The Biggest Mistake I See New Traders Make Is This...

Posted on by The INO.com Team

They Have No Game Plan!!!

This is an important element in trading and one that should not be brushed to the side. When you have a game plan it allows you to get in and out of the market in a non-emotional way.

So often I see new traders jump into the markets based on emotion, hearsay, and rumor. This is the worst possible way to trade and the quickest way to lose all of your money.

In my humble opinion, nothing is more important than a game plan and sticking with it.

By creating a game plan, you are setting yourself up to be prepared emotionally. No matter what happens to a particular stock or futures market, you have a pre-planned way to enter and exit the market. Having a successful exit strategy is enormously important.

With the kind of volatility that we are seeing in the marketplace today, having a game plan has never been as important as it is right now.

Creating a game plan is very easy and you can do in a matter of minutes. Here are the key steps to creating a very basic game plan:

1) Write down your reasons for buying or selling a particular market.

2) Write down your entry point for the market you're about to trade. Why are you getting in? Did you see a technical set up?

3) Write down when you are going to exit this market. Why and when are you going exit? Was your profit target reached, or were you stopped out?

4) Do not make market decisions during trading hours. It may sound easier said than done, but watching the daily ticks can cause your emotions to go haywire.

5) Review your game plan every day to see if things are going according to your plan. This allows you to adjust your money management stops and your target zones in a non-emotional way.

It couldn't be easier and it's only costs is a sheet of paper and some of your time.

So there you have it ... five easy steps that can both make you money and save you money in the future.

Every success in training and in life,

Adam Hewison
President, INO.com
Co-creator, MarketClub

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24 thoughts on “The Biggest Mistake I See New Traders Make Is This...”

  1. SOME INVESTORS GAME PLANS ARE SIMPLY JUST TRY & STRIKE IT RICH!
    TEHY SHOULD FOLLOW YOUR ARTICLE AND ELIMINATE GREED AS A DECISION MAKER.
    IF THEY FOLLOWED YOUR ARTICLE MANY WOULD NOT HAVE BEEN SLAUGHTERED RE:MRNA
    STILL THE ONES WHO ARE LEFT ARE PURE GAMBLERS, WHILE THE STOCK IS NOW $.26 CENTS.
    A BIG DIFFERENCE FROM $20 DOLLARS.
    AND WITH INCREASING EVIDENCE MONTH AFTER MONTH THEY ARE STILL HOPING, STILL BUYING AND IGNORING ARTICLES LIKE THIS: http://www.genomeweb.com/rnai/mdrna-gets-1m-milestone-it-ekes-value-non-rnai-programs
    A REAL DOSE OF REALITY!

    1. Jimmy,

      Thank you for your feedback.

      We are in a completely new game when it comes to investing. No longer are the old rules good. The age of buy-and-hold is over.

      Adam

  3. One thing I have trouble with are profit targets.
    Should one set sell stops at the target.This would preclude having your profits run but avoid hitting your target and dropping.Could you please comment.
    thanks
    john

    1. John,

      It never hurts to take profits but taking profits too soon is a mistake that many traders make. What I would suggest is that you take maybe half your profits when you have a defined target that has been met and then put a stop on the balance of your position. This will allow you to let your profits run and to protect your capital.

      I hope this answers your question.

      All the best,

      Adam

  4. Hi. What is the simplest way to get started with the scans? I think I can manage the trades, but pick out the good scans in a simple manner seems to be the key for me. I have traded off and on for several years as an end-of-day trader and am burned out at looking at charts. The trade triangles appealed to me, but I am on information overload.

    Thanks.

    1. Jon,

      One of the easiest ways to get started with our scans is to use MarketClub's SmartScan technology. When you combine this with our Trade Triangle technology you have a winning combination in my opinion.

      If you need any help with this call one of our customer relationship specialists at 800-538-7424. They will be only too happy to help you.

      Every success in the future.
      Adam and

  6. You guys are great. I have traded off an on for 10 to 15 years. I have come to the conclusion I want something simple and do not want to think too much about charts anymore, but I do not want my money to sit long term in buy-and-hold accounts,. I cam back to Market Club for the triangles and the ease of the daily, weekly, monthly charts. I was swing trading., looking for pullbacks and then entering.

    What is the simplest way to lookf for new opportunities to trade with the trrend and catch the entry points? I work a day job and it seems on my scans that I am one to several days off to the entry points. Does anyone have a simple suggestion to get started? I have spent hours looking at everything. I pretty much know what to do when I find the setup, but it takes awhile looking at charts to find them.

    Thanks.

