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Biggesttradingmistakes

Trading After The Presidential ElectionThe aftermath of the election The presidential election is over, so it is safe to start trading again? First of all, as of writing this, we actually don’t know yet who has won the Presidential Election. As of this morning, Biden leads Trump in the Electoral College 264–214, and we are waiting for an update to see who won Nevada. If Biden wins Nevada, this will give him 270 electoral votes exactly enough to win the presidency. The Trump campaign has also filed lawsuits against the states of Pennsylvania, Michigan, Nevada, and Georgia as the race to 270 looks to be nearing its end. As of now, it is still a close race. We won’t have any updates until later today, as Nevada basically said yesterday: “You know what, we’ll keep counting, but stop bothering us, we’ll let you know tomorrow around noon. Until then we will not publish any more results.” we will see what is happening there soon. Looking back to last week, the markets were a little bit worried about a so-called “blue wave.” This means the Democrats would control both the House of Representatives, and The Senate. What it comes down to is, how is power being distributed? As of right now, it seems that the Senate COULD remain Republican. However, we’re not quite sure yet. It is very close, but it doesn’t seem that we have this “blue wave” that the markets were fearing. As for The House of Representatives, it seems that it likely to remain Democratic. So we still don’t know for sure who will control The House, The Senate, or win the Presidency. It’s still a close race. There’s still a lot of “would of, could of” and speculation as far as what will happen if Trump stays in office, or if Biden takes over. How is the election affecting the markets & traders? Yesterday morning, the day after the election, the markets were rallying big before pulling back a little bit. The DJI was up more than 900 points as it continued to shoot up that morning, before pulling back before the close. The S&P 500 was up 2.37% and its the same picture here, jumping up before retracing The NASDAQ was the leader of that day towards the close. Up 4.2% and as high as 5% earlier in the day. What is causing this? As I mentioned, looking at the election results so far, there doesn’t seem to be a “blue wave” coming. This means that there is a division of the powers and not everything in the hand of one party. This is what traders and the markets are looking for right now. A division of the powers could mean fewer regulations on ‘Big Tech’. This is why yesterday, the day after the election we saw big jumps in companies AAPL , AMZN , GOOG , etc. AMZN was up 6% near the close. AAPL was up over 5% and finished up over 4%. NFLX closed up almost 2%, FB closed up almost 8%, and GOOG and MSFT both closed up almost 6%. This is why The NASDAQ was leading the way higher, when before it was lagging behind The S&P 500 and The DJI . News from the election that is affecting the markets In California, voters pushed for Prop. 22. This will allow UBER and LYFT to keep classifying their drivers as independent contractors instead of employees. This was a big win for both companies resulting in both companies being up almost 12% and 13%. Another thing on trader’s minds is the stimulus deal (or lack of one). Recently, Senate majority leader Mitch McConnell said that a stimulus package should be passed by the end of the year. This is what market participants were waiting for, as new cases for the Coronavirus continue to rise. We are up to almost 95,000 new cases of Covid-19 a day, and Dr. Fauci has said that we are positioned really badly as we head into Flu season. It’s important to keep in mind that uncertainty could creep back into the markets as the Trump Campaign is calling for lawsuits, and as new Covid-19 cases continue to rise. Is it safe to trade after the presidential election? The key question is, “How do we trade this?” Before the election, I said that we should all sit on our hands. For those of you trading The Wheel Strategy, we had an opportunity, on election day, to close out a TQQQ 100 put that I sold. This is the ONLY position that I had going into the election. I sold this put last Thursday and I was able to buy it back on election day, for a nice profit of about $250, after only being in the position for 5 days. Now, the next morning when I saw the markets were up, I thought that after the initial excitement we would fill the gap. After we saw that we might not have any results from the election for a few days I thought we would hover where we opened at around $133 or maybe lower. Instead, we went higher so here’s what I did. I sold a call with a strike price of 148. I sold this call for $2.45 which means I took in another $245 in premium. My break-even price on this trade was around $132. At one point I was down $3,000 but I just kept selling more premium according to the rules of The Wheel Strategy. Overall I’ve realized $2,300 by selling premium. If I would have closed out the trade right then, I would have closed it with a profit, but I didn’t plan to do that just yet. Should TQQQ keep dropping, I will be able to buy back the call that I sold against my shares. If my shares are “called away” I would lose $200 of the premium I earned, but would still be up over $2000 on this trade. I checked this position yesterday and it started the day up $1,400, and this is the only position I am in. For now, I am not taking making any other trades. I may start trading again later this week, but for now, I’m just going to sit on my hands. The markets are still rather flat, trending sideways, as market participants are waiting for the final results of the election to come in. Trading After The Presidential Election Summary Whether you like what’s happening with the election so far, or whether you will like the final results of the election or not, as traders it is our jobs to react to this and make the best out of it by adjusting our trading strategies. With still a lot of uncertainty looming, I recommend sitting back and waiting to take any new positions until the air clears. There is a saying among sailors: “You can’t change the wind, but you can adjust your sails.”
