After another round of losses, I finally snagged some profits on Monday this week. With the same patterns that I always use.
These trade patterns occur over-and-over again in the market.
Look at my trade notes below for examples:
Now, as I mentioned, I also lost on quite a few trades recently.
That’s OK.
Losing is part of trading. The sooner you accept that, the quicker you’ll start to succeed in the market.
According to my trade tracker on Profit.ly, I win 76% of the time.
And when I lose, I know how to cut the loss before it gets worse.
How And When To Cut A Loss
It all starts with a trade plan.
Stocks like to follow specific patterns in the market. Especially volatile stocks.
We use trade plans to capitalize on these patterns.
Sometimes the patterns play out perfectly, and sometimes the patterns fall apart. That’s the nature of the market.
When the patterns fall apart, that’s when we’re forced to take a loss.
But how do we do that? When do we know that a trade is falling apart?
A trade falls apart when the stock price falls below the support/risk level from your trade plan.
The patterns that my millionaire students and I use to trade, they rely on price-action support.
Let me explain …
When a stock trades, people are always buying and selling at different prices. But some price levels are more significant than others. Especially for the human mind.
For example, $3.50 is more psychologically significant than $3.27.
As a result, these significant areas on a stock are places where a lot of buyers and sellers congregate. The increased trading volume around these levels can act as barriers for the price action.
And if the price crosses these levels, it can signal a momentum shift. Sometimes that means a violent momentum shift, like a breakout or a breakdown.
- Long-biased traders hope for breakouts.
- Short sellers hope for breakdowns.
Let’s look at a quick example from Monday, I grabbed this chart mid-day.
Monogram Technologies Inc. (NASDAQ: MGRM)
Take a look at the $3.50 support level on the Monogram Technologies Inc. (NASDAQ: MGRM) chart below.
Every candle represents one trading minute:
A long-biased trader could identify this level of support on the chart and buy shares close to $3.50.
Then, they could take profits into bounces off the support or wait for a retest of the intraday highs at $4.20. Even a breakout past those highs …
If the price falls below $3.50, that’s the sign to take a small loss.
More Breaking News
Look at a chart of MGRM yesterday to see what happened.
How I Rebounded After My Losses
It’s true, I was taking quite a few losses back-to-back.
The overall market was sinking lower, and that bearish momentum translated to our lower-priced niche.
As a result, the patterns that I traded were weaker than usual.
Look at my trade notes below:
I was able to control my losses thanks to my trading plans.
Then, after those losses, I didn’t get frustrated. I didn’t give up. I stuck to the plan.
I’m no stranger to losses. This trading process that I use hasn’t changed for over 20 years.
Yes, sometimes I fall into ruts of a few back-to-back losses. But I know that if I stick to the process, I’ll find solid trades again soon.
Don’t get frustrated by your losses.
If you’re using my trading process, those losses might be good trades that kept you from a larger selloff. In which case, pat yourself on the back.
Not sure how to trade with my strategies?
Learn my entire trading process right now, watch the video below:
Cheers.
*Past performance does not indicate future results
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