Expecting a miracle?? It probably will not happen. This is intended to help traders get out of a losing position by trading, not as an excuse to ignore stop losses. Ignoring stops is the surest way in the world to take all the money in your account and just flush it down the toilet. I am serious. While that might help you in the short run eventually there is a 100% chance you will have a massive loss, like 50% or more on your money lost that is invested in the trade if you don’t use a stop. In addition, you will accumulate a portfolio of losing positions and have no more money to trade with. Every huge loss starts with the trader refusing to take a small loss – often times as a result of taking a loss or a stopout and then watching the stock turn in their favor. So the thinking is “They are not gonna get me this time”.  This is how traders learn to trade with bad habits.

The first thing to realize, there are 4 reasons losses that can happen when you are in a day trading or swing trading.

1. Timing is off on the entry
2. The direction you think the stock will move is just wrong
3. News items come out and move stock or index against you
4. Your price target to exit is too far away

We will address these one by one.

1. Timing is off on the entry

If your timing is off on the entry (the most common), usually that means the stock will go a little for you, then move against you within the first 5-10 minutes. The amount the price moves against you will be way more than any profit so far, but it does not go to the stop area either. This can be identified by the price hesitating and moving up and down, just below your price for long or just above for short. It should not make a beeline against you and it should not go right near your stop in the first few minutes.

The best way to deal with this type of trade is to assume most of the time you trade you are going to be off. Enter long or short only one half to two-thirds the actual size you want in a position where you think the timing is right. To make sure this never happens, do not use market orders. Place a limit slightly below the current market quote, most of the time you will have no trouble getting filled. Obviously you need to be aware of the trade type – if it’s a breakout and you don’t think you will get filled if you don’t use market, then for sure just go in. Most trades you enter will not immediately run in your favor, including breakouts. Once you receive a fill back, make sure you place an initial stop loss for that position. Wait 5 minutes and see what the stock does. If it moves in your favor immediately, that means you r timing was spot on and you just trade with what you have as a position.

Most of the time the best deal is to stick with day trading what you have. If the stock moves against you more than for you in the first 5 minutes, but is not a beeline against you (meaning it looks like the trade will stop out etc), then put in an order to add at the low of this 5 minutes (for long) or the high (for shorts). In addition, if you are aggressive, put in another add order (press bets) above the high for longs, or below the low for shorts. IF you don’t get your better price add, usually this press bets add when its going for you will work out. If the price moves so that you can add at a better price, then make sure you cancel the press bets add shares. If you get filled on your additional shares, you can move your stop down slightly but increase to include all shares OR just place a separate stop on teh add. If you get the press bets add, move your initial stop up to just below that low of the 5 minutes, and make sure you increase the shares.

2. The direction you think the stock will move is just wrong

This often happens to even the most seasoned traders. You try a breakout that fails, you try to catch a turn at the bottom of a downtrend, you think a stock will follow another stock with bad news down … the common element is you are dead wrong. This type of trade is easily identifiable from the start, within a few minutes it has already moved further against you than you expected to make if you were right from the start. By this I mean the upside is severely limited (for longs) or downside limited (for shorts). This means it can move easily one direction, but really, really struggles in the direction you bet.

Usually if you see this happening, the only chance you have is to try to double down near your stop. You basically would risk another 15-20c on double size that it would bounce before you get stopped out, or sell down before you stop on shorts. If you want to attempt this, care must be taken to use discipline. Do not try to force making money on the trade. The goal is to minimize the loss by trying to catch a turn near your stop area. If you can cut the loss in half or even get to even, get out. Just move on to the next trade.

If you doubled down and actually caught the turn, you would want to move the stop up on all to just below the turn. When the price moves halfway back from your secondary add position to the price of your first entry, sell the additional shares so you are left with only your original position. On the additional shares you want to keep you stop to just below that entry. The thinking here is you possibly washed out the side that was causing it to go so far against you, so give the rest a shot. Because you made a bunch back with the added shares, if you get stopped you will lose less than if you did not do that. It is your call to decide if that is the best thing or to just exit all of the position with a minor loss and move on.

