Trading Lesson of the Week

Check back weekly for another free trading lesson:

What You Need to Succeed in Trading

In This Week’s Issue:

  • Stockscores Market Minutes Video – Should You Use Stop Loss Orders
  • Stockscores Trader Training – What You Need to Succeed in Trading
  • Stockscores Feature Strategy – Morning Movers in Energy

 

Stockscores Market Minutes – Should You Use Stop Loss Orders

Limiting the size of your losses is essential in stock trading and investing and stop loss orders are an important tool to do so. However, set your stop at the wrong price and you can really hurt performance. This week, I discuss this, my market analysis, do a Market Scan on Stockscores and look at the trade of the week on BILI.

Click here to watch this week’s Market Minutes

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Commentary of the Week – What You Need to Succeed in Trading

When we think about being a successful trader, we tend to focus on knowing that stocks to buy and when. We think a lot about having a sound strategy or powerful tools to find stocks before the crowd. Effective risk management should be the focus of every trader. However, while these are each very important elements to being successful in the market, there are a few things that I think get overlooked. They are the things that come from the inside and are not just important for success in trading but success in life.

 

Determination

Trading is simple, but it is not easy. You are playing a game with millions of players and each is trying to take your money. You have to come prepared to compete and determined to win.

Practice

My trading strategy rules are pretty simple. They don’t require any background in finance to understand and they aren’t that complicated. However, they do require repetition and practice. Particularly when day trading, we have to understand the rules so well that we don’t have to think about them. Like a pro athlete, there is no time to think, we have to just act. Imagine a hockey player or golfer who thought about each aspect of taking a shot as he or she was taking that shot. The results would be very bad. In trading, you have to practice enough that your decisions become natural.

Perseverance

Having traded for 30 years, I can tell you that there will always be times when the market kicks you in the head and challenges you to get up again. Good traders are those that overcome the streaks of poor performance and maintain their discipline and focus. Never give up.

Sensibility

If you are doing the same thing over and over, don’t expect to get a different result. I see a lot of traders who have fallen into bad habits that are hurting their performance, but they don’t have the sensibility to make changes. Track your performance and figure out what practices are helping you and which are hurting. If you are my student, ask me for help.

Contrarian Thinking

If you do what everyone else does, you will get what everyone else gets. That is the definition of being average and, if you are ok with average returns, buy a low-fee index fund and don’t put in any effort. If you want to beat the market, you must think and act differently than the crowd.

Expectations

When you hear about a successful trader, it is easy to think that you can do what they do because there are no barriers to entry in trading. Anyone can trade and many try. However, the people who succeed in trading are no different than the people who succeed in anything else. They work harder than most and they have put in the time to get good at it. Anyone can be a lawyer, a doctor or a pro athlete but only those who want it more than everyone else will be successful. It is the same for trading, expect success only if you are willing to make it happen.

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