Trading Lesson of the Week

Check back weekly for another free trading lesson:

3 Ways to Trade Better

In This Week’s Issue:

  • Stockscores Market Minutes Video – Is a Stock Market Crash Coming?
  • Stockscores Trader Training – 3 Ways to Trade Better
  • Stockscores Feature Strategy – Stockscores Simple Weekly

 

Stockscores Market Minutes – Is a Stock Market Crash Coming?

Is a stock market crash coming? Answering the question does not require in depth knowledge about economics, politics or finance. The question is most easily answered with a pencil and a ruler and this week, I show you how. I also provide my regular weekly market analysis, do a Market Scan in search of opportunity and look at the day trade of the week on MYOV.

Click here to watch this week’s Market Minutes

To get instant updates when I upload a new video, subscribe to the Stockscores YouTube Channel

 

Commentary of the Week – 3 Ways to Trade Better

I think many traders have a hard time believing they can make money by buying a stock and waiting. Most of us are not taught to make our money work for us but instead that we must work for our money. Go to a job, put in the time and you get a paycheck. Work hard, and your paychecks will grow. But the thought that you can make money by putting your feet up is a difficult thing to grasp.

With that mental programming, most of us have difficulty holding on to our strong stocks and letting the profits grow. If we buy a stock at $1 and it goes up to $1.20 in a couple of days, we are likely to sell. In some ways we think of this fast return as good luck, not much different than buying a winning lottery ticket. We have a fear that someone is going to figure out that we have benefited from a mistake, and so we better get out now before we get discovered.

This thinking is strengthened when we take a trade that's less than ideal and it goes down as quickly as it went up. If we take a marginal trade we should expect marginal results, but somehow we only remember the negative feeling of watching a paper profit turn into a loss. We tell ourselves that next time we will sell at the first sign of weakness and crystallize the gain. Avoiding pain is human nature.

Our next trade is of higher quality, but we sell it on a short-term weakness and lock in a quick but relatively small profit. While lost in self-congratulations we realize that someone named Murphy is writing the laws of trading, and we watch the stock march ever higher with us eating the stock's dust. We have jumped off a high-speed bus that is headed for Profit City.

What is behind this destructive behavior? It's that deep-rooted emotional response to danger that keeps us out of trouble but also makes us avoid a greater feeling of fulfilment.

Fear is what makes us sell our winners too early and hold our losers too long.

The best traders are not afraid of holding on to strong stocks, they are afraid of holding on to losing stocks. What do you do when you trade?

If you are a normal human being, you do the opposite of what the pros do. Think about the last loser that you owned. As the stock fell lower and lower, what was it that you told yourself over and over?

"It'll bounce back eventually. I'll just be patient."

What your subconscious mind was really saying was, "It's much too painful to sell this loser and see that loss of my hard-earned capital. I'll hold on with the hope that it goes back to what I paid for it and then I'll sell." And of course, it continued lower because there was something wrong with the company and it deserved to go lower.

What can we do to fight our destructive minds? How can we program ourselves to hold on to our winners and dump the losers? How can we trade without fear? Here are three of my seven criteria for fearless trading:

Only Trade Quality

Our fears are confirmed when we enter marginal trades. If you only trade the best opportunities, you will trade less but you will have greater success. This will put you on the road to fearless trading and help you simplify your trading approach. Write down your rules and do nothing unless every rule is satisfied. When you consider a stock, look for a reason to avoid the trade. If you can't find one, then you have a trade worth taking.

Buy with Confidence

The rules that you trade with must have a foundation of success. You must believe in your rules or you won't believe in holding the stock through the shakeout periods in the longer-term up trend. Analyze and test the strategy until you have proven to yourself that it works. Then trade it slowly without a lot of risk, so you can gain a greater level of confidence that it works.

Don't Watch the Scoreboard

Sports fans don't spend a lot of time watching the scoreboard during a game. It only matters when the game is over. In trading, the scoreboard is the profit and loss figure for your account. If you focus on the scoreboard, it is likely that you will lose sight of what's happening in the game. As a technical trader, all that matters to me is what the chart is telling me.