    Jon

    1. John,

      Thank you for your feedback. I see you have some good background and history in the market so you know that great opportunities do exist to make money. One of the best way to find trades in my opinion is to use MarketClub's SmartScan technology. This will pinpoint markets that are moving/trending and are ready to move.

      The other strategy would be to pick out a few markets that have historically shown big moves either up or down and track those markets using our "Trade Triangle" technology. This allows you to easily sleep at night when you diversify and to catch big moves when they occur.

      I hope this answers your question.

      All the best,
      Adam

  7. Often times i see what i believe to be a trading channel.
    If i was to set a 'game plan'
    Look to enter/ go long (say) as the price moves pulls back toward a rising support line.
    I will want to enter just before so as not to miss it.
    If there is no other guide such as horizontal or fib - then i would have to guess the angle of decent in order to guage the price at which it will hit the trend line - so this is something i can only do 'live'
    Unless i am missing something?
    And as for setting fixed stops ahead of time aghh - too tight/ too loose?
    If i am doing it live, then i can see the RSI at the time. If the price is moving faster than the RSI then my judgment as to where the support would be (where i would have put a stop) was probably about right and i can let the price overshoot with some confidence it will come back.
    This has proved true several times - but can only be done 'live'
    Alternative is to preplan with a wider stop and lose more if it does get hit.
    Sure i am not the first to admit this method is 'emotional' and requires constant screen staring!!
    Would love to be able to pre plan what the market will do! lol
    ps - am talking about day trading forex - and yes i am a newbee
    Dave

    1. Dave,

      Day trading is perhaps the most difficult of all disciplines in trading. It requires you to be in front of a screen for most of the trading day. While it is possible to make money doing this is highly stressful and the results can be somewhat disappointing.

      As you mentioned it's very emotional to be trading this way. We have said time and time again on this blog the biggest account killer is emotion.

      I would strongly suggest if you are a newbie to look at an alternate gameplan for trading. I believe this will take a great deal of the emotion and stress out of your trading.

      All the best,
      Adam

  8. 4. is the one that gets me.

    But that aside i seem to be having terrible luck. My performance is sub random. My strategy which makes sense and is backtested with proffitable results may generate say 5 buy signals.. I select 3 and then either all of them are losses OR if two are small to moderate losses and one is a big winner I'm locked out of one because my order either dosen't fill or is kicked back from the broker. One guess which order it is that is rejected. These are regular buy stops and sell stops.

    How can it be possible to take so many losses shorting a bear market. it's nuts.

    1. Scott,

      I sense your frustration. The one way to avoid all of this is to be diversified and trade more than one market. This allows you to weather a series of bad signals and not put too much pressure on yourself.

      This of course is easier said than done but it is the right direction to move in.

      All the best,
      Adam

    1. Perrin,

      We still see the major trend in the equity markets as negative. If we take out the recent lows that we have seen we are looking for a move down to the 6,600 area basis the Dow.

      The one variable here is if our trade triangles give us a signal to get out or go long we will follow them.

      All the best,
      Adam

      1. 6600! WOW.. That's very low!

        Do you believe in the Elliott Wave Theory and this is a corrective ABC Pattern? Do you believe that the 6600 will come during this current leg down or during the Wave C down leg?

        If you do believe in Elliott Wave Theory. What's the current Wave count? It looks to be doing one way and that's down!!

  10. This was my biggest mistake. No gameplan, no plan of any sorts at all. I would just trade to try and make up for my losses the day before. Not a good way to trade!

    1. Debtkid,

      Thank you very much for posting your comment and for your honesty. I think most traders have made this mistake. I know I was guilty of this early on in my career.

      Every success with your gameplan.
      Adam

  11. Bayode,

    The number four point is quite clear and that is not to make trading decisions during market hours. You can make all your decisions before the market opens and place those orders with your broker. The important element here is not to make any emotional or irrational decision on a position that you have in the market.

    I hope this answers your question.

    Every success,
    Adam

  12. I can explain #4: When your premarket analysis says the market will likely go down over the course of the day's trading, and the trend of the market for the past week has been for the market to go down, and the market is well above any serious support levels, and after all that the market tries to rally during lunch hours, and you go long because it suddenly looks like a good idea, you lose money.

  14. With no game plan there is no way you can make trading profitable. I need more clarification of the no.3 point.i will be expecting a reply

    1. Bayode,

      Thank you for your feedback. To answer your question on point number three, basically what this means is that when you get into a position you should also have an exit plan. This plan can mean if you are getting out of a profitable trade or a unprofitable. The important point is that you have the peace of mind knowing that you can exit either with a profit or loss and still feel the same way about yourself.

      I hope this addresses your question.

      At

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