Avoid Account Explosions with THESE Tips
Dear Penny Stock Millionaire,
New traders almost always look for ways to improve their trading, but knowing common trading mistakes is just as important.
No trader has a perfect trading record. Not even me. You will make mistakes and you will lose sometimes. But that doesn’t mean you can’t learn from traders who have experience…
And it definitely doesn’t mean you can’t learn from your own slip-ups.
I’ve compiled this list of 10 common trading mistakes that I’ll cover with you over the next two days, so you can learn to avoid them and trade smarter.
Write these trading mistakes down! Take notes! Throughout your trading journey, refer back to them often to make sure you don’t fall back into these traps. Even the most experienced traders can fall into these every once in a while.
#1 Relying on Hot Stock Picks
One of the biggest mistakes most new traders make is thinking they can get rich by following other people’s trades and stock picks.
Too many traders don’t want to study or work hard. Instead, they say things like, “Hey Tim, give me a hot stock pick … just tell me which one to buy.”
Sorry, it doesn’t work that way. You should NEVER blindly follow anyone’s stock picks or trades. There is no harm in reading what other people have to say and recognizing good analysis when you see it, or learning from someone else’s trades, but you need to learn market skills for yourself.
You can’t rely on someone else. The reality is, this industry is full of fakes. So many traders claim to be successful but really have no idea what they’re doing.
Don’t blindly follow others. Instead, learn from traders who have a transparent track record and who can teach you how to develop your own trading strategy.
I teach my followers to be self-sufficient. They learn to adapt to the market and think for themselves. They don’t need to rely on someone else to tell them what to buy and how to trade.
#2 Having the Wrong Mindset
If you got into trading because you think it’s a ticket to get rich quick, or if you only think about the money when you’re in a trade… then you have the wrong mindset.
The ‘get rich quick’ mentality will affect your ability to execute and manage trades — and not in a good way.
When you’re in a trade, you should focus on the reasons you’re in the trade… your thesis, the indicators, managing your entry and exit. Don’t focus on the profits.
If you want to be in this game long term, you need the right mindset. And that mindset isn’t getting rich quick. Your goal should be to hit singles, not home runs.
If you don’t have a trading plan, then you are missing a crucial component to success.
#3 Being Unprepared
Traders who want hot stock picks and ‘home-run’ trades aren’t prepared for the market. They’re not prepared mentally to manage risk and react to the many scenarios that are possible when you’re in a trade.
How to help prepare? Study the past before putting your hard-earned money on the line in any trade.
It takes time and dedication to study, but you must be willing to learn the patterns, practice and refine your strategies over time, and continually adapt to the markets.
It’s a marathon, not a sprint. Take your education seriously so you can be prepared for those awesome setups when they present themselves.
There’s so much free education on the internet, you have no excuse not to study!
Take the time to study up and you’ll be surprised at what you can learn… or ignore me, and lose it all.
I’m gonna be blunt. You’re not unique. I’ve had this EXACT conversation approximately 4,636,323 times. I know EXACTLY how it ends
#4 Using the Wrong Broker
A lot of new traders start with the cheapest broker they can find. They think saving a small amount on commissions will increase their income. But the thing is, using the wrong broker can actually cost you more.
Cheap brokers can screw you over with bad executions, poor service, no tools, or worse…
When it comes to brokers, you need speed. When you want to buy a stock for a specific price, you need quick executions, especially when the stock is moving fast. And if you’re in a trade and need to get out fast, bad executions and lagging data can hang you out to dry.
Make sure you choose the right broker for your strategy. If you short penny stocks, you need a broker that has shares available to short. Brokers usually charge locate fees for you to borrow shares, so be careful and do your research. Make sure there’s still room for profits after all the fees.
Penny stocks can move fast. Use the tools and brokers that can help you keep up.
#5 Trading the Wrong Stocks
Sometimes new traders think they see a pattern on a chart and jump in without considering any other indicators, such as volume, catalysts, and volatility.
If you jump into trades without doing your research, you’re not trading — you’re just gambling. You don’t know if it will go up, down, or sideways.
Worse, you can get stuck in your position or be forced to sell for a much lower price, just to get out! There has to be volume in the stock so you can easily get in and out of your positions.
Learn to focus on the biggest percent gainers for the day, with lots of volume and preferably a catalyst.
The Bottom Line
Most traders blow up their accounts by making these mistakes. It doesn’t always happen in a day or a month, but over the course of a few months or a year…If you ignore my advice, and consistently make these mistakes you’ll be left with nothing but blown up accounts and regrets.
Tomorrow, I’ll pick up where I left off and go over 5 more common trading mistakes that traders make and how you can avoid them to see long term trading success.
Editor, Penny Stock Millionaires