Some traders simply can’t get out of their own way.
They’ll string a few good trades together, then get overly aggressive on a subpar looking trade and get wrecked.
But what if you could avoid those disastrous outcomes…
Better yet, what if you could stop yourself completely before even getting in a mess…
It’s possible…and I’m about to show you how.
Table of Contents
Why Do Traders Self Sabotage?
Now, I’m not a doctor, so please take this with a grain of salt. But I have turned a small amount of money into millions. And I’ve coached over 30 of my students on their way to becoming millionaire traders.
I’ve seen the best and worst over my 20-plus years in this game.
Here are some of the most common reasons why traders act against their own best interests.
- Emotions. They let fear and greed override their rational decision-making. That’s why we see some traders hold onto losing positions longer than they should. They’re hoping it turns around.
- Overconfidence. When you overestimate your abilities, it can lead to excessive risk taking. That’s why I say early success is one of the worst things that can happen to a trader. No surprise, my very best students struggled during their first year of trading.
- Loss Aversion. Who likes losing? Not me. But in trading it’s part of the game. Some traders will refuse to take a loss because it means they were wrong. I believe in cutting losses quickly. You should too.
- Confirmation Bias. Short-sellers love confirmation bias. That’s why they all huddle in the same places, and spew the same broken logic. They scream fundamentals when they should be focused on price action and risk management. Don’t always be hanging out with traders who only see trades the same way you do. Remember, there’s someone on the other side of your trade. Be curious enough to wonder what they see in the trade.
- Revenge Trading. After a few losses some traders will get super angry. They’ll not only want to get their losses back, but they’ll want to do it immediately. But that’s not how trading works. You need good setups to trade. Rushing into another trade because you’re angry won’t help you get those losses back.
- Lack of a Trading Plan. It’s very hard to make money when you randomly trade tickers without a plan in mind. Know your strategy, and have a plan on how to trade it. If you’ve been following the blog, you know I love trading panics and dip buying. If I’m wrong I’m getting out right away.
- Overtrading. Sit in front of the screen all day and you’ll probably over trade. Some traders can’t help themselves, they want action all the time. I’m not going to lie, I’ve been vulnerable to overtrading in the past. To overcome it I will step away from my screen and do other things.
- Burnout. You don’t have to eat, sleep, and breathe trading. You do however need to do your homework and come prepared to each session with a plan. But if your life is only trading then eventually you will burn out. That’s why I’m a huge proponent of getting away from the screen, enjoying life, and doing other worthwhile things besides trading.
- Not Accepting Responsibility. Don’t blame lack of funds and resources for your struggles. There’s plenty of free resources for you to learn from on this blog and on my YouTube channel.
How Do You Make Better Trading Decisions?
The Power of PREPARE: A Pro Trader’s Checklist for Success
In the world of trading, staying curious and questioning everything can make all the difference. When individuals approach me, asking the secret behind my consistent streak of successful trades, I open up about my guiding tool: the checklist. This isn’t just any list; it’s a tool honed over years that assists in making informed decisions. Let’s dive deep into my process, which revolves around the mnemonic ‘PREPARE.’
P: Pattern/Price
This is where the price of the stock comes into play. I zoom into its current state, identifying areas of support, resistance, and its behavior across different time frames. When analyzing a stock recently, I noticed a pattern I always look out for – the panic sell-off near the start of trading.
R: Risk/Reward
How do the potential rewards compare to the risks? It’s vital to balance them. I seek out trades that offer a risk vs. reward of 3:1 or more. Assessing the potential risks and rewards helps me gauge the overall viability of a trade.
E: Ease of Entry
Is there ample volume? Will the exit be smooth or rocky? Monitoring the stock’s price action provides insights into this. A stock’s liquidity and my ability to navigate it without hiccups is crucial.
P: Past Performance/History of Spiking
Here, I assess whether the stock has a track record of explosive growth or not. A stock with a history of significant moves often signals potential future activity.
A: At What Time Is It? / Personal Schedule
Timing is everything in trading. Sometimes, even with a promising setup, I might step back if other commitments or conditions aren’t conducive. It’s not just about the trade; it’s also about being in the right state of mind.
R: Reason/Catalyst
Every stock move is often backed by a reason or a catalyst. Whether it’s company news, sectoral shifts, or global trends, knowing what’s driving a stock’s movement is crucial.
E: Market Environment
While individual stocks have their dynamics, they don’t exist in a vacuum. The broader market mood can heavily influence even the most promising trades. Thus, always keeping a pulse on the overall market sentiment is non-negotiable.
Putting It All Together
After meticulously evaluating a stock based on these factors, I assign scores. A cumulative score of 70 or more catches my interest. Recently, after putting a specific stock through this process, it scored a 52. Interesting, but not compelling enough for me.
For those eager to integrate this method into their trading arsenal, I’ve made it even more accessible.
[CLICK HERE TO GAIN ACCESS] to the Trader Checklist Calculator. It’s a game-changer and absolutely free! So, are you prepared to elevate your trading game?
Why Stop Now?
Now that you’ve got a better idea of what the pitfalls traders must take, and the makings of a good trade setup…it’s time to kick it up a notch.
I want you to see for yourself what my top students are doing to take advantage of this crazy market.
Yes, you heard me right…CRAZY.
After all, how do you explain some of the short squeezes we’ve been seeing. Like CCG on Monday, the stock went from $11.47 to $200 in just a few hours!
But it’s unlikely you’d even know about moves like that if you followed the mainstream financial media.
The thing is, plays like that are happening more than I’ve seen in a LONG TIME.
And I want to help you find them. That’s why everyday my team and I are hosting live training classes.
We bring them to you at zero-cost.
All you have to do is sign up and register.
CLICK HERE TO RESERVE YOUR SPOT
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