Last week’s note mentioned how challenging 2022 had been for investors in stocks Ian Murphy of MurphyTrading.com.
For traders, the beginning of 2023 is also proving to be just as difficult. The bullish rally in January and February encouraged a few bears sitting on the sidelines to jump back into stocks for fear of missing out. And sure enough, as soon as they were back in the market sold off again.
Struggling traders usually make three mistakes in this scenario. They come to the party too late, stay too long, and most importantly, don’t understand the party they attended. The first two errors (entering late and overstaying) are easy to rectify, and the third is about trading the appropriate timeframe and using a strategy suited to that timeframe—that requires research and learning, which is frequently overlooked.
The most successful trades usually begin at a ‘pivot point’ where an instrument might be changing direction. Professional traders get in at that point with an appropriately located stop and a correct position size. Beginners get in before or after the pivot and are unsure when to exit, plus they inevitably carry too large a position.
Learn more about Ian Murphy at MurphyTrading.com.
