The best day trading advice I ever received
If we were at a park sitting on a bench and I ask you what the best advice in stock trading, what would you answer? May traders will think deep and try to figure out what made them the most money. Some would tell you the best advice was the one that made him/her 1000% in 2 minutes. Others may just tell you not to do anything.
Let me tell you my answer as it is a different way of thinking. I was in a discord room and one of the traders who has been in the game for over 20 years was just talking about stocks. He made enough and doesn’t need to trade anymore but likes to teach the beginners. He’s not even a mod or owner of the channel, just like a regular member.
I learned a lot from him and still am but one thing he said will stick with me forever.
“Look at your best trades and critique it if it was a good trade or was it purely a gamble that worked.”
I thought to myself, why would I do that? I made 500% and I’m now a stock guru and I’m invisible. I outsmarted the market and made my biggest trade right? That was completely the wrong thought.
When you’re in the moment and everything is going right your way, it’s not because you’re good, it may have been in plain luck that you were in the winning trade. If you can make is consistently then by all means you’re GOOD.
I started to question myself…..
Did my trade actually made sense?
Think for a second, not all your beginner trades will work out. You may be on a winning streak because the market is doing well. Anyone can buy a stock or option call but when it turns sour, you will have huge losses.
People seem to think that it’s over when you win. You collect the money and you end up just going away from the chart and not re-analyze what you did RIGHT.
Was my entry perfect?
If all the indicators such as support and resistance made sense, with all the EMA crossing, you had yourself a golden play. We can assume we bought in support and this was the perfect trend reversal to the upside. To make things even crazier, there’s a gap to fill with tons of buying volume.
BUT if you just played any play without even looking at the chart and copied someone’s play then you learned NOTHING. You just somehow got a good entry on the way up to the upside. This is pure luck.
Did I go over my risk tolerance?
This one is the biggest issue for most people. It is all fun and games when you’re up 50% and you put your whole account in the trade. Let’ say you had $10,000 and you made $5,000 (+50%) and you can pay off your credit card now because of one good trade.
You’re NEVER sweating when you’re winning but crying when you’re losing
Again, if you did that and it went the other way your $10,000 would be only a total of $5,000. You blew your account buddy.
Believe me, I have a lot of friends who have made way more money than me in months but eventually blew the account because they sized up too much. When the market is crashing, they are tripping out while I’m able to take the hits.
Any trade should be treated if it was going to reverse at one point. You “believing” and “hoping”, does absolutely NOTHING, ZERO, NADA, GARBAGE. I have personally blown my account because I went too heavy on my stock positions.
How did I know where to exit?
I say the perfect exit is one where you had a good fill and you sell it at HOD (high of day) then drops right after you sell. I love these exits because I don’t feel bad of “shoulda woulda coulda” went longer. You’d also have to question yourself if you exited because of the dollar amount. Do not use dollar amount as a way to exit. This is horrible advice because you may exit in the middle of support and resistance OR inside of a channel.
Exit where the chart tells you just as you entered due to the chart
But again like what we say
When you’re happy and you know it, just click sell.
What would happen if it did fail?
See what happens if the trade did fail? You’d start blaming yourself that the trade wasn’t worth it. Instantly you lose your glory of being a stock trader because you are red on a trade. The losing aspect is huge because everything you thought just failed.
This doesn’t make that good trade any good because it’s RED.
If it did fail you wouldn’t even notice the play and you wouldn’t analyze the play. This is why it’s very important to journal your trades. So if it fails, you know why and you know where you should have exited. This would have been a gamble
This mindset changed me…
A few weeks later I actually messaged him and thanked him because it brought something new to the table. Something that I have never thought of and the knowledge that came from it. This is the reason why I shared this with everyone because you need to see how BAD your GOOD play was. It may have just been a very lucky bet.
So in other words, the best thing I can say is to review your plays even if it’s a win or a loss. In the long run, you will see how well you done on the stock market. You need to journal your trades to see if it was all pure luck or it actually worked out for you. Trying to critique your green is hardly done and it should because you may think you’re smart but it may all have been luck.