TVC:NDQ
by rockwelltrading
Should You Be Trading Forex?In this article I’ll show you the pros and the cons of trading Forex so that you can decide whether Forex trading is for you. What Are The Pros of Trading For ex? The fascinating world of Forex. You see, it’s super easy to find the pros because there’s no shortage of ‘Forex Gurus’ out there telling you they’re the greatest thing ever! So let’s cover some of the pros of the Forex markets. 1. It’s open 24 hours Well, the first one that everybody tells you is that it is open round the clock. So it’s not like trading stocks where you have regular trading hours and then a few extended hours. No, it means that you can trade it 24 hours a day through the business week. It is the market that never sleeps. Now, we are trading from 5:00 p.m. on Sunday until 4:00 p.m. on Friday and these are Eastern times. But as you can see, it is open all the time. And this is intriguing to many people because they have still a daytime job and then they want to trade at night or in the evening or early morning. And this is one first pros you hear often about the Forex market. 2. “It’s the most liquid market in the world” There is another pro, this is where people say, “It is the most liquid market in the world.” What do they mean by this? It means there’s a lot of volume going on. I found that the average trading volume in the Forex market is around five trillion dollars every day. Now, in comparison, the New York Stock Exchange is making around 160 to 200 billion dollars. It’s peanuts compared to what’s happening in the Forex market. So this is why the Forex brokers tell you, “Why wouldn’t you participate in the most popular market in the world,” right? The most liquid market in the world. And if you’ve ever been caught in a trade that you couldn’t get out of, you understand what a plus it is to have a very liquid market. 3. No commissions What is another advantage here of trading Forex? Well, you have absolutely no commissions. These days, as you know, commissions have gone away for trading stocks. They are still there when you’re trading options and when you are trading futures. So, of course, it is super attractive when Forex trading says that there is no commissions, why wouldn’t you do this? When most people start trading, they’re trading for growth typically due to their account size (or lack thereof). Because of this, doing anything you can to preserve capital (i.e. no commission) can be very appealing. 4. Free tools Brokers are telling you, “We give you free charts and tools.” You get calculators, you get charting software, you get everything for free. Now, again, in 2020, right now, this is pretty much the standard. Most brokerages for stocks and options are also giving you free charts, watchlists, scanners, etc. But if you think a couple of years back, this is when brokers were still charging for everything from the data feed to additional features. Anyhow, with Forex trading, it was always free and it will always be free. Sounds good thus far, right? 5. You can start with as little as $10 So let’s talk about the fifth advantage here. You can actually start with as little as $10. Can you believe it? Most brokers ask you to fund your account with at least $500 or $1,000, and if you want to trade stocks and options, it makes sense to start with around $2,000 to $5,000, right? Here you can start with only $10. I Googled “Best Forex Brokers 2020” and I found the minimum deposits for these brokers are $100, $10, $0, $200, $100 — super easy to fund, and you’re getting a leverage of 500 to 1. What does this mean? It means that if you put $100 in there, you’re getting $50,000 buying power. I mean, amazing, right? What Are The Cons of Trading Forex? So it seems that just looking at this, there are so many pros why would you not trade Forex? Well, let’s talk about the cons here. 1. Foreign exchange First, let’s clarify what “Forex” actually means: Foreign Exchange So you would think, like the New York Stock Exchange or the CBOE, the Chicago Board of Options, that there is an exchange, right? Here is the deal, and this is the kicker. Most people don’t know this, but there is no foreign ‘exchange’. So how are you trading them? Well, this is the deal… 2. You’re trading against the house You are not trading against other traders. You are trading against the broker. Yep, that’s it. You are trading against the broker, and the broker is trading against you because there is no foreign exchange. Now, this is why here in the United States, Forex trading has almost been banned. 