The Top 5 Mistakes New Traders Make

If you’re like most people, you’re intrigued by the immense profit potential of the stock market. 

You’ve heard all the success stories… 

And you want a piece of the action. 

But at the same time, you’re also intimidated by the terminology, unsure of the risks involved and skeptical of your own ability. 

As a result, you haven’t traded yet. 

Well… starting today, we’re going to change that. 

In this simple, approachable, and powerful guidebook, my partner Karim and I will review the Top 5 Mistakes New Traders Make – and how to avoid them. 

We’ll give you a complete breakdown of the first things you should check off your list before jumping into the market. 

With this book, you’ll learn how to prepare yourself – mentally, emotionally and financially – to trade successfully. 

You’ll quickly come to understand how the right trading methods can tilt the odds in your favor. 

And most importantly, by the time you finish, you’ll realize that you can – confidently – begin to harness the incredible profit potential of the stock market. 

Let’s get right into it and not waste any more time. Here is the first big mistake most new traders make…

Trading Mistake No. 1 – Negative Trading Environment 

Trading on a tablet at the kitchen counter or on your phone in the car is a recipe for disaster. Set yourself up for success – literally. It’s cool to close a trade for a big win while poolside with a drink in your hand, but that should not be your usual trading environment. 

Give yourself a quiet area where you can concentrate. Get as far from distractions as you can. An office would be perfect, of course, but a den, basement, or guest bedroom will do as well. You’ll want a comfortable chair and a table or desk to work from. Reading and researching are critical elements of successful trading.  

Also, you should be as comfortable and familiar with your brokerage as you are with your trading command center. Create a comfortable virtual trading space as well. Start by familiarizing yourself with your brokerage’s platform. Most brokerages offer a ton of great materials to teach you how to trade through their systems. Some, like TD Ameritrade, even have official YouTube channels where an expert will walk you through placing a trade step by step in a concise, easy-to-follow video. 

In addition, make sure you have a real-time live feed for stock quotes – or as close as you can get. Many sites have delayed data, refreshing only every 15 minutes or so. This is critical to realize. Actual current prices are not reflected on many sites. Keep an eye out for keywords and phrases like “delayed” and “as of X time.” Most of the big-name brokerages have options for getting real-time stock quotes, and sites like also give you free access to quotes, with updates every 30 seconds.  

Set up a functional financial environment too. Know your account balance! This isn’t poker – feel free to count your chips all the time. Make sure that you have the margin necessary for trading in an accessible account and that you are familiar with how to withdraw and deposit funds quickly. Missing a winning trade because you didn’t have the money to play it is a frustrating lesson! 

So before you even think about trading, set yourself up for success by establishing a spatial, technical and financial environment that you can trade in comfortably. 

On to big mistake No. 2…

Trading Mistake No. 2 – Jumping in Without Checking the Water First 

It’s not a good idea to hop in a car and pull out onto the freeway without first learning how to drive. 

In turn, before you start risking your hard-earned money, it’s critically important that you get familiar with trading. 

That’s why I recommend that you set up a paper trading account. 

This offers you a number of advantages… 

First, you’ll get familiar with how to enter and exit trades. 

Second, you’ll get comfortable with how to place your orders – and what the language for options recommendations looks like. 

And third, you’ll get all of your mistakes out of the way NOW – before you’re using real money. 

For instance… 

Did you buy a put – instead of a call? Oops. 

Did you sell – instead of buy? Oops. 

Did you trade the March 1 expiration – instead of the April 1 expiration? Oops. 

These are all rookie mistakes that we’d rather you make now – in the preparation stage – when they don’t cost you real money. 

Taking the time to do this exercise right now – at the start of your trading journey – will eliminate more mistakes and make you more money than anything else you could possibly do. 

At Monument Traders Alliance, we recommend TD Ameritrade and its ThinkorSwim platform, but many of the big-name brokerages offer paper trading accounts as well.  

If in doubt, reach out to your brokerage’s customer service department, and they’ll show you the way. (Getting the customer service number is part of avoiding that first big mistake!)

Trading Mistake No. 3 – Letting a Small Loss Turn Into a BIG Loss 

Consider this quote from Max Gunther’s classic investing text, The Zurich Axioms 

“Accept small losses cheerfully as a fact of life. Expect to experience several while awaiting a large gain.” 

You see, part of the art form of trading is structuring your plays in a way that allows you to get out for small, manageable losses if you’re wrong… and hit grand slams if you’re right. 

By structuring your plays well and utilizing stop losses, you can give yourself an edge. 

Even if a speculative position doesn’t hit (which will happen), don’t worry, because you likely won’t suffer a catastrophic loss. 

And don’t get frustrated! Follow this formula over time, hitting a larger percentage of winners than of losers, and you’ll always come out ahead. 

