Learning from trading pros is vital and can greatly expedite the process of becoming a consistent trader. But there's a lot of value to seeing what your peers have done - and are doing - to get past their hangups and become profitable. I recently held a webinar with one of my successful students, Taylor Jordan, for just this reason. Taylor is a Bootcamp student who was struggling to become consistently profitable, but willing to do the work to overcome his struggles. We spent some time together going over his trades and identifying the handful of mistakes he was making, and it really turned his trading around. Like all of us, he still has a lot of room to grow and improve, but he's become a much more consistent trader. These are a few of the takeaways from our chat.
Don't Ignore the Premarket
Like so many traders, Taylor said that he completely ignored the premarket action when he started trading. Each morning, he'd be looking at a blank slate at 9:30 AM. Then he realized by simply activating the premarket data on his charting software, he had access to a much more complete picture of what was going on with the momentum stocks he was trading. Eventually, he realized that not only did this premarket data help him identify trends and important levels, but it was actually a great time to trade. Rather than chasing gap ups and getting whipped around, he started trading the premarket period leading up to the gap up. He notes that individuals who want to day trade but have full-time jobs should seriously consider trading the premarket period and that all traders should be aware of what goes on during premarket trading.
Get in Early
Taylor was great at identifying chart patterns and he knew how to trade the setups, but his entries were terrible. In short, he waited far too long to get in and would miss half the move. This ensured that his gains, when he had them, were rarely large enough to offset his losses. By gaining confidence in his pattern recognition skills and actually getting in at the right point, he turned his trading around completely. It's important to remember that if a trade doesn't pan out but your entry was good, you can usually stop out with minimal loss, and that it's far better to have several small losses followed by a significant gain than it is to be constantly getting in at the end of the move.
Wait! Didn't we just say the opposite of this above? No, and here's why: sometimes you miss that initial move. The stock spikes, everyone is posting their gains and patting each other on the back. It's an awful feeling, particularly if you've been stalking the trade and waiting for your entry. But it happens. Sometimes it even happens with stocks you've had on your watchlist for weeks. What you don't want to do is chase the stock - you never want to be the last person to the party. If it's a good momentum stock, even if just for one day, you'll get another opportunity - it will pullback or consolidate and then you can get a low-risk entry.
No, this isn't just a feel-good platitude. You need to know who you are as a trader: the good, the bad, and the ugly. For a long time, Taylor tried to be a jack of all trades. He'd scalp, day trade and swing all at once, using a variety of setups. Is it possible to do that and be profitable? Absolutely! But you need to walk before you can run. If you are struggling as a trader, it's generally not because you are doing too little - you are probably doing too much. Pick a timeframe and one or two setups you like and master those. Once you've become consistently profitable - or realized you just cannot stand that timeframe or setup - then add something new. Note that to know yourself sometimes requires a mentor or other outsider giving you objective feedback, as it's difficult to recognize your own flaws. I was able to help Taylor identify what was working and what wasn't so he could focus on the style of trading that best suits his personality.
If you want to learn more about how I can help you achieve your trading goals, shoot me a message at email@example.com. I can fill you in on our upcoming Bootcamp (March 21st!) and other educational and mentoring options.
Here's the rest of my webinar with Taylor!