The Hardest Part is STICKING to Your Strategy

After paper trading for some time now, I can certainly see how easy it is to make some common mistakes, and these would be amplified with real money.

There are many good strategies out there, and it seems that "sticking" to your strategy is probably the hardest thing to do, and what separates winners from losers. I can see this now after the drop in the market yesterday, and I've also recently came across this statement from the book The Best Loser Wins. Sticking to your strategy is the hardest part. I would imagine many other texts / guides agree with this.

Here are the rules I've been working on following for the Market Symmetry Strategy I'm learning:

Stick to the strategy
Never chase price
Limit position size
Buy at support, sell at resistance
Stay uncomfortable (buying at support feels uncomfortable)

Find more details about these here.

These seem pretty easy to follow, but they're not. I've experienced FOMO, overtrading, and emotional reactions recently and can see how easy it is for people lose money trading.

For example, I was buying COIN at support levels and on Thursday when the market had a down day. COIN dropped after earnings and kept falling through every support level. I ended up allocating more than 10% to this position, and overtraded instead of waiting and being patient. Based on various sources I feel COIN is going to do really well, and I veered off the trading rules and allocated too much in fear of not buying the bottom / reducing my average cost. These mistakes are very easy to do, and they would be amplified with real money. Now a large portion of my portfolio is stuck in a stock that is down, and I'll need to potentially wait many days or weeks for the position to turn green hopefully.

Bottom line, you NEED to stick to your strategy and stay disciplined. Practice with your paper trading account because when you risk real money and run into a situation like this without practicing it or experiencing it, it very well might wipe you out.

Here are some common mistakes you will want to potentially encounter on your paper trading account if possible. Even when you transition to real money, hopefully you experience these and they don't do too much damage. I can see how some people will need to experience some type of loss for things to really sink in.

Fear of Missing Out (FOMO)
Impatience and Overtrading
Lack of Confidence in Strategy
Chasing Price Moves
Emotional Reactions to Losses
Failure to Take Profits or Cut Losses
Trying to “Win Back” Losses (Revenge Trading)
Trading Too Large or Too Often
Confirmation Bias
Underestimating the Value of Small Wins

Check out more details on the trading rules I'm trying to follow, and some common mistakes you will definitely experience here.

Have you experienced any of these common mistakes yet?..

I can honestly see how people just can't control themselves, and make trades without thinking it through. You get into a state where you're not thinking rationally. Until you experience "emotional trading" it really doesn't sound real or that it can affect you. But when you're emotional in front of your computer with access to money with a click of a mouse, you will most likely do the wrong thing and it could cost you a lot of money.

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