Trading Lesson of the Week

• May 25, 2025
• SLDP | DNN | FCEL

In This Week’s Issue:

• Market Outlook – A Market for Alpha Stocks
• This Week’s Market Minutes video – Before You Buy Another Stock, Understand THIS
• Trader Training – Normal People Fail in the Stock Market
• Strategy – Bullish Pullback Breaks

Market Outlook – A Risky Market?

I don’t like how the market feels in general as surprise headlines tend to move the market sharply up and down, making it difficult to get a read on the overall market direction. However, there continues to be good, and very tradeable action, in small companies that have positive catalysts for buyer enthusiasm. Focusing on stocks trading abnormally and building optimism with rising bottoms on the charts is working well.

This Week’s Market Minutes Video – Before You Buy Another Stock, Understand THIS

There are 8 simple things to learn to be a better investor or stock trader. .This week, I take you through the simple concepts that I have learned from my 35 years of trading stocks. Plus, I do my regular market analysis and look at the trade of the week on PMAX.

CLICK HERE TO WATCH ON YOUTUBE https://youtu.be/iDjNG9lMPWI

Commentary – Normal People Fail in the Stock Market

Many failing traders, after a lengthy streak of losers, will proclaim, “if I just do the opposite in the market, I would be rich!” In other words, sell short the stocks that they buy and buy the stocks that they sell.

Sadly, doing this probably won’t lead to any more success.

Most traders are hyper focused on the entry decision. Buy the right stock at the right time using the right indicators and the best strategy. Yes, those are important steps but overlooking one very important factor will ensure that even great stock pickers fail to beat the market.

What do great traders do that most do not? They avoid falling into the trap of being a normal human being.

Normal people don’t like to take losses so they don’t sell their stocks when the market has proven them wrong. This leads them to let small losses grow into big losses.

Normal people add to their losers, hoping that buying more of a loser will lower their average cost to the point that they can get out profitably when the stock bounces back. This leads to even bigger losses.

Normal people worry that their winning trades will turn into losing trades so they sell when there is any sign of weakness.

Normal people do not add to their winners, since their logic tells them that the stock has gone up so much that it cannot go up anymore.

Normal people take more risk than they are comfortable with, causing them to act emotionally because of their emotional attachment to money.

Normal people let emotion affect their decision making, doing what feels good instead of what the facts tell them to do. They avoid pain and pursue pleasure.

Normal people listen to what people say to do in the market, instead of looking at what people are doing with their money.

Normal people buy stocks like they shop for other goods, looking to buy bargains in stocks that have fallen in price. Stocks that have fallen in price do so because there is something wrong.

Normal people avoid buying stocks that have gone up a lot, with the belief that higher prices mean the stock is overvalued.

Normal people try to be smart instead of trusting that the stock market is smarter than them as it represents the opinion of millions of investors.

Normal people work hard when times are tough instead of working hard when the market is easy. Work harder when the trend is up.

If you want to beat the market, you must stop thinking like a normal person. Human beings are programmed to fail in the stock market. To succeed, you have to write a new program for yourself.

When making a trading decision, ask yourself whether your trade is motivated by fear, greed or facts. Only take trades based on fact. Exit when the facts tell you to, not when your emotions do.

This does require some skill and practice. Knowing how to read the market’s opinion through the price and volume chart is not too complex but it does take time to learn. However, the mistake many investors and traders make is to only focus on their analytical skill and fail to work on themselves.

To succeed, you have to overcome being human.