Break A Losing Trading Cycle

2020-05-29 | Simpler Trading Team

Trading has a lot more to do with repeatedly admitting that you’re wrong (and being okay with it) than with trying to make a lot of money.

Retail traders — that’s us — must remember that there is always someone on the other side of a trade trying to get our money.

One trader’s disaster is another trader’s bread and butter.

All traders lose money, so it’s important to know where most of the losses come from and avoid that part of trading.

Keep in mind these elements that keep traders in a losing cycle:

  • The freedom that comes from the trading lifestyle can be destructive. During the formative years of life we learned that it’s better to follow the rules and do what we’re told. Traders can do whatever they want, and unfortunately they do.
  • The markets actually encourage and reinforce bad habits. Especially using all that freedom to chase down any “hopeful” trade the markets dangle in front of us.
  • Traders are seduced into taking every opportunity to sell themselves on the idea that they’re right. There's always someone on the other side of your trade.

Learn to be the trader who isn’t chasing, but the one who knows that other people are chasing.

Learn not to be the one who removes stops, but the one who knows that traders tend to remove stops.

Learn not to be the one who trades too big for his or her account size, but the one who trades just the right size, or smaller, for his or her account size.

Learn not to be the one who frantically feels that he or she has to be in every move, but the one who’s content to wait patiently for the one setup that falls within his or her trading plan. Even if it means not having a trade that day.

See the common theme? Learn to be a better trader who can escape the losing cycle. 

Over the long haul, a trader can make a lot more money trading small and consistent versus trading large and haphazard.

Be the trader that wants to make money over time, not the one that needs to be right... right now.

We Saw: Markets fighting to maintain a rally — 

  • Dow just shy of positive, but still above 25,000
  • U.S. ramping up more sanctions against China
  • President’s press conference didn’t take markets

We’re Watching: … bullish plays in sector leading stocks —

  • High level of end-of-day, end-of-month volatility
  • Chop and more chop into next month
  • Options in: TTD, NVDA, TSLA, SHOP, SPX

Can you make gains with “boring” trades in a volatile market? Find low-risk trades in any market HERE