September 16, 2021

25 Trading Lessons in 25 Years in the Market

25 Trading Lessons in 25 Years in the Market

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I began putting capital into the stock market in 1992 as an investor. After the volatility of 1998 I stopped investing and started  trading price action in and out in 1999 during the wild parabolic tech bull market and into the year 2000. I picked up many lessons over the years and here are some key ones on my trading journey. Many times I was fortunate to be on the right side of these lessons and other times I learned them the hard way. Over time, I have been able to build up a large amount of capital and become financially independent. Here are the lessons I learned through experience in both losing and making money. 

1998 Bull markets don’t end easily, they can climb a wall of worry. 

1999 Stocks can go parabolic without any fundamentals.

2000 Bull markets can run farther than anyone expects realistically. (NASDAQ 5,000)

2001 Black Swan events can change everything. (9/11/2001)

2002 Bear markets can last a long time.

2003 It is crucial to be long in the stock market when the reversal out of a bear market begins.

2004 If you are in the right stocks you can have a great year regardless of the indexes.

2005 Find where the trends are and trade them. 

2006 Focusing on trading stocks that double or triple in price can provide great returns.

2007 It is not what you make in a bull market but what you keep that really matters.

2008 Going to cash at the right time can save a huge draw down and stomach lining.

2009 Ignore the macro-economic situation, predictions, and bearish sentiment and just trade the price action. 

2010 Anything can happen at any time. Even a flash crash. Always manage risk. (DJIA dropped 1,000 points in one day)

2011 Uncertainty and market opening  gaps can chew up an account.

2012 Even a big cap stock like Apple (AAPL) can break out to all time highs and double in price.

2013 Trading the S&P 500 index with leverage can offer a very smooth equity curve.

2014 The 30 RSI is one of the highest probability oversold dip buy levels in indexes and leading stocks in both trading ranges and uptrends. 

2015 Sometimes buying the dip into oversold levels is one of the best trades you will get in the indexes as the market goes sideways for long periods of time. 

2016 Sometimes trends can break through overbought 70 RSI readings for months and continue to trend higher.

2017 Sometimes holding a long term position in a trend is the best trade because there are no large dips to buy for long periods of time.

2018 Santa Clause rallies can become December crashes, don’t let seasonal patterns over ride price action trading. 

2019 The more charts with positive backtested signals you can trade the greater the opportunities you can have to find a trend somewhere. 

2020 The speed of a bear market and bull market starting and ending can be faster than anyone imagines, it is crucial to focus on your signals and not get caught up in any narrative, even during a pandemic. 

2021 There is always a trend somewhere, never stop looking for them.