Want to know the secret to becoming a great trader?
It is NOT some get rich quick scheme or trying to find the next small cap stock that will go up 1000%.
It is overcoming your psychology and mastering the mental aspect of it. These 7 deadly trading sins are the threats to all traders. Once you can overcome these consistently, you will be well on your way to successful stock trading.
Over the next 7 days, we will be breaking down all 7 of these sins in detail and teach you how to combat these destructive tendencies. Here are the 7 sins of trading:
Revenge trading is the easiest way to turn a normal red day into an account blow up. Revenge trading occurs after you have had one or several losing trades, and you start to get emotional. You want to make back the money you just lost, so you start forcing trades on subpar setups. What happens after is that you end up losing even more money, you become even more emotional, and you start to spiral out of control.
It is very easy to treat trading like gambling. Gambling is addicting by nature, and many new and inexperienced traders fall victim to this addiction. Just like in a casino, it is possible to make money in the stock market without much effort. But you will not make money consistently, and will end up losing money in the long run. The only way you can make money in the stock market is by trading a proven system with an edge. Doing anything other than this is just pure gambling, and will result in you losing all of your money.
Emotional attachment in trading will prevent you from making rational decisions. Emotions cloud your judgement, and do not allow you to view market information objectively. Emotional attachment to stocks causes you not to buy and sell at the right times. Traders who get emotionally attached to stocks they own often turn into bag holders, as their emotions prevent them from respecting price action.
The stock market is mechanism of moving money from the lazy and unprepared to the patient and hard working. Since the stock market is random, it is possible to make money buying and selling randomly without doing any technical or fundamental analysis. However you will not keep the money you make, and will end up losing money in the long run like most people who try to trade for a living. You are going up against some of the smartest and richest people in the world when you trade.
Fear of missing out haunts traders of all experience levels. There is nothing worse than missing a 20% move in a stock that was on the top of your watchlist. This often causes traders to chase and buy way too high. Traders will often hastily jump in the next stock that moves with the expectation that it will make a monster move. The stock ends up just being a subpar setup, they lose money, and they become even more emotional.
Scared money does not make money in the stock market. Fear manifests itself in many different forms in trading. You cannot let the fear of losing money deter you from making a trade. You cannot let the fear of a winner turning into a loser cause you to take profits too soon. In trading, you have to risk money to make money. If you’re afraid to lose the money you are risking, you are likely trading too much size.
You cannot let your ego get in the way of taking a loss. Losing traders will believe so strongly in their trade thesis, they won’t obey their stop loss because they don’t want to admit they were wrong. Stubbornness is the number one cause of account blow ups. You have to put your ego aside when you participate in the stock market. No one wins 100% of the time, and losing trades are inevitable. Do not let your ego get in the way of your ability to make rational trading decisions. Care more about making and keeping your money than being right.
We are doing a free webclass on December 17th where we will go over all of the 7 sins in even more detail, show exactly how to overcome these and, build a bulletproof mindset. Mark it on your calendar and join us live.