What trades have the largest impact on your P&L?
Hopefully you’re using a trade tracker and/or journal and you have some idea. If you’re not sure, go look. I’ll wait…
If you don't have a trade tracker and/or journal, please read THIS when you are done with this piece!
We asked these questions during our webinar this past Thursday and here are a few of the answers we received:
Bad fills when trying to sell.
Selling too early.
Risky news trades on bios.
Jumping in with no real reason.
Not honoring stops.
Hold and Hope.
Averaging down (received this many times)
Not reading the charts correctly.
Upside shape and not selling.
We also received some specific stocks: ETRM, DRYS, GLBS. Several said GLBS.
These were all great answers and we were impressed so many traders had a sense of the type of trades costing them the most money.
There was one answer that was missing and it’s what I firmly believe costs traders the most. It’s something even your trade tracker won’t tell you.
It’s NOT the trades you take - win or lose. It’s the trades you don’t take that cost you the most!
Think about that… How many times have you seen a stock setting up and it’s meeting all your parameters, yet you didn’t take the trade? Instead, you just watched it do exactly what you thought it was going to do? You were a spectator.
It’s those trades that cost you the most. They cost you in more ways than one. Not only do you miss out on all the money the trade would have generated, you miss out on the CONFIDENCE the winning trade gives you. The lack of confidence is a HUGE (if not the biggest) part of why so many traders struggle. How do you get confidence if you don’t trade? Like anything in life, you must do it and experience it in order to learn from it. The experience and confidence you miss out on by not taking a trade is a much bigger loss than the $$$. I feel the exact same way about losing trades.
Let’s talk about an example:
The biggest loss on my tracker YTD is $ROKA. I lost $450.87 in a blink of an eye and was lucky I didn’t lose more. In hindsight, it wasn’t the best set-up and I anticipated a potential breakout incorrectly. I jumped in early and the stock didn’t go anywhere but down immediately after my entry. It happens. Not everything works.
Now for the sake of making my point, let's pretend I didn’t take $ETRM on Friday. Here’s that call and chart:
Or if I didn’t take $APRI on Wednesday? This ran to over $4:
Look at all the $$$ I could have missed! It’s these trades that more than made up for my loss in $ROKA. $ETRM alone would cover about five losers like $ROKA. These are the trades that if I had NOT taken them would have had the largest impact on my P&L.
So even though $ETRM was a home run yesterday and I ended the day well above my daily goal, there was one stock that cost me. It's not red on my P&L. It's not even in my tracker. Why? Because I didn't take the trade. Here it is:
Yep, I missed this. We all miss trades. Let's just say this was a very expensive bathroom break. Had I been sitting at my desk I would have jumped all over this. How about you?
So, let me say it one last time: The trades that are having the largest impact on you, your confidence and your P&L are the trades you aren’t taking. If a trade sets-up, meets all your parameters and checks all your boxes then PUSH THE BUY BUTTON.
Thanks for reading!
If you're interested in the webinar I mentioned at the top of this blog, you can view the recording and all of our previous webinars by clicking HERE.
Questions? Comments? Reach out!