3. They are not trusted by the CFTC There’s this commission we have here in the U.S. called the CFTC, short for the Commodities Futures Trading Commissions. It’s a government institution, and they actually warn and protect us against Foreign Exchange Currency Fraud. On the CFTC’s own website, they have an article titled “Beware of Foreign Currency Trading Frauds,” and here is a highlight from the article: “Often, the investor’s money is never actually placed in the market through a legitimate dealer, but simply diverted–stolen–for the personal benefit of the con artists.” So let’s go back here. It’s the most liquid market in the world. However, again, there is no foreign exchange, right? There are no commissions, no fees, but these Forex brokers, they actually sponsor race cars according to a press release from McLaren.com. They’re also sponsoring RoboMarkets, which is another Forex broker. You might say, “So what? They’re sponsoring a few cars, who are watching Formula One anyhow?” Well, keep this in mind, sponsors are sponsoring Formula One with 30 billion dollars. You may also be thinking, “Well, big deal. I mean, here in the US we have football, right?” I mean, we have 32 teams in the league. However, the NFL sponsorship is only 1.5 billion. This must be why Forex brokers are not sponsoring the NFL. I mean, who watches NFL right? Kidding, but you get the idea. So they are sponsoring race cars, which is 30 billion, 20 times as much as the NFL. How They Make Money? So you might be wondering if there are no commissions if there are free charts and tools if everything is free how do they make money? How how can they sponsor a billion-dollar industry? 1. They steal money from you Well, we just talked about it. What did the CFTC say? They steal money from you. You are trading against the broker and it’s like playing against the house. In Vegas, when you’re playing against the house, who wins? The house always wins. 2. It’s addicting It’s also open 24 hours a day, just like Las Vegas. I mean, why would they close Las Vegas? Same with the Forex market, it’s because it is a billion-dollar money-making machine. You have to be very careful, especially when it is open 24 hours, it can lead to addiction. Same as Vegas here, because, hey, let’s just pull on the slot machine one more time. It’s the most liquid market in the world, but it doesn’t matter because you’re not trading against other traders. Even if there are millions and billions of traders in there, you’re trading against the house. 3. They trick you with free incentives and low buy-in There are no commissions, of course, but why would they charge you commissions when they steal your money? I mean, we have just seen it according to the CFTC. These are not my words, it’s their words, and they are an official government’s institution. They offer free charts and tools but the same idea here. Why charge you for these when they just steal your money. You see in Forex, you can start with as little as $10-$100, as I mentioned earlier. However, with stocks and options, as I said, I recommend that you have $2,000 to $5,000 here. So this is where we compare it again to Las Vegas. In Las Vegas there are 164,000 slot machines, right? You know, the slot machines where you only pay $0.25 to get started here? On the other hand, you have 600 poker tables. Why? At the poker table, your minimum buy-in is anywhere between $30 and $100. So you get the idea, right? I mean, this is why Forex is like a slot machine. And this is why they keep the entry-level low because they even let you fund an account with your credit card. Summary I promised you, first of all, that this will be eye-opening. Should you be trading Forex? Well, keep in mind, you are trading against the house. There are a few brokers that let you trade against other traders, but most brokers out there are taking the other side of your trade. They are providing you the quote. This is why they give you free quotes and free tools. Remember, there is no foreign exchange. Keep this in mind. So the key questions here are… Can You Make Money Trading Forex? Maybe. There are some traders who are really, really, really good, but the odds are against you. There’s people who come back from Las Vegas and they make money every single time they go to Vegas, but think about the majority. What happens to the majority of people when they go to Vegas? They lose money, right? So what should you do? Should You Trade Forex? Well, here’s my advice. If you want to trade, I would say trade stocks and options, and here’s why: You are trading against the house. I cannot say this often enough, but I hope that I can do this until it sinks in, until you realize that when trading Forex, you’re trading against the house. Let me know in the comments if you have some experience with Forex brokers, or if you have opened an account and what happened. Did you make money or did you lose money? I hope that this is helpful and tells you a little bit behind the scenes of what is happening in the Forex market. It is the biggest market in the world, a five trillion market, compared to the U.S. stock market worth 200 billion.
