June has been a rollercoaster of a month for my trading. I started off with a big loss then went on a nice run to increase my winning % and my $P/L up until the last 3 days. My trading in the past 3 days negated almost all of my gains from my run of wins and I know exactly why. I know which mistakes I'm making and how easily preventable they can be if I had better discipline but that is the difficult part.

 

In no particular order:

 

Mistake 1: Not Making a Plan Before Entering the Trade

- I get so caught up in a certain stock and have a terrible case of FOMO (Fear of missing out) which makes me just enter at any price without making a plan and also not considering my risk/reward. This is just terrible to do because the stock can move quick and without being prepared ahead of time, it can lead to losses that could have been minimized or prevented.

 

Mistake 2: Chasing Stocks

- I dont know why I do this time after time but even though I lose more often than not by chasing, my FOMO causes me to forget everything I know about disciplined trading. I just get in to get part of the run or short regardless of considering how far the stock has already ran up or without looking to see if the overall markets are up or down.

 

Mistake 3: Taking bigger positions and Scalping

- I noticed that during my run of a few wins in a row, I was also starting to experiment with taking bigger positions. This made it look like I was doing better than in the past because my $ profits were increasing due to bigger size but the cents/share were still in the 0.05/share to 0.15/share range so the % gains were very small and I concluded that I was scalping. This goes back to not determining risk/reward because looking back, the risk/reward is usually 1/1 which doesn't give me enough upside to enter the trade.

 

Mistake 4: Overtrading

- After taking these losses, I feel bad about it and know I can do better. Ideally I should take a step back from the markets and come back after Ive gotten over the loss, calmed down, and don't have emotions involved. This week I did the opposite and just got right back in making the same mistakes to try to make my money back and resulted in losing more money.

 

Fear of missing the trade --> chasing --> entering without a plan --> bad risk/reward --> scalping --> minimal gain at best, Big loss at worst --> Overtrading

 

I believe FOMO is the root of my problem and I think the best way to solve it is to be better prepared ahead of time and if I'm not then be very cautious about entering trades.

 

vbansal