Are you a person who likes to repeat yourself? If you are, this lesson will be an easy one. If you are in my group coaching class or a one-on-one student, you have heard me repeat some of my favorite phrases that have helped me become successful. Why do I repeat them so frequently? I want my students to know how important these mantras are, and I want them to hear my voice when the situation arises and think about what they need to do or consider.

Let’s be clear, I don’t get a thrill out of haunting your thoughts, but I do get a thrill out of you knowing what I feel is very important to your potential success. I am just going to cover two mantras here, and I will explain briefly the meaning behind them. 

Think of Yourself as a Risk Manager First

To me, this is hands down the most important of all my mantras. Many of you probably have heard the saying that the first rule in trading is to protect your capital. And most likely you thought, no, the first rule is to increase your capital. Who could blame you as a new trader? But once you realize how trading works, it starts to make sense.

Essentially when you think about removing risk first, profits are sure to follow if you are managing things properly. I try to ingrain this in my students’ heads because it needs to come instinctively. Trading can become a whole lot easier when you know how to manage your trades and when to remove risk. As a joke, I tell students to repeat “I am a risk manager first” a thousand times in front of the mirror each weekend. I’m only half kidding.

When the Stock Comes Into a Target Area, You Need to Do Something

This mantra is pretty simple but really important too. When I say a stock comes into a target area, what I am referring to is when an underlying (usually stock) trades into a support or resistance area. When this happens, a trader needs to take action.

When I look at a chart, I see several potential areas for the stock to move in the intended direction. For me, these areas are usually support for bearish trades and resistance for bullish trades. Since support and resistance have a better chance of holding than not (70% to 80% in my opinion), I know the stock might have trouble moving in the same direction and could reverse.

I want traders to consider taking some profit at those levels if applicable, or at least moving up their mental or hard stops. In fact, they should really consider removing some risk (taking a profit) and moving up the stop loss.

Should Make Sense

Those are just a couple of sayings I like to use when teaching about trading. I hope they make sense and you can use or consider them in your own trading. Of course, I apologize in advance if you now hear my voice in your head. You will thank me later.

John Kmiecik, Market Taker Mentoring