Get the weekly email from Stockscores founder Tyler Bollhorn

Get our weekly trading lesson and stock trading ideas direct to your email in box with the Stockscores Foundation newsletter.

Learn how to be a better investor and trader plus see how to best utilize the tools of Stockscores.com.

This is a free service from Stockscores with no spam (we hate spam!). Enter your email address below to register for future email editions and see the archive of past newsletters.

Past Trading Lessons

December 1, 20193 Ways to Trade BetterHL | CTRN
November 24, 2019Are Oil Stocks Ready to Move Higher?ERX | T.HEU
November 18, 2019Have Marijuana Stocks Gone Down in Smoke?T.WEED | ACB | CRON
November 3, 2019What You Need to Succeed in TradingT.BIR | T.VII | T.POU | T.MX
October 28, 2019Surprise TradesNAVB | CLUB | AQST
October 20, 2019Beat Your EnemyPDFS | CFFN
October 7, 2019The Basics of Stock Chart Reading
September 30, 2019Trading and Behavioral Science
September 22, 2019Scan the Market For Hot StocksHL | MLNT
September 8, 2019Good Stocks Do Not Go Straight UpOGEN | GTE | EYEN
August 25, 2019What Are the Stockscores?V.SVI | T.PEGI
August 19, 2019Look for Reasons to Say No to the TradeVVUS | CMCM
August 11, 2019What You Can Do to be a Better TraderT.VLE
August 5, 2019Get the Money Out of Mind
July 28, 2019How to Invest in Stocks and Sleep Well
July 21, 2019Essential for Stock Trading SuccessDRRX
July 14, 2019What It Takes to be a Winning TraderT.PTG | AQB
July 8, 2019How Much Money Can You Make Trading
June 23, 2019Avoid Fear Based Trading DecisionsT.PTG | T.ELD
June 16, 2019Keep the Money Out of ItPIRS | KIM | RDUS
June 9, 2019Trading Tactics and StrategySNAP | COTY
June 3, 2019Test Your StrategySATS | RDUS
May 27, 2019Overcoming Emotion in TradingT.NFI | AVP
May 27, 2019Overcoming Emotion in TradingT.NFI | AVP
May 19, 2019Fearlessness in FactsAVXL | BLDP | IIIV
May 12, 2019Traders Must Seek the TruthVXX | UVXY
May 5, 2019No to FOMOOVID | T.BU
April 28, 201915 Core Trading PriniciplesT.REAL | ZYME
April 21, 201910 Ways to be a Better InvestorKEG | CRZO
April 14, 2019How Do You Make Day Trading a Career?PE | T.LUN
April 14, 2019How Do You Make Day Trading a Career?PE | T.LUN
April 7, 2019Gambler or Trader?T.WPRT | T.CJ | T.GTE
March 31, 20193 Ways to Beat the Stock MarketLLNW | ALKS | NM
March 24, 2019Avoid Reckless TradingT.AUG | T.YRI
March 17, 2019What You Need to Know to Trade Stocks for a LivingJAGX | SELB
March 10, 20197 Ways to Trade Without EmotionV.META | SNOA
March 3, 2019The Hazard of Chasing TrendsVXXB | QID | SDS
February 24, 2019The Most Important Indicator for My Stock Trading StrategiesT.CMMC | GNCA | VERI | LKSD | RCKT
February 18, 201910 Do Nots to Make More in TradingT.MAXR | NXTD
February 10, 2019Trading Company SizePTI | NGD
February 3, 20193 Ways to Increase Your Trading ProfitsT.ROOT | MLNT | ABEO
January 27, 2019Wait for Great TradesTRVN | WHLR | DTEA | JMEI | AWSM
January 20, 20193 Ways to Improve Trading ProfitsT.BIR | T.CPG
January 14, 20198 Important Trading RulesAPRN | CPST
December 16, 2018Fear or Analysis?SSRM | T.BLU
December 9, 2018There is Strength in Market WeaknessT.ABX | RWM
December 2, 2018Keep Your Standards UpT.AC | T.GIL
November 25, 2018Beat Fear, Beat the MarketTYME | BIOS
November 18, 2018When the Unexpected Happens, Trade!KOOL | SQQQ
November 4, 2018Recent Stockscores VideosMARA | CNCE