The Dumbest Great Day Trading Advice I’ve Ever Heard

Years ago when I was learning to trade and jumping from chat room to chat room trying to make some money in this trading game, I met a guy in one particular chat room who was friendly and helpful. We used to private message each other about the calls in the room, who to follow, who not to follow etc.

I’ll never forget one day he private messaged me an epiphany he had. I’m paraphrasing here, but this is basically what he wrote. ‘Hey, I finally figured this game out. The key is, NOT TO LOSE’! While he was very excited about his new found strategy, I remember thinking to myself, that is the dumbest thing I’ve ever heard! Back in junior high school the proper response would have been DUH!

Fast forward to now. The guy was 100% right. That really is the key to trading success. You have to stop losing money. If you treat the market like a slot machine, and you think you’re going to have to lose a whole bunch of times before you hit the big jackpot, you will never make it.

You don’t have to lose a bunch of times. You shouldn’t lose a bunch of times. Each loss means the next winner will have to cover that loss and hopefully be enough to put you ‘net green’ on the day. The farther you get in the hole, the more you start to gamble with bigger size and non-existent set ups to try and get back to even. Once you’re in that state of mind you are extremely vulnerable to sliding into that trading abyss know as the infamous trading death spiral.

So how do you avoid this? Listen to my buddy. The key is not to lose. Now we all know you can’t trade without losses. However, we can sit in cash unless and until we have an A+ set up. We can take that A+ set up right at the correct point where it should work immediately after our entry (I call these inflection points). We can pay ourselves on part of the trade very quickly if it moves like we thought it would. We can tighten the stop on the rest once we have put some money in our pockets so we are left with what I call ‘free shares’. We can kill the trade for a tiny loss if it doesn’t do what we thought within 1 or 2 minutes. This will be a situation where we do lose, but the loss will be negligible and we are on to stalking the next one.

Trading is hard. It’s the hardest thing I’ve ever done. Following the advice in the previous paragraph will greatly shorten your learning curve. Master those steps and your trading will be forever more consistent. If you don’t know what stocks to watch, or how to find those inflection points, we are happy to help. We teach that in our chat room and our trading course.

Remember, anyone can have a big winning trade. If you’re gambling in the markets without a process, and you’re not consistently profitable (consistent profitabilty is the true measure of a professional day trader), remember these words.

The key is not to lose.