That leads me to the 5 most common problems I have seen as a retail mentor for 11 years and option teacher for 30 years.  I was a decent option floor trader long before I started teaching so I have a rough idea of what it takes.

Probably a 1000 students have walked through our mentoring courses over the years.  This is what I found.

Here they are

In No Particular Order

We Trade Against Ourselves

Trading psychology is 90% of the game.  If someone’s personality is not suited to trading, buy the SPY, QQQ and IWM every month and forget it.  We are our own worst enemy trading because we make the mistake of thinking our opinions are always right.

No Exit Plan

The exit on any trade should inform how I get into the trade idea.  If the big dollars and good risk reward is not there on a clear path, find another idea.

Use the words Need, Wish, Hope and Want

This is back to trading psychology, if i find myself using these words, I need to get out, reduce or hedge.  Your plan for the trade should be the exit, not the big bowl of Hopium on the desk.  I see the biggest mistake is rolling losses and compounding small losses into giant ones.  

Don’t allocate proper dollars to trade size

Risk Management is #1 trading.  I manage risk per trade, per type and for the portfolio.  I never want 1 trade to wipe out more than 1 other trade.  1%-2% of the account per trade is a good place to start for dollar allocation.  Once a trader learns how to manage a trade, the size can scale in a working strategy.  Dont go over the dollar allocation per trade just because it is losing (see Rule 3)

Ignore Trading History

Many of my individual trading sessions started with traders going over their recent trading history.  How did you do?  What were the biggest losses?  I found most of the time, as in 4 out of 5 times, not letting one bad trade kill all the others and most of my students were on the path to making money.  It might be that a trader does the same bad thing at the same time every time so they learn what that is.

I am sure I can think of 5 more or 500 more but these stick out in my mind as the most obvious.  I set up a Weekly Profit Cycles to manage the psychology of trading as much as possible. It works very well.

To Your Trading Success,

AG