Have you ever tried to do something for the first time?
Maybe it was swinging a golf club, throwing a football, learning to ride a bike, learning to drive a car…
How did it turn out for you?
It probably wasn’t your best performance, so what did you do to get better?
I bet most of your answers are practice, hopefully, it wasn’t that you gave up.
Benjamin Franklin once said, “practice makes perfect.”
I tell my students every day to practice and study their own trades…
Maybe other millionaire students’ trades…
And talk about each other’s trades just to get a feel for what is working in this market.
Over my 20-plus years in this industry, I have met traders who started both with large and small trading accounts…
And I can tell you that most of my students who started with a small account are the ones who are the most successful traders today.
Trading is about understanding the process and being disciplined when it comes to trade.
I’ve seen way too many traders hold onto trades and don’t fully learn the process they need to…
So if you are wondering what steps you can take to help you practice and perfect your trading strategy…
Be sure to try these basic trading fundamentals that all traders should know.
Keep A Trading Journal
Learning a process isn’t always the easiest thing for a human to do…
Have you ever heard the saying, “you can’t teach an old dog new tricks”?
Unfortunately, I have seen where new traders are stuck in their way and they don’t want to listen to other people…
And they decide to risk the majority of their trading portfolio because they think they know what they are doing after watching one or two YouTube videos.
Hate to say it, but trading is a process that you have to always be willing to adapt to.
We can see some amazing opportunities as we did in 2020…
But some difficult times for traders that struggle to find a lot of opportunities as we saw in 2021.
So what do I do to keep track of all of my trades?
I keep a trading journal.
I log all of my trades on profit.ly so all of my students and I can go back and study every trade, good or bad…
But if you are a new student and you are learning to trade, this can help you analyze your own trade to see why it may have worked…
Or why it didn’t work.
Focus On Your Foundation
Every trader should have some type of foundation.
What do I mean by this?
It’s important for every trade to know how much they are risking for every trade, recognize key patterns, and know what to focus on every morning when the market opens.
These are only a few key things that every trader should focus on as part of their foundation…
But let’s take a quick look at these few items.
It’s important to make sure your foundation fits your trading strategy.
So if you ask yourself this question…How much do you risk on a single trade?
I have seen traders who are risking 30%, 40%, if not more of their trading portfolio on a single trade hoping to maximize their profits quickly…
And it’s been proven that not every trade works as designed.
In fact, I can attest that with all of my trades over the years, not all of them worked as planned.
Being disciplined and not having a huge position size on my trades helps me limit my risk, helping me profit on over 71% of my trades in 2022…
So make sure you are focusing on these key things to help you profit on 70% of your trades in 2023.
If you are randomly buying hundreds of shares of a stock, hoping it to move upwards even just a few cents, that is not the right approach…
This leads me to key patterns, this is something traders should be able to recognize.
It’s important for you to be able to find a stock and identify if it fits your trading strategy.
One of my favorite patterns is the dip-buying pattern, and I am looking for these stocks to have a massive panic in the morning.
I want this stock to panic by 20%, 30%, if not more…
The more the merrier, but this can happen relatively quickly…
A stock that is on a constant downward trend throughout the day does not fit my morning panic strategy…
But that doesn’t mean you won’t be able to dip-buy it, eventually, we have seen this with Cloudweb, Inc. (OTC: CLOW) where I dip-bought intra-day…
But it’s important to understand the patterns you are looking to trade.
Don’t focus on learning multiple trading patterns, focus on one or two to help you become better at spotting the best setups.
Every morning when I am looking for big percent gainers, I look to see if the stock has been a multi-day runner, has more than average volume…
Then decide if it’s volatile enough for me to trade my dip-buying strategy.
Looking for this indicator early in the morning helps me find some of the best possible trading opportunities for that day…
And I will also add them to my watchlist if it’s something I think has potential for another play.
But even if you can follow these steps, there is one important trait all traders should have…
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And even my students agreed with me on that, and this is…
Discipline
I have met several traders who lack discipline…
They are just not willing to swallow their ego and accept a losing trade.
This is so important for traders to realize that when you enter a trade and you plan for it to react a certain wait…
And it doesn’t, there is no point in holding and hoping that it’s going to happen.
You need to accept a losing trade before it could potentially blow up into something much bigger…
Even though I have lost trades, take it from some of my students who have suffered big losses that nearly wiped out their whole trading account.
But it’s not just about accepting losses, it’s also about locking in quick gains.
I have seen traders who made money riding a stock into the close, but they don’t sell any of their position…
And then the stock opens lower based on news, closing lower than where it ended at the close the previous day.
You just missed out on locking in solid gains due to stubbornness and greed.
If you struggle with discipline, I want all of you to practice and learn how to be disciplined in 2023…
Realizing that small gains do add up, as long as you follow my #1 rule!
One Last Thing
If you listen to any of my videos and what my students say, trading doesn’t come as easy as some people think…
It requires dedication, preparation, and discipline, and that is only part of the puzzle!
If you are new to trading, it’s about taking baby steps…
And learning everything you possibly can, when you can!
Don’t try to go full-throttle and pick a hot stock and hope it’s going to double your trading account…
Instead take a small position size on what you may think is a perfect morning panic and dip-buy, and see how it works out…
Then go back and study what worked, and what didn’t work.
Most athletes practice almost daily to prepare for their next game, without any excuses…
So don’t make excuses, and become a trading pro this year!
Cheers,
Tim
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