The Number One Skill That Made 2020 My Most Profitable Year Trading Stocks
It’s so simple that you’ll laugh as much as you’ll seethe with anger for not realizing sooner.
It’s Easier To Explain Than Put A Single Name To It
I don't know what inspired me to write this short article right now. I mean, it has been tumbling around in my head for quite some time now, but I never worked up the nerve to write it. Until now.
I started trading a while back now, (not nearly so long as others, but enough to know my way), and learned a great many useful skills. I also learned many more that turned out to be less than helpful, some even hindering me. It took me a while to finally realize that the basic indicators and candlestick patterns that I first learned were more than sufficient to trade profitably.
Fibonacci Retracements, ADX Index, and Commodity Channels…
On and on I can go naming them. I’m not suggesting that they are bullshit, rather I suggest they are merely uncessessary.
In my opinion, it’s much better to have fewer distractions on the chart. I like to watch what the humans sitting behind their computers, and the Funds on Wall Street are doing when I look at a particular Stock or Option I intend to trade.
Support and Resistance give me, (along with the RSI indicator, of course), all the entry and exit signals I need for my short-term trading. Of course, I am simplifying this to a great extent and not going into detail about the times where I won’t listen to what I’m seeing.
False signals are the treachery of far too many new investors.
That’s not why you clicked on this article though. I said it would be short and to the point.
So I’ll cut the shit and for once deliver what I promised without layering it in so much other crap, you damn near have to read all of my articles to finally learn what the skill was.
The Number One Reason I Either Make Money Or Lose It When Trading
This will sound so simple that you’ll laugh. This will be so simple, that you’ll very likely get angry and exit this article promptly, never to read my work again.
I felt, feel the exact same when I read another writer’s work, preaching what I’m about to throw at you. A searing heat would work its way into my bones as I considered how much of a fool the author of those few words could possibly think me.
The cold hard fact is that in the morning, at about 6:25 am, right before the market opens, your heart rate begins to rise slightly. Excitement, no matter how small and faint is igniting inside you.
6:28 am
You know what stock(s), you are going to trade, at what price you’ll enter,, and where you will have the stop loss set in stone. Your plan is laid out like a map carved into stone within your mind. You spent all night working on it, finding the previous days’ high, low, all the important support & resistance levels for the past 6 months. Perhaps even the whole year.
Scoured the internet for any and all news or signs of strength and weakness. You know this little company better than most on this fine Monday morning.
6:29 am….6:30 am: Ding ding ding ding dign….
All too often the plan seems to not work out right away. You haven’t bought into the stock just yet. Something doesn’t seem right, even though the price is right about where you thought it would be. But…
Yahoo Finance is blaring along with some other channel in the background. Push notifications of weakness in the banking sector this morning as most of the big banks are falling.
“So much for buying that Bank of America Call Option.”
You notice another sector is on fire today though. The EV market is killing it, all the stocks up double digits already since the pre-market session, the lowest among them up 15%.
You abandon Bank of America for NIO a Call Option. An extremely overpriced number sitting under both the Bid and Ask buttons. Relative Volume is good on it, but you haven't a clue where all the important support and resistance levels are, let alone all the important levels for the year. How can you know where it’s at in this trend?
You’ve done no research on this NIO stock…. But it’s up 20% now from 15%. Bank of America did not do as expected, although it’s not quite at your stop loss, you are certain it would have triggered it anyway, wasting a precious Day Trade…
You Know The Drill
NIO plummets and you barely make it out with half your starting capital, Bank of America made a miraculous comeback, (along with the rest of the Big Banks), and just to hit it home harder the stock’s price is exactly where the yellow square you drew out on the chart the night before is.
It happened just like you thought it would. Played out perfectly in fact. Shoot, with that drop this morning you could have afforded two more Option's contracts with how much the Bid and Ask spread widened because of the morning panic.
Your stop loss would never have been triggered, and even if it were your losses would have been smaller than what they are.
Follow The Plan, No Matter What
It’s really as simple as that. Trust your gut, but follow the plan you made. Even if it doesn’t work out I can promise you this. It feels a lot better to loos money while executing your plan than it does when you abandon your plan, buy some half-assed stock you know next to nothing about, and loos three times as much.
All those carefully planned stop losses to stem the bleeding to your account funds if the trade went against you. Entry and exit points. Historical data and endless news articles sifted through for the past 3 days. Patiently waiting for days until the price came back down t support.
Once it hit, (and hit perfectly it did), you’d buy and wait to see if the price broke that all-important resistance level that Bank of America hadn’t been able to breach since all the way back in 2010. Everything was so perfect, nothing could go wrong!
Until panic set in and made you buy an electric vehicle company you knew dog shit about.
By you I mean myself btw…
Short, simple, and true. Down to the diasterous trades you just heard of, I speak the truth. This was my experience from before that I’ve been trying not to forget this time. Oh, trust me, even though it happens and you vow to never let it again, it does.
So this past year I focused on simplicity. Support & Resistance. Maybe an indicator here and there. I’d look for the patterns in the candles of course, and follow the news and gauge the public constantly.
But above all, no matter what. Come hell or high water I was following every plan I made this year to the pit of doom if that’s where it looked like we were heading. Never again would I abandon all that hard work and effort because of people who didn’t do their homework panicking in the morning, while others spring their carefully laid traps. They’ve been planning all week. All month.
Never forget
The Stock market isn’t some safe and guarded saintly institution, free from greed and corruption because it’s under the protection of the United States of America. The world's greatest and most fair Democracy. Of course, they would never let people behave like that with the stock market, manipulation prices, and the Hedge Funds trading insider knowledge, working hand in hand with the Financial Media Stations.
What is the stock market then?
The Stock Market is as much a game as is any Casino in Las Vegas. If you have a plan, filled with carefully thought-out maneuvers, well positioned chips, and all of it is fitting perfectly into place… Then you’re playing the game exactly like it’s supposed to be played, and your damned good at it. Stop doubting yourself and let the dice fall as they may. This is Chess, not Checkers!
