Change Everything?

Sometime when trading the stock market, as in life, the only thing that needs to change is everything.

I've watched many students trade over the years. I've watched some succeed, and I've watched some fail. This is written for those of you that are on the verge of failing. In trading that means on the verge of blowing up your trading account.

Let's start with the obvious thing that must change- STOP trading.

Now that you can't do any more damage, let's examine what you may have done. The general reasons for failing fall into many categories:
++ No trading plan, no rationale for the trade
++ No discipline (since there was no plan)
++ Holding a losing position
++ Adding to a losing position
++ Taking too large a position
++ Over trading, too many trades... no patience
++ Revenge trading... going back to the same security one time too often
++ Home run trading... only going elephant hunting
++ Overly concerned about the reward, disregarding the risk
++ Playing penny stocks
++ Trading options without knowledge of options
++ An insistance on being "right" vs. taking what the market will give
++ Too much fear... in too soon or out too early
++ Not enough fear... out too late or in too early
++ Too much greed... over confident for no reason
++ Not enough greed... too fearful and miss opportunities

To be sure, there are more reasons one could think of, but you get the idea.

Trading can be a mind-numbing psychological game whereby traders beat themselves and yet look to the market as the reason things didn't work out. Of course the market is the cause of the action in price but it is not the cause of a bad trade.

What's a bad trade? One that not only didn't go your way but was doomed from the start. The odds were against you and you didn't know it.

As mentioned above, sometimes the only thing that has to change is everything. Considering the items outlined below, if you're not brutally honest with your response, you're just setting yourself up again.

Let's start with:
1) stop trading. No, really- stop trading.
2) review rationale for trading the market at all (not everyone is meant for this business. If you're all about making a killing, making a million, and you don't really know a stock from a rock... you're in trouble).
3) do you understand money management in trading? Learn how to manage what you have. If you lose it, you can't trade any more.
4) do you know when the odds are in your favor or working against you? If not, get a trading coach.
5) do you really understand market dynamics? If not, get a trading coach.
6) can you really read charts or do you just think you do?
7) do you have a plan for the trade? No? Then why are you taking the risk?
8) do you appreciate economic announcements and their impact on markets?
9) can you spot a change in sentiment, more importantly; can you position yourself and take advantage of it?
10) are you tracking sector rotation or not? Do you know what it is?
11) are you on top of daily market events and happenings to make a truly informed, calculated, rationalized trade where the odds are in your favor? No, why are you taking the risk?
12) can you spell discipline?

The items listed demand that you review your knowledge in those areas. If you're weak in something, find a way to turn that weakness into a strength. Don't let a weakness kill what could have been a potentially good trade- if it wasn't for that one weakness. Make the time to learn if you really want to trade.

There are many many variables to consider when trading. Yes, it's more than a handful but they are manageable and they have a pecking order of importance. Learn that order.

You got it; get a trading coach or mentor.