3. News items come out and move stock or index against you

This is arguably a tough situation. You have to be able to analyze the news very quickly AND decide the impact. The judgment is would this news cause the stock to go far enough to stop me out? If the answer is probably yes, exiting at market before the stop will save you money. If you think that the news that came out will not stop your position, then the best plan is to exit on a small counter move the other way. Most of the time there is no good way to add shares to trade out of a news play where you get caught. Occasionally the price might react in way A, but after a bit of time that side realizes they are wrong, and they flip around and want out, moving the market in direction B. If you can uncover and notice that this will probably happen, the add point is the high of the bar where the news came out. Most of the time that will run any stops and trap traders playing the news as a quick trade, forcing them out.

4. Your price target to exit is too far away

This is common to. You have to kind of guess based on how the stock has been trading, localized volatility, and support resistance points where a price move might go to. I can be commong for a trader to think a stock will move to point A, but it cannot even push to half of A. Usually these types if you don’t monitor them real close will turn into losing trades. The main reason is a scale up seller (for long bets) or scale down buyer (for short bets) is betting the other direction and absorbing a lot of the volume.

Most chart setups will attract trader attention and the more obvious a trade looks but does not work or really struggles, the bigger th indication is to get out immediately. This can result in a huge move the other way, as traders are trapped on the wrong side. There is no real method to add to work your way out of it, you really just need to pay attention. If the stock appears weak (meaning it should be going up but its not) and you think you should exit – usually this is the right thing to do. Your gut is telling you something, the stock is not trading just right for the trade setup. Getting out is the best solution because you are looking to avoid your stop getting hit and saving a bigger loss. Also realize if you exit early, and then see it was a mistake, you can always get back in with a click of the button.

One last word – do not fall into the trap of trying to make money on every trade. If you sense something is off or wrong and you are at a loss, take the loss and move on. Sticking around and trying to always make money will actually result in bigger losses eventually. When a trade is really going poorly, usually you will be offered one chance to get out – it is up to you to capitalize on it and take it.

trade profits

 

On the top of my list is a tip which I consider to be more important than any other – never consider trading to be the same as investing, and never get caught up in any of the traps of this sort of concept. Develop a winning trading psychology.

 

When many people learn to trade associate trading with investing is because they tend to initially discover trading through the stock market.

 

Of course, as with investing, trading also requires that you put your money at risk in order to receive good returns but simply following this course of action doesn’t mean you’re investing.

 

Rather than compare trading with investing, one should pay attention to the similarities between trading and gambling such as:

 

• Wagers are always being placed

• As with gambling, the pace is always fast

• The action never stops

• Chance or probability always plays a part in the outcome

• Just as gamblers have to deal with uncertainties such as the cards and dice, traders are faced with political or market related uncertainties

• There are high risk trades just as there are high risk games

• Emotions can have a severe impact on the outcome

• Traders want to conquer the markets while gamblers want to beat the house

• The majority of people loose most of their money

 

Can’t see how trading can be compared to wagering?

 

Do you remember a movie called “Trading Places” which starred Eddie Murphy? Anyway, he was recruited by two commodity brokerage owners and when they explained to him how the markets work, Eddie’s response was “You’re bookies”.

 

Of course when Eddie starts giving sound trading advice, it’s not because he knows anything about trading, but rather because he understands how betting works. Providing you’re willing to see that trading is betting, you’ll be in the right frame of mind to start trading.

 

So, you’re actually getting into a betting game rather than some high yielding investment because each time you buy or sell, you’re actually placing a bet as to how the markets will behave.

 

One of the primary differences between gambling and trading lie with the fact that you’re stuck with a bad bet if you make one but with trading, you can usually get out of a bad trade simply by making another trade. Irrespective of how absurd a wager might be, you’ll nearly always find someone who is willing to take a chance, especially those who are new to the game.

 

Of course, as some markets experience greater activity than others, there’s always a possibility that you may not find a gullible trader to take your bet.

