The Daily Ticker Losing 300K in the Stock Market 12-30-22
The Daily Ticker | "I lost $300,000 This Year" 12-30-22
The market zigged when it should have zagged.
What a great way to end 2022. A perfect lesson. Wednesday the #SPY ETF closed near the lows and broke down out of a six day trading range.
All systems go to trade lower. A solid setup and one that has good odds of continuing lower. Until it didn’t.
Frustrating for some. For others, for those with a plan, it simply traded higher. Sure sure I get it, we planned for the market to go lower, and even had some stocks that lined up as short sales.
#AAPL broke below key support from June and appeared ready to drag the market lower, perfectly bearishly summing up 2022.
We even calculated the share size. Bigger positions and hold those trades longer as the market implodes to end the year! And then the market rallied, for the entire day.
So what did we do with our carefully crafted game plan? We adapted. We took small losses. We used our tape reading skills and followed the market.
That’s what long term profitable traders do. We don’t fight the tape. We respect it. But most importantly, we respect risk.
When your perfect plans unfold perfectly wrong, you make new decisions. You don’t fight the market. Losers fight the market. Losers hold losers. Losers add more shares to losing trades.
Sounds harsh? Tough. I’m here to help.
There’s no participation trophies in the markets. There’s progress, positive results or we lose our money. For many, your self managed retirement accounts become dust in the wind and pretty soon your golden years are spent in aisle 12 at Home Depot showing people where to find a new hammer.
The stock market offers wondrous opportuniti-es, as long as you play by the rules. Or better said, as long as you have rules. Rules are the one thing with strong odds of getting the result you want.
Define your edge, your system and test it. Start small. There’s no reason to go big yet.
You need to prove two things:
#1) Does it work? Does something happen more often than not?
#2) If yes, can you follow it? Can you let the edge do its magic?
Next, learn to accept risk. You can’t gain experience if you aren’t in the game. I’m willing to bet that you don’t accept risk. I’ll bet you’re taking a risk.
Sounds the same? Nope. Big difference. And I’ll prove that you’re guilty.
How many times have you moved your stop loss just as you were about to get hit, and taken out of a trade? I’d bet more times than you can imagine.
Moving your stop loss proves that you never accepted the risk. Accept the fact that there was a possibility of loss, and that you were okay with the risk.
Okay with the risk because your edge, more often than not, provides a positive outcome.
Think of it this way, “If I lose $500 on this trade, I’m okay with that. The odds are good, I have the market on my side, and based on the size of my account, that $500 won’t put me out of business.”
So before you place the trade you accept the possibility of loss, and you have a plan to PPC (protect precious capital).
Losing traders take risk. They place trades never expecting a loss. So when the moment of decision arrives, they panic, act emotionally and hold the losers, and sometimes even add to the loser.
This week we spoke to a trader who said the following: “I lost $300,000 in 2022. Because 2021 was easy, and I didn’t think I needed a plan…”
It was heartbreaking, but too common these days. Smart people freeze and get margin calls. It doesn’t need to be that way.
Trading is a business, and you’re a money manager. And a business means expenses. A trading loss is a business expense. Once you accept and act on that concept, it becomes a much easier business to run profitably.
Your next task, should you heed my insights, is learning the next skill – holding your winners longer.
See you in 2023!
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