Practical tips for dealing with expenses
by Jenny Taylor
Do you get discouraged when you take an expense on a trade? Here are a few tips to remember to keep your spirits merry and help turn some of those trades around!
1) Learn from expenses.
Contrary to all of our hopes and desires, we won’t make money on every trade we get into. It’s okay to take an expense. Every successful business has them! If we look at it as an expense to our business and use it as a learning tool rather than treating it like coal in our stockings, we’ll be better, more successful traders.
2) When you take an expense, ask yourself these questions:
Did I break a rule? If so, which one? Did I have a bad buy point? Did I get greedy?
Go through and critique each trade. Make lists of the rules you have broken and don’t break them again.
Top Gun students, guess what? You can send your trades into the NVOWS Certified Coaches and they will analyze them for you! This is an incredible way to benefit from your past trades.
3) Remember if you take an expense, it may not be because you did anything wrong!
Guess what? Sometimes the trade doesn’t go your way, and you did everything right!
The market may not move the way you think it should even though the technicals and market tone indicate that it will. Maybe the market does do what you thought, but your stock doesn’t follow its pattern and you have to stop out. This happens on occasion. However, you did not make a bad trade because you followed the rules, you based your decisions on the knowledge that you have gained, and you got out when you should have. That’s okay! Yes, it’s sad. But then you get to just brush it off, get back in the game and remember that you have the skill sets to gain it all back—and more!
4) Stay positive.
My greatest secret to being a successful stock trader is having a positive attitude about my trading, even when it seems like every trade isn’t going my way. Trust me, if you let yourself get negative and beat yourself up, you may very well quit. Remember what you have learned and believe in the 3-Legged Trading Table: fundamentals, technicals, and market tone. Follow the system. If you do that, the statistical math will be on your side!
These are the things that I held close to me when I first started trading several years ago. Out of my first 7 trades, I only made money on ONE of them. Then out of the next 3, I made money on 2. So my first 10 trades I went 3 out of 10 and I still had a slight profit! I minimized my expenses and maximized my profits and still had a small profit after only profiting on 3 out of 10 trades. Now, I broke every rule under the sun, responded to fear, forgot to check earnings, etc. So I really should have done much better, but I was putting into practice the knowledge that I had gained. I was learning and applying the knowledge and gaining my practical experience; that takes time and patience (and a positive attitude).
One of the most helpful things you can do is follow the rule of using practice money when you are learning a new strategy. With practice trades, make sure you only use an amount of money that you would be okay with losing—after all, it is practice! For some this may be $200, for others it may be $2,000. This allows you to learn while using small amounts of money, so that when you make a mistake and break the rules (which you probably will at some point) the expenses won’t hurt nearly as much! You are in the mindset of practicing, so use the time to really focus on following the rules, analyzing your trades, etc.
Remember: you can do it! Even if you start off like me having only 3 out of 10 go the way you want! Stay positive, keep trading, work hard and learn from your mistakes. Doing this paid off for me and it can for you too! Keep your head up, and your heart merry, and have fun trading!