This is the perfect market for losing a lot of money….
Uncertainty surrounding the economy, inflation, and the Fed’s next move has the stock market scared after a massive runup in January.
I picked up on this a few weeks ago before it became clear to most folks. And it’s why I’ve become more selective with my trades and decided to take quick profits when I see them.
However, several traders are still banging away on their keyboards like nothing’s changed.
Look at some of the last few big OTC spikers, Auto Dataflow Inc. (OTCMKTS: EPAZ) and SMC Entertainment Inc. (OTCMKTS: SMCE). They were one-and-done moves, lacking the same follow-through we saw in January.
There’s a time to be active and a time to lay off.
Unfortunately, most traders don’t recognize this until it’s too late and they’ve either gotten into a deep trading hole or blown out their trading account.
You’ll have to develop your AWARENESS levels if you want to avoid falling victim to this trap.
This shift in thinking could be the difference between making little money in the market or becoming my next millionaire student.
By answering these series of questions … you’ll be primed for optimal performance.
Prepare Yourself Mentally
I’m usually never in the same location for more than a few days. Most of the time, I’m tired from jet lag and working on my charitable foundation, Karmagawa.
On top of that, I often trade in locations where the WiFi is spotty.
However, I don’t use these as excuses to trade poorly.
In fact, being aware of my current mental state allows me to stay disciplined.
Building your awareness levels takes practice. But if you consistently ask yourself the right questions, you’ll develop awareness.
- Are you prepared for the day? Have you studied your charts, read through the catalysts, and prepared a stock watchlist? If you haven’t, you’re coming into the trading day unprepared. Knowing what’s been happening in the market can help you recognize trends faster and make you more efficient.
- How are you feeling around the opening bell? Are you distracted, thinking about something else? Or are you calm and relaxed, waiting for the right setup to come your way?
- What is the sentiment of the overall market? 3 out of 4 stocks will follow the market. If you are going to be bullish on a down day, is the catalyst you’re trading strong enough to overcome a weak tape? (Once you have a better feel for the market, you’ll know when you should be hesitant or decisive.)
- How are you talking to yourself? I don’t know what it is about traders, but they love beating themselves up when they miss an opportunity or lose money on a trade. While it’s okay to be upset, it’s never good to have negative self-talk. The only way you’ll be able to trust your gut is by staying positive.
- What is catching your eye the most? Many of my millionaire students have developed their own style of trading. However, the trait that makes them so successful is their discipline. They wait for their plays to develop. On the other hand, newbies are more obsessed with staring at their PnL.
- How do you rank your decision-making? Are you placing trades because your PnL is bothering you? Are you not trusting your gut instincts because you’re on a cold streak? Is your style drifting because you’ve lost confidence? If you catch yourself making poor decisions, shut it down and live to fight another day.
Analyze Your Trading
- How are you trading? Are you chasing moves? Or are you patiently waiting for your setups before you trade?
- Are you playing for the right moves? Are you fighting the market, trying to buy a stock when its price action is choppy? Are you trying to jump into 20 trades and scalp a few pennies here and there? Or are you playing clean setups and playing for big moves like I teach my students how to do?
- Does your trading match the markets? A few weeks ago, I recognized that the market became much choppier to trade. That’s why I became more selective and decided to take profits and cut losses faster. I adjusted my trading to fit the current market conditions.
- Are you sticking to your trading plan? Do you get out of a stock if it hits your stop limit or ignore it because you’re stubborn and don’t want to take a loss? Are you not taking profits because you’re overcome by greed, only to have those profits vanish on you when the stock reverses?
These are just a few questions you can ask yourself to raise your trader awareness. But that doesn’t mean you can’t add your own.
Raising your awareness level takes practice and experience. Once fully developed, it can help you avoid bad trades and take advantage of the best opportunities.
I’m not the world’s best trader, but I have been consistently profitable, racking up more than $7.4 million in profits during my career. And after coaching more than 30 students into millionaires, I can tell you that awareness is a trait you must acquire if you want to take your trading to the next level.