I was recently asked about some of the trading mistakes new traders fall into when starting out.
It was easy to come up with a lengthy list, mainly because I’ve personally made all of these mistakes myself, and in most cases, more than once.
I thought it would be fun to put together a bulleted list
Monday August 24, 2015 was the craziest session I’ve ever traded.
Okay maybe it was tied with the flash crash of 2010.
My trading days didn’t start until the end of 2009. So that means I never experienced first hand events such as the dot com bear market of 2000 or the financial crisis of 2008. I was involved in the elevated volatility in mid 2010 and then again at the end of 2011, but 8/24/15 really seemed to take the cake.
Trading can really suck sometimes.
Especially during those times where everything you touch turns out to be wrong. Those dark periods are part of the business, and unfortunately it’s just a matter of time before you find yourself in the next trading drawdown.
It’s that time of year again: going to ugly sweater Christmas parties, planning for the new year, and looking back over the accomplishments and mistakes of the year. This is my favorite time of the year, and, no, it’s not for the Christmas parties.
It’s because it’s a time I take a detailed look over what’s worked well and what’s not worked so well, and then make adjustments to move forward. It’s this self analysis that keeps me in a constant state of improvement.
With another year of trading day in and day out, full of successes and challenges, here are the 3 important lessons I learned in 2014.
Kevin O’Leary (Mr. Wonderful) from Shark Tank
GoPro ($GPRO) is a stock I have been watching for a while. Since the week of its IPO on June 26, 2014, the stock showed tremendous potential for a high volatility new issue. It opened with an IPO price of 28.65 a share and just 3 days later the stock hit an intraday high of 49.90. That’s a 74% jump in 72 hours. From that point forward it was on my radar.
It took a few weeks of being patient, but finally around the third week of July,
photo by Frits Ahlefeldt-Laurvig
Before you even think about taking your next trade you better first assess your risk to reward ratio to make sure the trade is worth taking.
Isn’t that what the trading books tell us we need to do?
There’s been a metamorphosis of sorts that has happened to my trading style over the past several months. Most of it gradual, and well thought out. But alas, the transformation is now complete.
It takes a long time to reshape one’s beliefs and thought process.
It’s one of the most quoted trading clichés out there.
Let your winning trades run and cut your losers fast.
And for good reason.
Managing your emotional capital is just as important as managing your trading capital.
Emotional capital is a finite resource, and it directly relates to how we the trader are feeling and our decision making ability.
When we are feeling anxious, upset, or depressed, for any reason, then we tend to do direct damage to our trading account, most of the time without even knowing it.
Successful trading is about living a well balanced life
Trading success is rarely achieved by an understanding of the markets alone. Success generally accompanies traders who understand and accept the ebbs and flows of the trading lifestyle, live in a state of happiness, live free of emotional baggage, live confidently, and live with hobbies outside of trading. If a trader is not living a well balanced life there are so many factors that have the potential to limit ones performance.