Things A Trader Needs to Give Up if They Want to Make Money:
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Give up your need to be right: The market is always right, don’t strive to be right in your predictions and opinions. Strive to go with the flow of the market.
Give up control: No matter how long you watch a live stock stream, you have no power over the movements. Save your emotional energy by not trying to cheer on your positions and get wrapped up in every price tick.
Give up blaming other factors for your losses: There is no mysterious ‘They’ causing you to lose money. Your choices cause you to lose money, or your system just had a losing trade. It is a free country and free market.
Give up beating yourself up for losing trades: If you followed your trading plan, then there should be zero regrets involved in a losing trade. If you didn’t follow your plan & lost, then money was the tuition and you paid to learn the lesson. You must move on to the next trade.
Give up your own opinions: If you took a trade based on your own opinion, you have to give up your opinion and get out if the trade moves to a place that proves you were wrong.
Give up your inability to change your mind: The more you believe a trade just can’t miss, the more dangerous it is. It will cause you to trade too big and stay on the wrong side for too long. You must always be ready to be wrong.
Give up thinking about your past trades: Each trade is a new trade. Do not hold grudges against stocks and think they ‘owe’ you for past losses. Do not fall in love with a stock and hold it as it falls lower and lower.
Give up letting your trading define your self worth: Do not let your trading define you. Diversify your life with friends, family, hobbies, and other interests. It is not healthy to become overly obsessed with the markets.
Give up on losing trades quickly when your stop is hit: Your best trades will usually be profitable from the start. If they immediately go against you, be prepared to be stopped out. You can destroy your trading account thinking: “It will come back, I just have to wait.”
Give up on price targets let your winners run as far as they will go: Trends can go to unthinkable levels at times. Big wins during these trends can make your year. If you set a predefined profit target, you’ll miss the opportunity when it comes. Let a trailing stop take you out.
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Trading the price action as it plays out has a better odds of putting a trader on the right side of the market than a trader with a bunch of opinions and predictions.
Backtested signals that worked in the past have better odds of success in the future than guessing which way the market will go.
A stop loss is a risk management tool that keeps your losing trades small. The point of a stop loss is defensive and to eliminate big losses from your trading.
Here are ten tips for thinking about when placing a stop loss on a trade:
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Your stop loss should be a part of your trading plan on entry not figured out later.
The best time to set a stop loss is before you get emotionally wrapped up in the outcome of a losing trade.
Higher highs & higher lows define the market is in an uptrend. Lower highs and lower lows define the market is in a downtrend. Trading inside a defined price range a sideways market. Defining what type of market you are in helps you go in the direction of least resistance.
Where price is in relation to the moving average in its time frame can show the current trend.
Research historical chart patterns to understand what is possible in the market and how markets change from uptrends to downtrends, and from volatile to range bound. Use this insight to structure profitable trading systems using price action signals.
Backtest your trading signals to see if they had an edge in the past.