Trading Lesson of the Week

• June 29, 2026
• PGY | RAPP

In This Week’s Issue:

• Market Outlook – Diverging Markets
• This Week’s Market Minutes video – Stock Market Crash or Summer Rally?
• Trader Training – To Succeed in Trading, Stop Thinking Like a Normal Person
• Strategy – Positive Chart Pattern Breaks

Market Outlook – Diverging Markets

The Small Cap stocks, which have underperformed the Large Cap stocks so far this year, are starting to play catch up. While there is profit taking in some of the large caps, an improving interest rate outlook is helping the performance of the smaller companies. It does appear that the profit taking may soon be done on the large cap stocks as companies like Nvidia (NVDA) and Amazon (AMZN) are pulling back to their long term upward trend lines where they should find a bottom.

Yesterday’s hot market can be today’s dog. Big gains in Gold and Oil in the past year have given way to profit taking. A simple rule to always keep in mind; when market chart trends go parabolic (curving upward), profit taking is around the corner. Neither Gold or Oil look bad in the longer term, they are just taking the speculative fervor.

This Week’s Market Minutes Video – Stock Market Crash or Summer Rally?

Will there be a stock market crash or summer rally, We get conflicting signals from two different sectors of the market so this week's video goes through the analysis to answer this important question for investors and traders.

CLICK HERE TO WATCH ON YOUTUBE

Commentary – To Succeed in Trading, Stop Thinking Like a Normal Person

After a long streak of losing trades, many frustrated traders say:

“If I just did the opposite of what I do, I would be rich.”

But reversing every buy and sell would probably not solve the problem. Most losing traders are not consistently wrong about which stocks will move. They fail because of what they do after entering the trade.

They hold losers too long, sell winners too quickly, average down on bad positions, and take risks that are too large for them to handle emotionally.

Most traders focus almost entirely on finding better entries. They search for the perfect indicator, the ideal chart pattern, or the next hot stock. Entry matters, but it is only one part of the process.

The difference between average traders and great traders is often simple:

Great traders do not react like normal human beings.

Normal people hate losses. They hold stocks after the market proves them wrong because selling would mean admitting failure. Small losses become large losses.

Paul Tudor Jones said it well:

“Losers average losers.”

Yet many traders do exactly that. They buy more of a falling stock because it looks cheaper and they want to lower their average cost. Instead of reducing risk in a bad trade, they increase it.

Great traders do the opposite. They cut losses when the market proves them wrong. They add to positions only when the market confirms they are right.

Normal people also sell winners too quickly. A small pullback creates fear that profits will disappear, so they take the money and feel relieved. Meanwhile, they continue holding losers because they hope they will recover.

That is backwards.

Jesse Livermore said:

“It was never my thinking that made the big money for me. It always was my sitting.”

The big money often comes from holding the right stock through normal pullbacks and allowing a strong trend to develop. Great traders understand that their best positions deserve room to work.

Normal people avoid buying stocks that have already moved up because they believe high prices mean the stock is overvalued. They prefer stocks that have fallen because they look like bargains.

But stocks are not like televisions on sale.

Strong stocks are usually strong for a reason. Weak stocks are often weak for a reason. The market frequently rewards strength, momentum, and leadership—not bargain hunting.

Normal people also listen to stories. They buy because someone says a company is undervalued, because a headline sounds exciting, or because a friend has a tip.

Great traders listen to price and volume.

The chart shows what people are actually doing with their money. Opinions can be wrong. Stories can be misleading. Price action is the market’s vote.

Another problem is position size. When traders risk too much, they become emotionally attached to every tick. They stop following their plan and start reacting to fear.

Bruce Kovner said:

“Whenever I enter a position, I have a predetermined stop. That is the only way I can sleep.”

A defined stop is not just a risk-management tool. It is a way to stay objective.

Successful trading requires doing things that often feel uncomfortable:

• Sell losers before they become disasters.
• Let winners run.
• Add to strength, not weakness.
• Buy leading stocks instead of weak bargains.
• Follow the facts instead of the story.
• Keep risk small enough that emotions do not take control.

Before making any trading decision, ask yourself:

Am I acting on fear, greed, hope—or facts?

Only facts deserve your capital.

Learning chart patterns and technical analysis is important. But many traders spend all their time trying to improve their market analysis while ignoring the real challenge: improving themselves.

The market does not reward comfort. It rewards discipline.

To succeed, you must learn to cut losses, hold winners, trust price action, and put your ego aside.

In other words:

To succeed in trading, you must overcome being human.