{"id":17362,"date":"2025-01-03T17:00:49","date_gmt":"2025-01-03T22:00:49","guid":{"rendered":"https:\/\/mtatradeoftheday.com\/?p=17362"},"modified":"2025-01-03T12:09:11","modified_gmt":"2025-01-03T17:09:11","slug":"why-most-traders-wont-make-consistent-profits","status":"publish","type":"post","link":"https:\/\/mtatradeoftheday.com\/why-most-traders-wont-make-consistent-profits\/","title":{"rendered":"Why Most Traders Won’t Make Consistent Profits"},"content":{"rendered":"

It’s a new year, and you’re probably intrigued by the immense profit potential in the markets right now.<\/p>\n

You see all the hype surrounding the current “hot button” sectors.<\/p>\n

Artificial intelligence…<\/p>\n

Quantum computing…<\/p>\n

Blockchain…<\/p>\n

The list goes on and on.<\/p>\n

Then you hear about your friends making profits…<\/p>\n

And now you want a piece of the action.<\/p>\n

But at the same time, you’re also intimidated by the terminology, unsure of the risks involved and skeptical of your own ability.<\/p>\n

As a result, you haven’t traded yet.<\/p>\n

Well… starting today, we’re going to change that.<\/p>\n

In this simple, approachable, and powerful guidebook, my partner Karim and I will review the Top 5 Mistakes New Traders Make – <\/em><\/strong>and how to avoid them.<\/p>\n

We’ll give you a complete breakdown of the first things you should check off your list before jumping into the market.<\/p>\n

With this guide, you’ll learn how to prepare yourself – <\/em><\/strong>mentally, emotionally and financially – <\/em><\/strong>to trade successfully.<\/p>\n

You’ll also quickly come to understand how the right trading methods can tilt the odds in your favor.<\/p>\n

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.<\/p>\n

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

Trading Mistake No. 1 – Negative Trading Environment<\/strong><\/p>\n

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.<\/p>\n

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.<\/p>\n

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.<\/p>\n

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.<\/p>\n

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.<\/p>\n

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 Nasdaq.com also give you free access to quotes, with updates every 30 seconds.<\/p>\n

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!<\/p>\n

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.<\/p>\n

On to big mistake No. 2…<\/p>\n

Trading Mistake No. 2 – Jumping in Without Checking the Water First<\/strong><\/p>\n

It’s not a good idea to hop in a car and pull out onto the freeway without first learning how to drive.<\/p>\n

In turn, before you start risking your hard-earned money, it’s critically important that you get familiar with trading.<\/p>\n

That’s why I recommend that you set up a paper trading account.<\/p>\n

This offers you a number of advantages…<\/p>\n

First, you’ll get familiar with how to enter and exit trades.<\/p>\n

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

And third, you’ll get all of your mistakes out of the way NOW – before you’re using real money.<\/p>\n

For instance…<\/p>\n

Did you buy a put – instead of a call? Oops.<\/p>\n

Did you sell – instead of buy? Oops.<\/p>\n

Did you trade the March 1 expiration – instead of the April 1 expiration? Oops.<\/p>\n

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

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.<\/p>\n

At Monument Traders Alliance, we recommend ThinkorSwim platform, but many of the big-name brokerages offer paper trading accounts as well.<\/p>\n

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!)<\/p>\n

Trading Mistake No. 3 – Letting a Small Loss Turn Into a BIG Loss<\/strong><\/p>\n

Consider this quote from Max Gunther’s classic investing text, The Zurich Axioms<\/em>…<\/p>\n

“Accept small losses cheerfully as a fact of life. Expect to experience several while awaiting a large gain.”<\/em><\/p>\n

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.<\/p>\n

By structuring your plays well and utilizing stop losses, you can give yourself an edge.<\/p>\n

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

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.<\/p>\n

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.<\/p>\n

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.<\/p>\n

Trading Mistake No. 4 – Not Having an Exit Strategy<\/strong><\/p>\n

I can’t reinforce enough the importance of setting your endgame.<\/p>\n

In today’s market, never fail to cash in your profits when you can.<\/p>\n

Virtually every game you can think of comes with a defined start and a defined end.<\/p>\n

For instance…<\/p>\n