Well, the market is closed today in observance of MLK Day… and I thought it would be a great time to help as many people as I can by answering the one number question popping up in my inbox…
How can I improve my win rate when I’m trading stocks?
Let me break it down for you…
Find Your Pain Points
When you first start out trading, it’s easy to fall into traps and hop into every single stock you see moving… without understanding the reason for the massive move. That’s one of the main reasons why the old Wall Street adage goes, “90% of traders fail to make money in the stock market.”
However, that statistic has some bias baked into it… but I can tell you the failure rate is rather high for traders. Heck, I even came close to becoming a statistic…
I tried to be a jack of all trades… as I tested out dozens of strategies out there… until I hit my max pain point — down 50% on my small $15K account in just a few months.
So what did I do?
I reviewed my trades and cut all the losers out. I slowed down and became patient with my plays — until I mastered one single strategy.
When you’re able to focus on just one strategy, you can make adjustments and tweaks until it reaches near perfection.
Here are a few tips you can implement starting today that could improve your chances of success:
- Write down all your trades and categorize them. When you journal your trades, you’ll start to find a pattern and realize what strategies work for you and which ones cost you money. All you have to do after is cut your losing strategies and focus on the winners.
- Have a trading plan in place. For my strategies, such as my Fast 5 Trades, I have a thesis, as well as buy, stop-loss, and target zones. That way, my clients just have to execute and stick to the plan.
- Remain patient and just place your bets behind your best ideas. It’s easy to fall into the trap and just push buttons all day… but don’t, it’s the quickest way to lose money in the markets. It’s okay to step away from your desk if you don’t see anything that’s moving.
I know what you’re wondering… Kyle, do you practice what you preach?
Of course, and I want to lead by example every chance I get.
Journal Your Trades
After every trade, whether it’s a winner or loser, I break down the trade and send it off to my clients. For example, last week, I notched my 9th consecutive winner in my Fast 5 Trades… but I didn’t just celebrate and forget about the trade…
In fact, I journaled and showed traders how I spotted the trade and what they could do the next time they see a similar setup…
The trade idea was in Party City, and I actually broke down the “gap fill” play for them.
Check out that green circle in the chart below. All of that blank space between the close on Nov. 6 and the open on Nov. 7 is the “gap” I’m referring to.
The shares closed at $6.10 on Nov. 6 — but Party City reported a major earnings disappointment ahead of the bell back on Nov. 7, and the stock opened way lower at $3.29.
That 46% opening deficit created the “gap” in PRTY’s daily chart that you see below… and things didn’t get much better for the stock during that post-earnings session. PRTY hit a post-bear gap high of only $3.31 on the day — just $0.02 above its opening price — before settling at $2.00 per share.
During the final week of 2019, though, PRTY finally broke out above this price point and started to gather real bullish momentum.
Last week’s trading was particularly compelling, in terms of setting up a bullish play for PRTY. The shares didn’t go too wild, mostly just consolidating atop newly established support at $2.50 — a sideways price trend that might not seem terribly exciting on its face.
Plan The Trade, And Trade The Plan
Trading gets a heck of a lot easier when you have a plan to follow. When I send out my highest conviction trade idea to my Fast 5 Trades clients, they know exactly the reasoning behind the trade, as well as where to get in, take profits, and stop-out.
Since everyone loves to call me The People’s Trader, I developed Fast 5 Trades… it’s my highest conviction trade idea delivered to clients via email, once per week.
Instead of overwhelming you with the minutiae about my trading style, I thought it would be easier if I just give traders my best idea — that way, you can still earn while you learn.
Since the launch of Fast 5, I haven’t had a single losing trade idea…
Week One: +11% in I
Week Two: +25% in SRRA
Week Three: +28% in VSTM
Week Four: +38% in DMPI
Week Five: +14% in XXII
Week Six: +23% in LJPC
Week Seven: +7% in NOK
Week Eight: +50% in BB
Week Nine: +15% in PRTY
That’s a 100% win rate, virtually unheard of in the markets… while I can’t guarantee you’ll be able to achieve a hot streak like this… I can tell you I’ve got a heck of a lot more trade alerts lined up.
Once you figure out the process and stick to it, you could lock in winners, just as many of my Fast 5 clients have been doing.