Hey there, Power Profit Traders!
I’ve been doing this longer than I haven’t, and one of the things I’ve learned over the years is the value of setting trading goals and holding yourself accountable.
That’s why I like to take the start of each year to reflect on the past 12 months of trading – asking myself what I did wrong, what I did right, and what I’ll improve upon in the next year.
Earlier this week, I shared some of my thoughts on this during a Power Profit Trades LIVE session, and today I want to share some of the knowledge I’ve cultivated through my years of regular introspection and plenty of trading mistakes.
I’ve boiled it down to 7 Keys to Successful Trading, and it’s something I want you to bookmark and revisit along the way in 2022.
Let’s begin…
- 1. Think about your time frame.
The worst thing you can do is try to go from 0 to 100 in record speed.
That means, if you’ve never traded a stock before, don’t jump head-first into the fast-paced world of day trading. That’s like going from never having a sip of alcohol to chugging moonshine.
You have to work your way there.
Novices should begin with longer-term trades, and as you gain experience and knowledge, THEN start dabbling into intermediate- and ultimately shorter-term trades.
If you’re an options novice, begin by buying monthly or even quarterly contracts, and ease your way into weekly contracts.
Moving on to No. 2…
7 Keys to Successful Trading in 2022
Nothing is a guarantee in trading, even with some of the best patterns and strategies out there, like what I use with my Money Calendar. That’s why you should.
- 2. Ask yourself, “What if I’m wrong?“
Always have a back-up plan!
Even the strongest case for a trade can be blown to smithereens.
That’s why it’s important to know the risks of every trade you enter, and have an exit plan and stops in place in case you’re wrong, to minimize the damage.
Losses are inevitable in trading – it’s how you bounce back that matters.
Just like you’ll have winning streaks, there will also be times you have what I call a “clumping” of losses, when not much seems to be going your way.
Watch me talk losses at the 53:30 marker
True winners continue with the same mindset – “that’s part of the business” – even after a string of losses. They dust themselves off and keep coming back.
After all, you could be wrong seven out of eight times, which can be demoralizing, BUT if you’re averaging huge profits on that one win and come out ahead…
Just remember that successful traders are more interested in making money in the end, not just being right.
- 4. Keep your charts simple.
If your chart looks like a Rorschach test, it’s way too busy.
There are thousands of indicators out there, and while many of them work, others can negatively impact your decision making.
Personally, I like to look at Fibonacci retracement levels and various Channels to determine my buy and sell points.
I also closely follow implied volatility (IV) trends, which tell me whether I should be an options buyer (when IV is low) or seller (when IV is high).
In fact, today’s Power Profit Trades Watchlist is once again brought to you by the Expensive IV report from the Morning Report tool inside the TG Suite app.
We broke this indicator down in yesterday’s newsletter, when I discussed which FAANG stocks are value plays, and which ones have expensive options.
The rumor mill doesn’t just exist within families or the workplace – it runs rampant on Wall Street, too.
Just keep in mind that by the time you find out about a “hot tip,” the stock move is most likely over.
- 6. If you’re winning, trade more; if you’re losing, trade less.
This one is pretty self-explanatory, but in a nutshell, if you’re trading hot, pump up the volume and keep working until it doesn’t work.
On the other hand, if you’re on a losing streak, dial down the trade volume for a bit and revisit Tip No. 3.
And if it continues, take a more macro look at your trading strategy and review your trade journal to see where you could improve.
And finally…
- 7. Become a jack of all trades, master of two.
Too many cooks in the kitchen is never good, and the same philosophy can be applied to the patterns and indicators you trade around.
When you find a couple that work – like my Money Calendar or cryptocurrency strategies do for me – really try to master them.
And the best way to master something is to GET EDUCATED and find an excellent trading mentor who has been in the game a while and had success, whether that’s me, Kenny Glick, Mark Sebastian, Chris Johnson, Olivia Voz, or someone else with Street cred.
That’s all for now, Power Profit Traders!
Keep in mind that U.S. markets are closed on Monday for MLK Day, but I’ll be back at 11:30 a.m. ET on Tuesday for another LIVE Power Profit Trades hour!
Have a great weekend,
Tom Gentile
America’s #1 Pattern Trader