 

Being able to keep your head screwed on properly is by far the most challenging aspect of trading, rather than placing trades.

 

Unfortunately the real nature of trading tends to be over-shadowed by all the accompanying hype. The fact is though, trading is betting!

 

Let’s face it, not many people would instantly give up their regular jobs in exchange for earning a living with gambling, and this is what really amazes me, because there are so many people out there with zero trading experience, but who think they can earn a great living through trading. The truth however is, they’ll be sorely disappointed.

 

Just as you get professional gamblers, you get professional traders, and just as you get those who thing they are gamblers, you get those who think they are traders.

 

The definition of gambling as shown in various dictionaries:

 

I. To expose oneself to hazard (risk)

II. To engage in reckless or hazardous behavior

III. An act or undertaking of uncertain outcome

 

Let’s see how these dictionaries define “calculated”

 

I. Determined by mathematical calculation!

II. Undertaken after careful estimation of the likely outcome!

III. Made to accomplish a certain purpose; deliberate!

 

Finally, let’s see what these dictionaries say about the word “risk”:

 

I. The possibility of suffering harm or loss; danger.

II. A course of action involving uncertain danger.

III. The variability of returns from an investment.

IV. The chance of nonpayment of a debt.

 

Real traders always aim to be ahead when they reach the end of the month and this can only be achieved if they stick to their rules and to their systems. Of course they take risks but they take calculated risks and believe me, the keep a close eye on those risks as well.

 

The truth of the matter is, gamblers gamble while traders take calculated risks. They know the markets and they have their own system in place which they follow. Most importantly, they realize the importance of being well prepared.

 

For the most part gamblers tend to fail, both in the gambling arena as well as in the trading arena. The inevitably get caught up in all the excitement and as a result they fail to play be the rules. They act on impulse rather than base decisions on calculated risks.

 

My final tip is that you behave like a trader in that your top priority is to earn consistent trading profits. Don’t be tempted to take uncalculated risks simply for the thrill of doing so.

 

 

 

Google ‘Technical Analysis’ on the web and you will be inundated with what’s available, but after much investigation I un-earthed Top Dog Trading.

On starting my foray into trading Share markets, I realised that fundamental analysis was out of the question, but interpreting share charts was what I preferred.

What helped my decision to take the Top Dog Trading course to learn Share trading?…. A variety of things besides the desire to improve my trading and stop entering too many loosing positions; was that I had a good feel for what Dr Barry Burns was saying on his website and most of the training is supported by the detailed videos which makes it much simpler to get your head around. A further qualifier was Barry’s CV; it is what I wished to see, a business man who treats trading as a business, he is also a accomplished speaker and writer.

So I subscribed to his free 5 video course on learning to trade to see if I felt good about his analysis systems.

Before this, I had studied several other courses on technical analysis relating to Forex trading but even after all of these felt there were gaps in my knowledge that would allow me to be successful, all this changed once I came across Dr Barry Burns, now I am comfortable with the share trading strategies I have learnt.

With Barry’s courses I have not only fully comprehended how to execute his methods but also developed a far deeper comprehension of the Share market & the charts and probably more importantly the money management and personal philosophies that are so intrinsic to becoming a profitable Share trader.

In his courses Barry explains the analysis rules simply and clearly, then gives real chart examples with all their erratic moves showing how to turn the rules into profitable trades. This is all explained via a huge selection of videos.

Barry teaches methods, which when stuck to, provide a good ratio of winning trades with tight control on the losses, so when one does a trade that goes against you (which all traders do) the financial pain is not too severe.

Barry’s courses are the best Share trading courses that I have come across and I would strongly suggest that you give his FREE course a try. This tutorial has 5 videos that introduce you to some of the most powerful trading material I’ve ever seen.

I personally took the course, loved it, and learned a lot from it and have progressed to Barry’s more in-depth courses. My wish to learn Share trading has turned out to be very profitable.

Try Barry’s Free Course for yourself: