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12 Aug

Stay Up: Avoid These 3 Trading Mistakes


Stock futures are pointing to a lower open this morning. As it appears that last week’s surge in market volatility is here to stay, at least for another day.

It’s easy to make mistakes when stocks are moving all over the place–reacting to headlines and tweets.

This morning, I’m going to cover three errors that I’m seeing traders make in this market, and offer my advice on how to overcome them.

Here they are:

Problem 1: Overtrading

Do you plan your trade and trade your plan?

Overt trading is when you jump in and out of too many trades, many of which weren’t even planned for.

What are some reasons why we might overtrade?

  • We keep losing, so we continue to trade in hopes of getting that money back
  • We don’t have a clearly defined edge, so we assume that more trading equals more opportunities
  • We blindly follow others, and don’t take ownership for our decisions
  • We try to force an outcome that isn’t there
  • We are not patient, and want fast results right away

The Fix:

  • Write down what your edge trades are. For example, here are my edge trades for my Jason Bond Picks service. And focus on those setups exclusively. My Jason Bond Picks service focuses on 3 highly profitable setups, which you can learn more about here 
  • Review your trades. If you review your trades one by one and identify the reasons why you got in them, then analyze your plan and execution. Eliminate the trades that don’t make sense after review
  • If you have a real problem, then give yourself a hard number. For example, “today I’m going to limit myself to 3 trades and will only take this setup if it comes”
  • Take a break. Overtrading can often be attributed to going on “tilt” or some other form of frustration

Problem 2: Not taking your trades

Instead of overtrading, some traders become too scared to put on “their” trades.

The perfect setup arises, but they are too afraid to pull the trigger.

Here are some of the main reasons why this happens to traders:

  • Maybe they’ve experienced a series of losses
  • Having doubts about the strategy
  • Lost in something else and are scared to lose more
  • Lack of confidence in overall trading

The Fix:

Two weeks ago I took a bath on some of my Weekly Windfalls trades. They were slightly bullish positions that turned south after all the tweets and headlines on trade talks hit the tape. It wiped out several hard days of hard work.

However, I had tested the strategy out. And I knew, from time to time, that would encounter drawbacks. But I also knew that in order to win with my Weekly Windfalls strategy, I must play the numbers.

For example, if I lose a trade or two, the numbers tell me I will be right on the next 8-9. If you had numbers backing that up, would you be scared to lose or take the next trade?

I wasn’t… and that’s how I managed to have one of my best trading performances of the year– last week.

(New Weekly Windfall Alerts are coming later today and throughout the week. Not a member? Join Now)

A great shooter like Klay Thompson of the Warriors won’t stop shooting if he misses his first couple of shots.

And that’s how you should be too with your trading when you know that you are trading with an edge. If you need to get your confidence back up, then try going back in with a smaller position size to get started.

Problem 3: Not Making Adjustments

If stocks are moving more than they usually do, then you have to make adjustments. It’s that simple.

For example, if a stock typically moves in a $1 range, and now it’s moving in a $2 range– then you have to either make adjustments to your position sizing or where you set your stop– to adjust for the volatility.

And since it’s a news-driven market, consider taking profits earlier because they can reverse off a tweet or breaking news story.

One of the mistakes that I made a few weeks ago was not being balanced with my options portfolio. I should have had a combo of long and short bias positions. Instead, I was too long on bias, and that ended up costing me.

However, I made the adjustment the following week, and proceeded to have my best trading week of the year, despite all the market madness.

I’m on pace to have my best year ever as a trader, as I’m now up $424K year-to-date. I’ve been able to get here by making adjustments, asking questions, learning, and surrounding myself with traders better than me.

Now, whether you’re trading momentum stocks or options, there will be plenty of opportunities this week, so stay patient, and be ready to get after it guys and gals.

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1 Comment

  1. Hennie

    Thanks guys I m not trading yet but your info and article are very informative. I hope to start trading soon.


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