I just looked at my trading journal from the last couple of months of trading mostly penny stocks and specifically the losses. I’m definitely in the 90% camp (90% of all traders lose money in the stock market) at this point. It was a bit discouraging until I looked at my losses and made one change.
I changed all my losses bigger than $200 to only $200. That turned things around giving me nearly a 50% profit on my starting investment pool of $5,000. Of course I can’t go back to change anything, BUT, this emphasizes probably the most valuable lesson I think any trader can learn.
TAKE LOSSES QUICKLY
Gotta cut them short and head into each trade knowing how much you’re willing to lose. I got bit hard by SEED not following this advice that has been pounded into my head over and over by Timothy Sykes among others. In fact, with SEED, I was actually in the red before that turned around, I got squeezed big time and lost $3,000 before I finally pulled the plug and called the Time Of Death on my trade.
Tomorrow as I start a new chapter in my trading life, I’m working to no lose more than $200 on any trade. If that was the only thing I changed, in theory, I would be a profitable trader joining the ranks of the small slice of traders that actually make money trading on a consistent basis.