10 Common Weaknesses

1. Not Staying Out Of The Market

• Not knowing or defining a repeatable process for identifying when to stay out

• Not having the patience to stay out when conditions aren’t favorable

2. Not Giving Market Movement Enough Weight

• General market direction and movement affects 75% of stocks

• Most trades should be in sync with general market and/or sector movement

• Ignoring higher trading time frame trends, support, resistance

• Being unaware of current time frame market movement

• Unaware or disregarding the significance of price movement beyond pre-market and multiple time frame ranges (market and stocks)

3. Not Having A Repeatable Timing Methodology

• Unaware of intraday time tendencies, seasonality, cyclical business cycles

• Ignoring breadth (e.g. advance decline line, advance decline volume)

• Not having a consistent way (in real time) to quickly identify catalysts

• Myopic price vision vs. seeing the bigger picture and continuous nature of price action on multiple time frames

4. No Framework To Understand Trending Vs. Range Bound Action

• Ignoring higher trading time frame trends, support, resistance

• Not defining / identifying if it’s a range bound or trending environment. Not being on the right side of the ranges and trend

• Disregarding the significance and common types of price movement beyond significant ranges (e.g. pre-market, daily, weekly, monthly)

• Not framing pre-market, opening or closing price movement. Intraday traders - not being on the right side of pre-market range

5. Playing Ranges Incorrectly

• Being indecisive / unclear about one's approach i.e. breakout or range entries

• Not defining when a range strategy will be used

• Long at top of range instead of short

• Short at bottom of range instead of long

• Favoring reversion to the mean over trend

6. Poor Candidate Selection

• Ignoring higher trading time frame trends, support, resistance

• Not avoiding choppy, sloppy price action (vs. smoothly trending swings)

• Not avoiding narrow, range bound / contracting conditions

• Not identifying strong and weak sectors or groups

• Unaware or ignoring general market direction

• Unaware of routine economic data that impacts sectors / stocks

7. No Trade Triggers / Edges

Not having a repeatable method of putting price action into context

No real play, pattern, base, or setup

Executing without a strategy’s entry / exit signals being triggered

Poor entry location (large distance to wrong, wrong not falsifiable, arbitrary stops)

Shorting price strength / strong sectors / breaking resistance

Long price weakness / weak sectors / breaking support

8. Mismanaging Losses

• Adding to losers instead of taking a loss

• Moving stops instead of taking the smaller, original loss

• Moving stops to prevent ‘being tricked’ / whipsawed

• Making stops too large and the related loss too ‘uncomfortable’

• Swinging over losses (day traders)

• Not taking a timeout to regroup after a series of losses and identifying the reason for under-performance

9. Improper Money and Risk Management

• Unprofitable trades are feedback -wrong about stock selection, direction, timing, entry location quality, stop management, etc

• Not reducing size with consecutive/increasing frequency of losses

• Increasing size with consecutive/ increasing frequency of losses

• Not trading less with consecutive/ increasing frequency of losses

• Position sizes that are too large

10. Lack of Emotional Awareness & Regulation

• Fear of missing out, taking a loss, being ‘tricked’ by whipsaws, etc

• Fear is responsible for most psychological challenges

• Fear is often due to under capitalization issues / pressures

• Impatience is extremely counterproductive

• Impatience with slow, grinding, wavy trends or choppy price action

• Fear is usually at the root of impatience

• Patience is a significant edge*