Don't take that because I started a site about trading that I am a veteran at it or do this as my full time job. I definitely do not fit into that category. The fact of the matter is that I started this site to hopefully help other people like me who are trying to become a profitable trader to add another source of income to the ever growing list of expenses as you grow up and live.
I started trading at the end of January and then a mentor of mine sent me this picture below that describes the stages of trading, and the psychology behind it. At first I was like, "ya right, this shit is easy, I got this, I am going to make bank and be rolling in it."
Little did I know, five months later I would be in the "lost of confidence and money" stage of this process. This chart is very simple, and seemed at first like it was too simple to really be something that people could relate to, but it could not be any more accurate.
I talked about this on my podcast "Day Trading Diaries" in episode 4 that the "Beginner's Luck Phenomenon" is a very real thing. Not only have I experienced it, but it actually gave me false hope that I was actually doing really well in trading. That to me is the scariest thing that can happen to you because that false confidence can really screw you over, you start to think that you can do no wrong, which I did think throughout the first few months of trading. I hit some lucky plays on TSLA and AMZN early on and thought, "this is going to be so easy to make money"., I was wrong.
After that false confidence grew, I ended up taking some major losses over things that I convinced myself were going to reverse, or holding onto losing contracts longer than I should have getting into the trap of telling myself "the market will turn around". Then thinking that the "market is always going against me." Or my TA is right, what is going on?! I ended up losing some big money on AMZN and TSLA a few Friday's in a row and I told myself "well, they are already down 50%, might as well just hold onto them."
DON'T FALL INTO THE TRAP. STICK TO YOUR RULES.
PART 2 COMING LATER