Here is a great guest blog post from young Sammy who just finished his fourth live month of trading with SMB.

Transitioning: The State of Change

How a few changes are leading me to the path of success as a trader:

Early on in my trading career, I was struggling and making many mistakes. I had all the right ideas but could not execute the idea properly. As a new trader, losing money is discouraging especially when you get shaken out of a stock and then watch it find your target. You begin to second guess your abilities, and psychologically does not allow you to properly execute. This was my main problem along with a few other problems that I will list. I will explain the struggles I was having and how a few changes are allowing me to transition into the path of a successful trader.

1. Patience. There was a lot going on as a new trader. I was always scared of missing a trade so I would get into stocks at bad prices and get stopped out all the time. “Patience is a virtue” especially when it comes to trading.

1. Discipline. Giving stocks the appropriate risk is crucial to success. A lot of times I would not give a stock proper risk, get stopped out, and watch it find the target price. However, if a trade doesn’t work, that doesn’t mean it was a bad trade. Being disciplined is having the proper stop and not over trading the stock. Many times I would allow stocks to find my target price yet, I wouldn’t get out of the position. When it was clear, it was time to get out, which caused me to lose money. You must be disciplined and allow yourself to follow and not change your plan.

1. Execution. This was a major problem for me as a trader. As a new trader, it was hard to properly execute because I began to see a ton of stocks and a ton of different ideas. I had great ideas but, what is an idea if you can’t execute it. When I talk about execution, I mean every part of trading. This includes patience, discipline, technicals, and tape readings to the overall market conditions. Executing properly means you have developed these skills as a trader that will allow you to “execute properly.”

At the end of August was when I first started trading live. I struggled, making every mistake possible. I didn’t have a positive day for about 2 weeks straight. Even when I finally did, I wasn’t able to be consistent with it. I was over trading, didn’t follow my plan, and I knew I needed to change. However, I had a large ego, traded with a bias, and traded to just trade. I had very little patience and discipline. My second month of trading went a little better because I changed a few things but eventually went back to my old ways up until December. I finally told myself enough is enough and it’s time to change. After I realized these issues, it shocked me. I play poker and these were the same struggles I had when I first started playing. After I fixed my problems, I began to rarely lose when playing.  The changes were very minor yet made a huge difference. These are the changes I made:

1. I became a lot more patient. I allowed the set-up I was looking for to develop and then get into the stock.
2. I became more disciplined, giving the stocks the proper stop and getting out at or near my targets.
3. My execution: I was no longer hesitant when I saw the opportunity or the play develop. I attacked and never second guessed my plan.
4. Technicals: I began going over charts and more charts and more charts. Trading is a repetition: the more you see, the more you begin to recognize patterns. Since trading is all patterns, going over a great deal of charts allows you to see tons of patterns. This helped me recognize set-ups that developed throughout the day, which offers me more trading opportunity.
5. Watching myself trade: I went through a lot of videos that I made of myself trading and began developing tape reading skills that allowed me to see more of my mistakes. This paid off, and I had one of my best days just by “scalping the tape” on the open.

All these minor changes have given me more confidence in my trading. Confidence is key because it allows me to execute trades properly and to be more aggressive when the situation calls for it. It helps me not second guess myself. These changes are now leading me to what I want to become, which is a successful trader. My trading went from bad to terrible to decent to better. What I want now is to become great. Yes, I will continue to make mistakes but I will learn from them and won’t allow them to happen again! Trading is a skill that takes time to develop and when it’s developed the rewards are amazing. There are many goals I want to accomplish this new year as a trader and I’m now heading down that path of become the next “great trader.”