If you’ve not had much success in the stock market, you might be asking yourself Is stock trading worth it?
Everybody has asked that question at some point in time. Traders have a losing streak, find their money is eroding from bad trades, and all of a sudden want to quit. It’s understandable. Nobody is in the market to lose money.
Consider this my motivational speaker post. If you’re out there, and this is a question you are asking yourself, this post is definitely for you.
The Stock Market Psychological Cycle
Take a look at this cycle and tell me if this has ever happened to you? You buy into a trade to see it gain a little, you double down, and then the stock crashes. You finally sell out, taking a loss, only to see it climb right back up.
Happened to you?
Guess what? It’s happened to all of us.
Stuff like this is definitely going to make you wonder if stock trading is worth it.
Understanding Why This Happens
There’s a few reasons why this sort of cycle happens.
- You don’t have the right trading plan.
- You’re trading based off of emotion.
- You don’t understand technical analysis and how it applies to trading.
Let’s start to break these down.
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You don’t have the right trading plan. You may not have a trading plan at all. Most traders enter the market nilly willy, thinking they’re just going to jump in and out of trades.
All. Let me repeat. All successful traders have a specific trading plan that they use when approaching the stock market. They know precisely what indicators they are looking for, what patterns they trade, their target price, target earnings, stop loss positions, required trading volume, position sizing, and portfolio risk before they enter a trade.
Perhaps you thought it was more like going to the casino. Maybe you’ll hit the jackpot. That sort of thinking is wrong.
Trading the stock market successfully is more like writing and executing a business plan.
If you don’t have a trading plan in place, you need one in order to be successful. I wrote about it more here.
Want to see how a profitable trader does it? Sign up for a two week trial to work with Tim Sykes.
You’re trading based off of emotion. This is the toughest part to master. As I said before, nobody’s in the market looking to lose money. Fear compounds mistakes and forces bad decisions. Greed can blind one from his mistakes and cause continuous errors.
This is why having a trading plan is so important. Trading plans eliminate emotion from the process. You can’t decide whether to exit a trade yet? You’re profitable, but you don’t know if you should stay in or get out.
A solid trading plan answers that question for you. You’ve predetermined your exit strategy, and it becomes a simple matter of execution. You can find lots of great reads on adapting your personality and controlling your emotions.
You don’t understand technical analysis and how it applies to trading. This could be the biggest block. You’ve not yet learned technical indicators and how to better your trades.
Putting It All Together
If you need me to answer the question for you, yes. Stock trading is worth it.
I know you’re going to suffer losses at some point. There’s not a single trader alive who hasn’t.
But understanding the major factors that play into why you have losses will help you fine tune your trading and start to become more profitable on trades. Having a plan in place helps you to take the emotion out of trading. Let your plan decide when to enter and exit.
Lastly, understanding simple technical analysis will help you identify trends and patterns that provide profitable trade setups.
Start trading with Tim Sykes and see how he does it.
There you have it. What technical indicators do you look for in your trades?