5 Beginner Mistakes to Avoid

[Music] what's up everyone ross here from warrior trading in today's episode i'm going to walk you through the five most common mistakes i see beginner traders making we're gonna go through them right here if you are a beginner trader i am sharing this with you because as you probably already know so many beginner traders coming to this market they lose money and they leave frustrated disappointed and out of pocket right in the negative my hope is that by sharing with you some of these really common beginner mistakes you can avoid them in your own trading the first on the list is so many beginner traders approach trading with a gambling mentality this was epitomized during the gamestop era where we had obviously traders bragging on reddit and and social media et cetera about buying you know basically placing a bet of 100 or 200 on these crazy out of the money options contracts that 99.9 of the time expire worthless much like a lottery ticket but in this case they struck gold and these were home run trades i mean beyond just home runs you know these were trades that did make some people very very wealthy but that was a once really in a lifetime event as far as i'm concerned i've never seen another stock with an options chain do something like that even stocks that have made big moves weren't even close to that and since then how many of those traders who struck it big on those lottery ticket trades how many of them do you think have given back everything they made trying to roll it into the next trade the next trade the next trade gambling is not a recipe for success in the stock market so this brings me right to item number two mistake number two trading without a plan so many beginner traders whether they come in with a gambling mentality or not they come into the market without a plan and they start trading with the real money with no plan and so essentially you could almost say it's gambling they may not realize it's gambling but if you're just shooting in the dark you're just guessing throwing darts at a wall you're leaving it entirely up to chance and of course a game of chance would be gambling so and i think that many traders don't realize this they think that they're they're sort of approaching this in maybe a logical way they're focusing on one or two stocks but they really don't have a set out plan of how they're going to approach trading and a plan and i'll put a link at the end of this video to sort of walking you through one of my trading plans aka strategy it involves the type of stocks you're going to trade the time of day you trade the amount of risk you take per trade how many trades you take per day all of this comes together into a cohesive plan now the only way to know whether or not a plan is actually profitable is with a track record so i'm going to just go ahead and jump ahead to number five here the biggest mistake that i see traders make i mean these are the top five but one of the big ones is trading with real money without first having a proven track record so you know i'll put it to you another way how would you feel if uh you were getting on a you know a flight and a pilot said hey guys this is my first time ever being in the cockpit cockpit i'm gonna try to uh you know get this plane into the air and let's see what happens all right buckle up here we go because so many traders when they just try to hit the ground running they jump in with real money with no track record with no plan they're really leaving it all to sort of hope and chance and and i think that the the part in this that's that's really a problem is that we know so many traders lose money and so if you want to be one of the few traders who is consistently profitable you really have to do things differently from how just about everyone else out there is doing it right let's be honest most of the people out there the way they're doing it is wrong it's backwards so it's maybe because they're coming in with a gambling mentality they're throwing real money on the line really haphazardly with no plan and i say haphazardly because it's just this throwing a little bit on this maybe i'll hold it for a few days throw in a little bit over here maybe i'll hold that for a few days i got in this trade it went up i'm gonna sell the whole thing for a quick profit but then they've got these other trades that they've been holding for weeks that keep going down well i it's my retirement account i can keep holding what and it's just there's no plan around it it's very haphazard and that again you can't find consistency in that type of approach and even if you found some profit you wouldn't be able to replicate it because there's not a set rule of how you did it so in some ways creating a trading strategy might not be too much different from perhaps trying to bake a a cake or something if you don't keep very detailed records in your process then when you finally get the cake that's fantastic you won't be able to look back to recreate it and so by having a strategy a set of rules that you follow every single day the results that you get each day are based on these rules and so if the results you're getting aren't good then you have to go back and either adjust the rules or you have to keep practicing gain more experience because there is the skill and experience component unlike i don't want to say baking doesn't require skill and experience but but perhaps unlike baking where it fairly first maybe a simple recipe the cookies or something you just sort of follow these 10 steps and you're going to pretty much get there that's not exactly the case with trading as many of you know you can implement a plan i could give you a plan for instance but then your own choices of how you manage risk your own intuition of do you take this trade or that trade you're then going to have naturally varying results so now let's look at um number three so we talked about gambling we talked about trading without a plan we talked about trading without track record and now let's talk about emotional hijack this is a really big one and one of the things that everyone i'm not going to say that i've never been emotionally hijacked while i'm trading emotional hijack is an expression that we use in in the trading world and it essentially means for instance you know you started the day and on your first trade you end up with a loss that's like five times your daily max loss it just happened instantly maybe it was a mistake a hot key error maybe it was just the luck of the draw and rather than follow your rules and say i'm done perhaps because you don't have rules or perhaps you have them and you just say you know what screw it i have nothing left to lose i'm going crazy today and next thing you know you start snowballing you start buying this sell this buy sell buy sell buy sell and you get into this tunnel vision frenzy where in a period of an hour two hours three hours you can blow up your whole account and that's emotional hijack so experienced traders we're not without emotion i feel emotions when i trade sometimes i feel very frustrated and you know upset disappointed i feel all those emotions but one of the things that you learn as an experienced and seasoned trader is when you start to see these triggers or these red flags these caution flags coming up in the way you're feeling emotionally whether it's your pulse your adrenaline you start to develop this self-awareness that i'm no longer in a good place to keep trading i can't think off the top of my head of another area in life where this might be particularly important to be able to have a very very close um awareness of sort of yourself and your emotional condition because with trading it can have a profound effect on your performance if you are not in like the right headspace the right mindset in a matter of minutes you could you could lose tens of thousands 100 you could lose millions of dollars if your account was large enough and you had the leverage so this is a really important one as a beginner trader you you need to start to