January 3, 2021

Source: Charles Schwab

Hello all!

Let me preface this by saying I wrote this on the options sub first because that' s what I enjoy trading, but a lot of what I talk about applied to stocks/shares as well.

 

First off, Happy New Year! It' s now 2021! This means there are a lot of people that are wanting to start fresh with new goals, resolutions and getting into new hobbies or interests. If you want to start 2021 with the goal of being financially responsible, want to see if trading in the stock market is your thing, or if you' ve been doing it and you' re just trying to find your way around this crazy mess, then read on!

 

1. DON' T WASTE YOUR MONEY ON A MENTOR

- Be cautious of who you' re learning from or where you' re putting your trust and money. There are many people that charge outrageous amounts of money to teach you things that you can learn on your own for free. They glamorize this rich lifestyle that they supposedly built from trading or promise you an accelerated path to profit, and now they want to help you do the same. Think about it, if these people were so successful, then why do they need to shove their courses down your throat? I, and a lot of other people, are almost entirely self-taught through reading books, websites and watching YouTube videos. I believe myself to be a self-sufficient trader now. At least for my personal goals, trading style, and expectations. You can learn on your own too, for free 99.

 

2. " I NEVER LOSE. I EITHER WIN, OR I LEARN"

- This journey you' re about to start...It' s hard. It really is. You' re going to encounter many obstacles and experience many pitfalls. You' re also going to learn many hard lessons along the way regarding patience, mistakes, risk, and discipline to name a few. You' re going to lose money. You' re going to feel defeated. You' re going to feel like giving up. It' s natural. It' s human-nature. We' ve all gone through it. Wanting to give up and quit is especially the case when you lose your hard-earned money. Don' t lose hope or give up. Ask anyone how much they lost or how long it took them before they started making money consistently. If they say $0 or not even a few months, they' re lying out of their ass. If you win, great! If you lose, learn why you lost. Dig deeper into the reasons and circumstances that led to it. Arguably, you should be tracking your wins and logging that info as well so you can replicate it. I blew up my account twice (about $3500 total) and recovered it all twice (shit gets old quick btw). First from fomo' ing call options on NIO' s very first run up when I didn' t know about implied volatility (IV) and yolo' ing calls on Rocket' s very first earnings because I didn' t know that even if expectations are beat, the price direction is still 50/50. Did I feel like quitting? Of course! However, each time I lost big like that I dug into the why' s and how' s. Coincidentally, if you look at my post history, my very first post (and the most upvoted one) was teaching people how to play NIO' s earnings the smarter/safer way. LOL.

 

3. TRADE WITH FAKE MONEY FIRST (OR DON' T)

- There' s this thing called paper trading where you can try investing/trading without using your hard-earned money. Take advantage of it! I personally didn' t and I somewhat regret it. I say somewhat because I believe I would' ve lost a lot less money than I did while learning. However, the stakes are much higher and I believe it forced me to learn faster. Losing your real money is a whole lot different than losing " fake" money and affects you much differently. Use that information how you want to.

 

4. PLAN YOUR TRADE, TRADE YOUR PLAN

- This goes a long way. Whenever you' re looking at a play. Have a plan to enter, have a plan for the duration you' re in the trade, and have a plan to get out of it. Having a plan keeps you consistent. Consistency is the name of the game here. Can you ultimately make money more than you lose it? Having a plan also keeps you out of trouble. For example, one of the biggest pitfalls of trading is trading emotionally. It' s almost like when poker players or video gamers " tilt" . They get nervous, mad, frustrated, scared, pressured, etc and it interferes with their decision-making and thought process. Having a simple plan and following basic rules like not using money you need for bills, or putting all of your money in one trade drastically reduces the risk of getting emotional.

 

5. SET GOALS. REALISTIC ONES

- Just like having a plan, setting goals goes a long way. This also helps with staying consistent and building confidence. I have a few friends whose goal is 5-10% of profit each day. Once they make that goal, they' re done for the day. Doesn' t matter if they cut out too early and it keeps running. They' ve reached their goal and are fine with that. They do it all over again the next day.

 

6. FIND YOUR IDEAL TRADING STYLE

- Day/Scalp traders, swing traders, momentum traders, breakout traders, the list goes on. Each type of trader has their own little nuances and things to pay attention to. For example, a swing trader doesn' t really care about intraday price movements as opposed to how much a day trader cares. Or a technical trader doesn' t really care about the fundamentals of the company they' re trading as opposed to a fundamental trader. Find what style suits your personality and/or what style fits your level of commitment. For example, day trading requires monitoring the market or price action which isn' t suitable for someone who works a 9-5 job with meetings all day.

 

7. WELCOME TO THE RABBITHOLE!

- Trading requires a certain level of dedication, discipline, and effort to get good at. Do people over in the wallstreetbets sub win money with minimal effort? Yes, they do. But not all the time and is mostly based on luck, thus that " strategy" isn' t sustainable. Learn as much as you can from as many (reputable) sources as possible. Try out what they' re teaching, tweak it, fine tune it to how you trade. Even though you' ve been trading forever and might think you know something, someone else comes along that can do what you do a million times better, faster, and more efficiently. My main point is never stop learning. #StayLearningStayEarning is the motto of my YT channel because although I learned enough to be a self-sufficient trader, I' m still open-minded and make an effort to learn as much as I can. I don' t know everything, I' m not perfect, but I definitely want to be better than I was yesterday.

 

8. WHAT GOES UP (ESPECIALLY IN A VERY SHORT TIME), MUST COME DOWN

- Don' t get caught in the hype of a certain ticker, especially penny stocks. When people ask me what I think about x company and I look at the chart and see green candles for days going vertical or almost vertical, I tell them it' s not worth my time and I personally don' t want to trade it. Can you still trade things that run up crazy like that? Of course you can! I' ve stayed in trades that got me over 100% in profit, but stayed in it because it showed me it wasn' t done running yet. However, that' s a discussion for another day. But since you' re a beginner, I' d strongly advise against it until you, at the very least, start to feel comfortable.

 

That' s all I can think of at the moment, but I' m sure that' s enough to give you a good foundation. If you have any questions or need help with something, feel free to message or comment. If you did check my post history for that NIO post I referenced back in #2, you' ll find that I' m very open to helping. I love helping people with what I know. If you have anything to add to the list that I forgot, by all means, comment them down below to help our new brothers and sisters.

Wishing you all a very healthy, happy, and profitable 2021!

-Davin