After having a nice comeback beginning in May, I had a pretty rough week this week and the reason for my bad week is from breaking many rules. I need to be more disciplined in my trading. I think I have been breaking rules recently because there haven't been as many plays as there usually have been in the past few weeks which has spoiled me.

 

Here are the 3 most important lessons of the many lessons I have learned from this week in order of importance:

 

1. Cut losses quickly - As easy as this one sounds, its easy to get caught up in a trade and disobey this rule. One thing I have been doing recently is adding to a losing position to get a better average price in hopes that the trade will start to turn in my favour. Although this works occasionally, it will wipe away all the profits from when it worked when it doesn't work so over the long term it is not worth it.

 

2. Always have a plan before entering the trade - I find that when I really don't want to miss out on a big move on a fast moving stock is when I break this rule. I get so caught up with the stock moving that I just get in before I miss it then try to make a plan when Im in the trade which is disastrous. Its OKAY to miss out on a play. Decide on a plan to exit the position if the stock goes against you and if it goes in your favour.

 

3. You do not have to trade everyday - Some days will be very slow and no great opportunities will show up. As tempting as it may be, you must resist the urge to enter a random trade out of boredom because it will result in unnecessary losses.