learn the the signs learn to recognize the signs of becoming emotionally hijacked so when you start to see them coming up you can close the computer and get away before you do any damage you'll you'll have mistakes but the goal is that you learn to kind of cut your cut yourself off at the pass before it becomes this train wreck all right now um number four and this will be the fifth uh mistake we've talked about is chasing gains and i think this you know these tie in in a lot of different ways but chasing gains the this sort of mentality of constantly chasing what's moving i this is important because i want to differentiate chasing gains with some people who would say as a momentum trader buying anything up 50 or 100 percent is chasing because buying something high and selling it higher can be certainly part of a valid strategy if you have a plan and a track record to support it but simply chasing that to me um reflects this emotionally impulsive i'm thinking of the dog chasing a chipmunk it's it's almost it's just like this instinctual impulsive you don't even know where it comes from you just it's happening this just chasing and when you start chasing gains you're thinking only about the gains and what happens when you buy these stocks that are crazy crazy high without a plan is you press that buy button that was easy and next thing you know all of a sudden it rolls over flips down you know it halts going down or something like that and now the the risk and reality of the trade is setting in and you'll realize after the fact that you're risking this much maybe to make only this much and of course that's not going to be sustainable so and that can be in the form of chasing stocks that are meme stocks that are really popular on social media you know now oh would you say sorry i had a i had some questions from the peanut gallery so um one of the um you know with gamestop in these meme stocks there could be a tendency to to chase it and the fact is i did very well on gamestop of course my results are not typical and i don't want you to think that there's any guarantee you'll have results similar to me but i did well on it and i was trading it and i probably did the best on it when it was between like a hundred and three hundred dollars a share so it was certainly very high from where it had started but that was all part of my strategy but i think that chasing mentality whether you're chasing because people are posting things on social media or you're getting email text alerts to buy buy you know buy alerts sell alerts things like that you have to be really careful it's it's certainly valid to see what other people are trading to hear that someone else has bought something whether it's me or any of the millions of other traders out there but you also have to with a grain of salt take all that information and then with your own strategy make the decision of is this a setup that is valid for me is this a setup that falls within my plan and then if it is then that's great you know other people brought it to your attention that's totally fine but if it's not you have to have the emotional composure and the discipline to say no so i would say probably one of the biggest um traits that beginner traders don't realize they need to be a successful trader is discipline and this is something that um i suppose in some way is a bit of a natural aptitude some people are naturally more disciplined than others right and so people who are naturally disciplined whether it comes from their upbringing or other careers they've had they're going to probably do better than someone who has very very little discipline and constantly gives in to emotional impulses and so people that are on the gambling spectrum this is a very emotionally impulsive side and that's very it can be very hard to untrain those impulses it's not impossible by any means but it's difficult and so it's important to know when you're coming into the market you know what kind of attributes and what kind of um just natural skills are you coming in with and if you're not coming in necessarily with the you know fullest deck of cards or whatever the case is then you may have to take some steps in your trading to try to mitigate um your shortcomings and and try to mitigate the risk that could come along with being more emotionally impulsive for instance so i i would say in summary the five beginner mistakes that i see most frequently number one gambling mentality number two trading with no plan of course gambling and no plan are pretty much hand in hand but trading with no plan and not necessarily thought of as gambling number three trading while emotionally hijacked uh we all can get emotionally hijacked from time to time but being able to recognize we're in that state and choose not to trade that's sort of the best level you can get to as a trader number four falling into the habit of chasing stocks chasing gains thinking about the p l and when you're thinking about the p l just the number you're not necessarily thinking about the pattern because as a technical trader we're thinking about patterns first candle to make a new high abcd pattern a scalp at the half dollar the whole dollar so i'm happy to trade any of these patterns but at the end of the day what i would really like is to be able to print out every single one of my trades and say yeah that based on that candlestick chart that was a good trade the money came separate the money was sort of a a product of the good trade if you focus on just the money then you can end up buying very very high risk stocks that don't have a good setup and then when it goes wrong the damage can be really significant and then number five trading without a track record i i don't wanna underestimate um or i don't wanna you can't understate um how important it is to practice in a simulator before putting real money on the line i know that there is valid uh there is a valid argument that maybe it's better just to trade with real money from the beginning but with like one share two shares or ten shares especially with a commission free broker because what you're doing during that period is you're training yourself not only on learning patterns and level two tape reading things like that but you're also beginning the process of emotionally conditioning yourself to experience gains and losses so that's valid but what a lot of traders do when they're trading with no track record is they're trading with like you know the share size that someone might trade with if they've been doing this for uh five years and they're doing it with no track record with no trading plan and they maybe allow themselves to trade while emotionally hijacked chasing gains that all basically comes back to gambling behavior whether or not they realize it they may realize it eventually and so my hope is that if you're watching this right now any of that falls you know into a way that describes you to take a really good look in the mirror and say all right if i want to make this happen the ticket and i'm going to be real with you is discipline how badly do you want this if you want it badly enough you will get disciplined it's as simple as that get disciplined that means disciplined and following strategies testing strategies and not trading with real size like big size until you have a track record that supports putting real money on the line i hope this episode has been super helpful i'll put a link to a couple more right here and right here and i'll see you back here for the morning show right here on youtube thanks for tuning

Channel: Ross Cameron - Warrior Trading

Views: 25,689

Keywords: Ross Cameron, Wall St, beginner trading strategies, brokers, candles, day trade warrior, day trading, day trading strategies, finance, float, how to day trade, how to trade, momentum day trading, pdt rule, penny stocks, profits, relentless trader, shares, stock market for beginners, stock trading, stocks, trading, trading strategies, volume, warrior trading

Id: ne75GMwzGD4

Length: 15min 37sec (937 seconds)

Published: Wed Oct 05 2022