So you are few weeks into your day trading career
and you’ve probably watched your trading account going through a violent
roller coaster ride. Rest assure I was in the same shoes as you when I first started.
And let me tell you, my roller coaster went straight down
without a bounce, like a penny stock pump and dump.
[Humbled Trader INTRO]
Yes, it was a struggle the first year I started as a complete beginner.
Now I’ve been trading for over 7 years as a full time day trader,
I can finally reflect on every single mistake I made in the book.
Iin this video, we’ll be talking about the three deadly day trading mistakes beginners make,
especially in this current market environment. If that sounds good to you,
you want to stick around for all the bad jokes. Make sure to hit the like button and subscribe.
Mistake #1. Believing stocks can only go up. Or how we call it in recent months… to the moon.
I think a new phenomenon we’ve been seeing since late 2020 and early 2021.
In fact, I think all of this started in March of 2020. It was in the middle
of a pandemic. Investors were selling their stocks; the market went down 30%.
Then comes the biggest pump we’ve ever seen in the stock market. No, I’m not talking
about the stock CEI, I'm talking about the FED chairman Jerome Powell’s non-stop money printer.
With all the new money supply in the form of stimulus checks in the US,
and we have similar thing in Canada called CERB,
everyone and their mom and dad started throwing money in to the stock market.
We saw GameStop going from double digits to close to $500,
followed by AMC from $4 to $70. And we see the same surge in prices in other asset classes like
dogecoin, Shiba inu, and of course the granddaddy of all things flying to the moon. Bitcoin.
Seeing all of these insane gains naturally created a lot of FOMO in the market,
you have media coverage hyping these moves up, and with more publicity
draws even more retail traders and investors to the market.
If you had only started following the market in 2021,
you likely don’t know what a pullback in prices really means.
Sure, the S&P 500 had dipped from Sep to Oct of this year but come on, on a weekly chart
that was nothing. You can barely even see any red. Do you see it?
This is great that so many traders are making money buying stocks on the way up.
But the current market paints a false narrative,
that stocks only GO up, and they never truly pull back or come crashing down.
For beginner day traders, this could be an extremely dangerous situation.
Because many traders would enter into trades thinking about all the reward,
the upside, the Gucci bags, the Lamborghini rains.
All the while forgetting about risk management. And what to do if the trade goes against them.
For every recent great run-up, be it gamma squeeze, hyped-up Donald Trump SPAC deals
or everyone rooting for dodgecoin to hit $1. The chart always looks something like this.
First, you have the huge parabolic emotional buying on the way up. This is also where you
get the most hype on social media, the most media attention and you’d hear your neighbors
who you never knew were interested in the stock market, suddenly hopping on the train.
Then comes the aftermath. Where we see the stock just bleed out. The highs after ATH just became
lower and lower. The lows also become lower. You see the volume dropping off.
And evening the stock had sold off 50% or even more from the highs.
But interestingly, whenever these asset classes make new lows
you don’t hear a lot of people talking about it anymore. Because guess what,
the crowd had moved on to the next shiny thing the next hot stock, or the next hot
crypto that’s going to the moon. And many new traders or investors, are left holding the bag.
And let me tell you, I’ve been there myself. I’d held many bags.
These are not the fancy bags like Gucci or Louis Vuitton,
these are the forever 21 the H&M or hertz or Lucking Coffee. If they even had bags.
So, if you are a new trader, just understand that there is nothing wrong with trading these
momentum stocks on the way up. Just keep riding that gravy train.
But you how to be smart and know when to bail the ship when the momentum dies. 31;40
Because what goes up must come down eventually. Unless it’s Tesla
because clearly gravity doesn’t apply to Elon Musk.
Now let's move on to the second beginner day trading mistake,
which is not smashing the like button at the bottom of this video.
Not only do you get no bs day trading content here,
but you also get a free subscription to bad jokes. Beat that, Netflix.
The second deadly mistake I see a lot of new traders entering the market is
treating day trading as a get-rich-quick scheme.
I know I know; this might be an unpopular opinion.
But becoming a profitable day trader definitely takes a little bit more than
some winning text alerts, and some Lamborghini motivational posts on Instagram.
But hey, if social media can teach us that stocks only go up,
it only makes sense that it also teaches us day trading is easy money, right? Wrong.
I have definitely been guilty of this myself when I first started trading 7 years ago. At the time,
I just wanted to make some quick couple thousand dollars so I could go to EDC VIP
and party throughout the weekend in style with my friends in Vegas.
I thought these buy and sell alerts were going to be the answer. My easy money-making plan.
Well, needless to say, I pretty much lost my entire small account
doing so. That’s why I’m cautioning new traders
against the following buy & sell alerts, signals, copy trading, or anything like that.
First of all, most of the time new traders would
get into positions without learning the thought process or the thesis behind
why they should do so. Or how to manage their positions if the trade goes against them.
This creates followers, also known as sheep, who blindly buys in without any plan, and guess what,
when the stock goes down soon after, they panic, and they market order out for a huge loss. 45;53
There’s a saying that goes something like “failing to plan, is planning to fail.”
Sure you could be lucky and make money from these alerts, once a while. But in the long run,
being a follower will drain your account, especially if you are in low float penny
stock chat rooms with thousands of followers. These are what we call, chat room pumps.
I’m very ashamed to say in my first year of trading I have tried out many different
penny stock chat rooms and have seen instances like these first hand.
But looking back, I think like I deserved it. I deserved to blow up my small trading accounts
because I wanted that fast cash, without the work. I bought into the dream of thinking I can make
millions just from following what these people are buying and selling… and make that easy cash.
But don’t worry, I still went to EDC. Instead of VIP, I paid for the General ticket
and used the disgusting portal potties. And instead of the fancy presidents’ suite,
I was on the floor. Good times.
The third mistake many new traders make is always jumping left and right for the
secret strategy, or the 99%-win rate strategy that they can follow with very little losses.
I see new traders trying all sorts of trading strategies. They go from A to B this week and to
C tomorrow. The moment they lose some money in one, they decided oh it’s the
strategy that’s not working. I should go find the next one on YouTube or TikTok.
I’m just gonna break it to you here. Trading strategies or all styles require risk,
and of course risk management. You could have a 90%-win rate strategy, but if you
don’t follow stops the 10% of the time the setup fails, you could still blow up your account.
And it is the same thing the other way around. You could have a 40%-win rate strategy.
But if all your losers are kept very small or on starter size, you can still become profitable.
And that's the reason I always preach about risk management and taking calculated risks
for your trading account. That means, having potential risk and reward
planned out beforehand, and only taking the share sizes that fit your account profile.
There are so many different trading strategies out there, there's the moving average cross, the RSI
MACD strategy, the buying breakouts. Sure, all of those strategies could work to each their own,
but it is up to each individual trader to test out what works best for you.
In other words, it’s not just the strategy that determines whether
a new trader is successful or not, the most important part is risk management.
Trading is not easy, but it could be learned slowly if you put in the time and work.
Let me know in the comments below if you’ve made any of these mistakes
in the past. I was definitely guilty of doing so.
If you want to see more day trading content please remember to drop a like and subscribe.
If you are interested in learning more about Day Trading as a Complete Beginner
feel free to check out the Humbled Trader Academy on my website.
Thank you guys for watching as always, I’m the Humbled Trader
and I will see you guys the next time.