5 Signs You Are Trading the Markets Like a Loser

I’ve been a loser many times in my trading career. Sometimes I come to that realization after merely stepping outside my office for some fresh air and returning just five minutes later. Other times in my career, I have had the official “aha” moment where newly discovered trading habits negate months worth of practice. 

I’ve composed a simple checklist in case you’re not sure if you might be a loser. Remember, it’s okay to be a loser in certain aspects that make up your trading persona. Work on an evaluation process that allows you to adjust to the ever changing markets.

1.      Every trade you make is based on a guru. Before you think of me as a hypocrite, recall that I do run a live trading room; but unlike some, my focus is actually on the education and mastery of day trading. When you follow a guru, human nature tends to make us want to engineer trades by creating our own trading methods based on someone else’s picks. Overtime, this becomes a failing method. Subsequently, more emphasis should be placed on personal stock analysis.

2.      You could be over trading. The current market is giving about two to three strong trends per day, so opportunities have been limited lately. Ask yourself if the quantity of trades per day matches your trade style. Are your targets viable to the number of trades you are making?

3.      Are your positions too correlated?  Depending on how many positions you have at once, you are either net long or short. What is the correlation to the market of your holdings? Do you know ways to measure correlation? If not, you might be a loser.

4.      Do you have better odds playing Black Jack? If you are in trading for the thrill, it will be next to impossible to create a career out of trading. If you receive an emotional high when entering the trade, it’s a good sign to take a step back and evaluate the reasons you are trading. You might be just as well off hitting the tables. At least you would get free alcohol.

5.      You think in terms of absolutes. You can always have a good confidence level based on the familiarity of a trade. However,  the reality is to attempt and think in rational terms and dismiss all or nothing thinking. Trading decisions should entail ideas of expectancy and of probability. Saying things such as, “I know this stock is going back to ten dollars,” or “this stock will double by the end of the month,” are for losers.