Let’s just cut to the chase! You, amongst over 95% of traders, have been losing money because–frankly–you don’t know how NOT to, and you’re not willing to do all it takes to turn that around. It is quite easy to cast blames on everyone else, but yourself, for your shortcomings and why people are practically taking your money; after all, when you lose, someone is winning.
“The stock market is a device for transferring money from the impatient to the patient.”
– Warren Buffett
I’ll revamp that quote by one of the most prominent investors by saying: “The stock market is an institution where the more skilled traders and experienced are paid by those less skilled or experienced.”
This is essentially why you tend to find yourself in a hole–for you lack the skills pertinent to being a successful trader. The good news is that you can turn this around. You can acquire these skills by studying relentlessly (charts, indicators, SEC filings, news, support and resistance, etc), asking questions, taking time off trading, and practicing with a paper trading account. The problem is, people are hell bent on making money, but forget to realize that everything good in life comes with hard work. I’ve officially made a million in all of my accounts combined (in just 1 year), but that came with hard work. I speak of how I used to buy on huge spikes and then get caught with big bags simply because I didn’t cut losses fast nor even had the knowledge of what a stop loss was.
So, I stopped trading and started studying and learning the core things I needed to know to start making money. One important thing to know is that you should plan your week, as if you fail to plan, you definitely plan to fail. Part of planning your trading week could be setting a weekly goal. For example, if you have a $5000 account, your weekly (day trading) goal could be $400-$500 a week (divide that by 5, and that is your daily goal). One could achieve this by deciding to get out of a position after about 4-5% profit (or any other profit level), especially if you know that it gets you to about halfway to your daily goal. This would be particularly prudent when you didn’t chase the stock, for chasing without an exit plan (3-5% SL) is what leaves people with designer bags (bag holders). Little victories, especially if you’re not skilled enough, will get you far in the market.
Lastly, never average down on a losing stock, especially if that was never your intention; this is how a trade can become an unintended investment/long hold. Essentially, that’s you creating bigger problems for yourself. Instead, cut losses fast and learn from your mistake; this is how you’ll start profiting from the market. . . or at least, this is how you’ll stop losing.
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