When it comes to your own position sizing, set yourself a profit goal – be it a month, a year or 10 years from now – then get positioned to “make it count.” In other words, be sure you put yourself in a position to maximize your returns if your trades go your way. 

If you go into each speculative position with the proper allocations given your preset goals, then you’ll be perfectly ready to make it count when things go your way.

Trading Mistake No. 4 – Not Having an Exit Strategy 

I can’t reinforce enough the importance of setting your endgame.  

In today’s market, never fail to cash in your profits when you can.  

Virtually every game you can think of comes with a defined start and a defined end. 

For instance… 

  • Monopoly is over when your opponents go bankrupt. 
  • Running a marathon ends once you cross the finish line. 
  • A professional baseball game typically lasts nine innings. 

When it comes to Wall Street, though, the game never ends. In fact, you’re always required to call your own endgame, which is unquestionably one of the most difficult aspects of investing. Many speculators fail to call their endgame, which leads to them holding on too long… and eventually losing. 

Never expect to “bottom tick” your entry or “top tick” your exit! Nobody in the modern history of the financial world has ever been able to consistently buy at the exact bottom or sell at the exact top! 

Expecting to do so is nothing more than an exercise in futility and frustration. Every chance that it gets, Wall Street will mess with your mind and make you second-guess yourself – oftentimes making you feel stupid. 

Prevent this from happening by using this simple trick: Call your endgame and sell half. 

If you ever find yourself asking whether to cash out or continue holding, always, always, always compromise by selling half of your position. That way, you lock in some profits but are still positioned to capitalize on future gains. 

Sure, you’re potentially making less than you might have by not selling, but you also have the security of knowing that you cashed in a portion of your position when that little voice of reason inside your head told you to exit. 

This is the best way to have your cake and eat it too – which, on Wall Street, doesn’t happen too often. After all, if you end up taking profits too soon, who cares? As a wise investor once said, “Nobody has ever gone broke taking profits.”

Trading Mistake No. 5 – Not Having Access to Good Research 

The last big mistake new investors make might be the most critical of them all… 

Investing without having good information or research. 

You certainly don’t want to go into any new venture totally blind. 

There is a ton of information for new traders out there, but it’s not all of the same quality. 

 Anyone with a webcam and a brokerage account can provide trading advice. 

But if you want the best chance for success, find the very best advice. 

I’ve been actively trading the markets for decades. 

Back in 1999, I started trading in the Apple computer trading pit on the Chicago Board Options Exchange. 

And today, it’s my job to keep track of every stock, anticipate every event that influences market conditions… and distill it all down into the most potentially lucrative investment recommendations possible. 

Finding the precise moment to make your trade could be the one and only difference between a sizable profit and a frustrating loss. 

That’s why my new “idea-sharing” research service is perfect for you. 

I call this idea-sharing service Trade of the Day Plus. 

It’s simple… it’s accurate… and it’s very inexpensive. 

It takes you just five minutes per week to review. 

Every day the markets are open, I carefully observe what’s going on in the markets, in world news, and in specific investment vehicles. 

I filter through it all weekly and cherry-pick the one idea that I consider to be the best-timed recommendation to share with you given the current market conditions. 

Then, I make a video about that pick – telling you the exact play to make and the exact time to make it, along with all of my analysis – and send it to you after the close of trading every Wednesday. 

Each week… this is the one idea that you can act on immediately – above everything else. 

We’ve tested this model with our free Trade of the Day service, and the results have been awesome. 

Whatever strategy offers the best-timed entry that week, I’ll share it with you. 

No matter what the pick is, you’ll get all of my research, as well as the exact details on that specific recommendation – including the ticker symbol – every single Wednesday afternoon. 

It takes only a few minutes to watch these videos… plus a minute or so to place your trade for the next day (if you choose). 

This allows you to get the full details of that week’s opportunity and get on with your day… confident you have the best-timed trading idea to help you succeed in current market conditions. 

Click here to sign up for Trade of the Day Plus right now!

Avoid Those Top 5 Mistakes! 

Now you know the biggest mistakes that newer traders make – and how you can work to avoid them. 

Whether it’s a poor trading environment or simply unreliable information, these five mistakes will put a damper on anyone’s foray into the world of retail investing. 

Take your time, prepare a comfortable and effective trading command zone, keep your losses small, always have an exit strategy, and make sure you are getting the very best information!  

Above all… we look forward to sharing our ideas and strategies with you as you begin this journey into the markets! 

Your best chance of success relies on keeping it simple.  

There is no need to overcomplicate the market. Focus on consistency rather than trying to get into every “promising” opportunity you see come across the screen.  

For starters, take a look at how I identify ONE, high conviction trade EVERY WEEK that has returned 83% winners.  

It’s absolutely free to attend and will provide you with a valuable framework for your future trading career.

Click Here to Join Trade of the Day Plus

Yours in smart speculation, 

Bryan Bottarelli, Head Trade Tactician, Monument Traders Alliance