by rockwelltrading
2
The 5 Biggest Trading MistakesSo let’s talk about the five biggest trading mistakes that cause traders to lose money. And one of them is the account killer that I’m saving for last. When you are trading, you need to have a trading strategy. You already know this, this is nothing new. The 3 Key Elements To Every Trading Strategy There are three key elements to every single trading strategy. What to trade First of all, a trading strategy tells you what to trade, right? I mean, what stock or what options should you trade? What expiration? What strike price? So this is very important. And as you know, I’m using my software PowerX Optimizer to find the best stocks and options to trade. When to enter Number two, a trading strategy, whatever trading strategy it is, has to tell you exactly when to enter. When exactly should you buy or sell an instrument? Whether it is a stock or an option, it doesn’t really matter. When to exit Now, element number three is when to exit. Super important here and when we talk about exiting, there’s two ways to exit, right? So we can either exit with a profit and if this happens, then yay, this is good, right? Or losses are part of our business as a trader. So sometimes we have to exit with a loss. And of course, nobody likes it, but it’s part of trading. So the key here is that you have to keep your losses small, right? Anyhow, this is just a brief recap. These are the three major elements that every good trading strategy needs. So let’s talk about the five biggest trading mistakes, especially considering that these are the things. Trading Mistake #5 Trading mistake number five is trading the wrong stock or option. What do I mean by this? Trading the wrong stock or option means that you picked a stock and it is just diddling around while everything is taking off, right? It happens. And this is where often I see that many traders are picking stocks based on news, right? They hear, for example, “Tesla is making new all time highs.” “Amazon is making new all time highs.” Netflix, or Nio, the Tesla of China, right? And then they’re jumping in and realize, “Oh, this is not going anywhere,” or it is going down. So trading mistake number five, trading the wrong stock or option. Trading Mistake #4 The next trading mistake is entering too early. Has this ever happened to you that you were kind of right about the stock, but you entered way too early? Let me give you a very specific example. Because right now, as we are still in this pandemic, the airlines have been one of the industries hit the hardest. So you might say at this point, “Yeah, you know what? This is a good point to enter because airlines will go up again. People will travel again.” Right? And so you might enter there or you might actually say, “Oh, this didn’t work. Let’s enter here as there at $10.” Then they do in fact move up and you think, “Yay, I timed right.” But then it’s again coming down. Has this ever happened to you that you entered a trade way too early before you should have happened it? Now, especially if you are a PowerX Optimizer user, you know that with PowerX Optimizer and the PowerX Strategy you need to wait until it goes above a certain level. Has it ever happened to you that you jumped into a trade before it actually went to the level? Probably, yes. Trading Mistake #3 Let’s talk about trading mistake number three, and this is entering too late. Let’s use Netflix for example. When do most people enter Netflix? Traders like you and I, we are way smarter, right? But many are entering it when it says, oh, it’s going through a key level, like $500. And they say, “Oh, my gosh. Netflix is going above $500. I need to buy it right now.” And what happens after it went through a key level? It comes down again. Also, often when stocks make a new all time high, this is when many traders are getting interested in this. Might not happen to you, but, hey, based on what I see of why people are losing money, is because they’re entering too late after a move has already taken place. Trading Mistake #2 Let’s talk about trading mistake number two. And again, all of this is connected to your trading strategy, because when you have a trading strategy, you have just these three major elements here. So another trading mistake is taking profits too early. Has this ever happened to you that you got out of a trade too early? That you saw some profits and you were so excited, “Oh, my gosh, it was moving up.” And you took the money off the table and realized, “Oh, my gosh, I did it way too early!” and the stock just keeps going higher and higher and you would have made so much more money if you had stayed in. Let me just ask you, do any of these four trading mistakes resonate with you thus far? Just let me know in the comments if you made any of these four trading mistakes and then I’m going to tell you the number one mistake. The Trading Account Killer This here, this mistake is the trading account killer. What is it? What is the number one trading mistake that kills accounts? It’s not getting out of losing trades. Here’s the deal. This is why it is so important. You’ve got to know that this is what