About 90% of TRADERS LOSE MONEY,What to do?
About 90% of TRADERS LOSE MONEY.So first what we have to do is ask, what are these 90% of trader doing?
1. Buy breakouts and Sell break breakdowns
They buy breakouts and sell breakdowns yes they are literally chasing the stock price around.
2.Cut the loses short.Let winners Run.
Where are they letting winner run to straight out the trading account.This idea sounds great in theory but it just doesn’t work.
3.BIG POSITION SIZES.
Their greed causes them to size their position way to big.Have you ever the saying “DON’T OVER THE TRADE FOCUS ON THE BEST SETUPS AND INCREASE YOUR SIZE ON THE GOOD ONES”.
look there’s some merits to increasing your size during periods of better opportunity, but don’t over do it or eventually you’ll be wiped out he game
4.NEVER CAP YOUR PROFIT POTENTIAL
They are afraid of reducing their cost faces because they might be capping their potential profit.For Example:Selling your covered call reduces your cost, but caps your potential game.
Unlimited profit potential is like a mythical creature.
Now you see four things most trader do, but why do they do them? Well some of it’s human psychology, but most of it is because it’s what they were taught bu investment education website’s .
I know sound a bit hypocritical but I also run an investment education website myself.But the different is they tell you what will you make when you spend money unlike them I’ll tell you the truth even if it’s not what you want to hear think about it how appealing does cut your loss and let the winner’s run, sound sure, it sound great exactly what you want hear, but anyone teaching this concept has either never traded before or they’re just flat-out lying.
Now let’s use little bit of inversion and flip these point’s and here’s your new trading strategy.
1.BUY INTO WEAKNESS.SELL INTO STRENGTH.
First you’re going to buy into weakness and sell into strength why because it’s exactly the opposite of what most trader do.now you might be saying but you know if you’re getting along into the sell-off how do you know when the sell-off is over the answer is simple.You don’t nobody does it doesn’t matter.you don’t know stock is going to go up,down, sideways or in circle’s and i believe that stock price swing and random for the most part
Ultimately human emotions that drive market moves.So just fall victim to your emotion’s
2.BOOK PROFITS.BE PATIENT WITH LOSING TRADES.
A high probability trading strategy almost all losing trades will become a winning trade at some point if you hang in there.If you’re cutting your losses small you’re going to choke out a lot of good trade and if you’re trying to let winner run you’re going to very disappointed when your winners just don’t run like they’re supposed to do.
Small position allow you to make decisions based on logic rather than emotion.The only way to be patient with positions is if you’re sizing your position correctly.If they are to big then the day to day fluctuation in your account balance will cause you to make bad decisions.
4.REDUCE COST BASIS.
Reduce your cost basis by placing trade with a defined profit strategies.These are the strategies with limited profit potential but they have a very high probability of success.If you’re buying options and you’re doing the exact opposite of reducing your cost basis, consistently reducing your cost basis will pay far more then that.
OK so we are done with why TRADERS LOSE MONEY .Following these simple guidelines will save you many headaches and a ton of money.