will kill your account. Can the other mistakes kill your account? Let’s talk about the other trading mistakes. Trading the wrong stock What happens when you’re trading the wrong stock? This could be a technical error. For example, I wanted to enter AAL and I accidentally typed in ALL. So it could be technical, or you just made a wrong choice, you traded the wrong stock. But that is not killing your account. When you realize you made a technical mistake, you get out of this as quickly as possible. Entering too early Now entering too early. Does this kill your account? No. All that happens is that you’re missing out on some of the profits because you’re getting into a stock that is not yet moving. I like to trade according to the PowerX Strategy. I want to wait until I see that the stock made a move and then I’m jumping in while the move gets momentum. So this is why the PowerX strategy is called momentum trading. But anyhow, does this entering too early kill an account? No, it does not. Entering too late Now entering too late. This is a problem because this is where if you are entering close to the top, you might enter right before a stock turns around. Now, here’s the good news. As you know, when we’re talking about a trading strategy here, when to exit, I like to work with profit targets. So I know exactly when I’m taking profits before I even enter a trade. And in order to keep my losses small I work with stop losses. And a stop loss, I set at 2% of my account. So I never risk more than 2% of my account on any given trade. This means that if I have a $10,000 account, I would risk $200. If I had a $20,000 account, I would risk $400, making sense? OK. So as you can see, if you are entering too late and you see, “Oh my gosh, the stock turns around,” you just get out of here. Taking profits too early Now taking profits too early, can this shred your account into pieces? No, because keep this in mind, nobody ever got broke taking profits. Why is not getting out of losing trades the #1 trading mistake? Think about it. Has this ever happened to you? It happened to me in the beginning of my trading career. In the beginning of my trading career I was trading bonds and I was bullish on bonds. I was convinced that they were just going up forever. And they didn’t, they came back and I just had an opinion. I just thought, you know what? No, these bonds will keep going up. Have you ever had a stock like this where you entered, and after you entered, it approaches your stop loss, but as it approaches your stop loss, you take the stop loss out of the market and then it keeps going down. And the $200 loss turns into a $300, $400 loss, and then into a $1,000 loss, then a $2,000 loss. So what should have been a stop loss turns into a larger loss. This is what I’ve seen over and over that is killing accounts. Accounts are not getting killed because you’re trading the wrong stock or because you’re entering too early or too late. Accounts are not getting shredded into pieces because you are taking profits too early. But if you hold onto a losing trade for too long, this is the number one account killer. That is for sure, so keep this in mind. Trading mistakes will happen There are trading mistakes that will happen. These are the big five. Of course, there’s more trading mistakes. You could, for example, go long when you intended to go short, or accidentally buy 1,000 shares when you only wanted to buy 100 shares. It’s also possible to accidentally buy 10 options when you only wanted to buy one. Keep this in mind, this will help you, when you make a mistake, liquidate. What does this mean? As soon as you realize that you made a mistake don’t hope that the market turns around, don’t hope that it gets better. Get out of this. Even if you get out of this with a small loss, right? This is how your account stays alive. And yes, losses are part of our business. As a trader, you will experience losses. The key is really here to keep your losses small. Recently traders have experienced more losses than usual because the markets have just been whipsawing, they’ve been going around. And one of the biggest mistakes that you could make is saying, “I don’t want to exit the trade because I don’t want to have another losing trade.” Trust me on this one, if you don’t take a loss when it is small, you will have to take a loss when it is bigger. Yes, of course, every now and then you might get lucky and the stock turns around. But let me ask you, when you held onto a losing trade for too long, did it turn into a winning trade? Sometimes it does, more often than this, it does not. Summary So these are the five mistakes. And the number one thing that I want you to take from this is: Get out of a losing trade when you see that your stop loss is hit. Have a stop loss, keep your losses small, and cut your losses short. This way you stay alive and then can benefit from the large move that will happen in the market. I hope that you enjoyed this article. If you did, do me a favor and leave a comment below or share it with anyone who might need to hear this, who might have experienced a larger loss.
NYSE:AAEducation
by rockwelltrading
20