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The Daily Dose: Questions For Stock Traders

What’s One of the Biggest Mistakes New Traders Make?

By February 5, 2017February 26th, 20214 Comments

Trading Just For the Thrill of the Action:

Instead of focusing on high-potential setups (stocks with good charts, upcoming catalysts, etc.), a lot of amateur traders enter positions just for the thrill of the action. In essence, they’re treating trading like gambling – they’re not putting the odds in their favor, but blindly throwing their money around in hopes that they’ll strike gold. Having that mindset is one of the biggest mistakes new traders make.

In addition to that, they give no thought to proper allocation. Instead of protecting their portfolio in instances where they might be wrong, they allocate their entire portfolio to one single position – that’s an extremely risky maneuver. Trying to get rich off one trade is the wrong way to go; consistency will keep you in the game for the long-haul. With this in mind, it all circles back to education and discipline: only taking trades when risk/reward is in your favor, approaching every potential trade with a plan, cutting losses early, and studying before risking your hard-earned money. Relying on “hope” is not a strategy. Trading successfully is a developed skill.

Related Page: What is the Cheapest Way to Trade Stocks? Avoid Learning the Hard Way

Matt Thomas

Founder of, Creator of the Trading Success Framework Course & Trading Paradigm Skool Community, and Intraday Futures Trader Using Auction Market Theory & Profiling (Volume & Market Profile).


  • FifthJune says:

    Hey Matt,

    Do you provide insights that requires online skype demo 1-1. I believe it will be good if you can show us how you do consistency trading to the people around. I think that would actually bring up more people to look into trading at the meantime I love your e-book

    Best regards,

    • Matt Thomas says:

      Hi Cedric – I do not. For education on stock trading, I’d recommend mentors like Jason Bond and/or Kyle Dennis. These guys are not only great traders, but even better teachers of their strategies. And being knowledgeable in the market can give you a tremendous edge – there’s no doubt about it.

      If you check out some of the top-ranked newsletters/educational services I’ve reviewed, you’ll find a few that offer private/semi-private (small group) mentoring: Jason Bond Picks Millionaire Roadmap, BioTech Breakouts Nucleus, and Penny Pro Elite are three services that provide in-depth education for the most committed traders. Take care!

  • Scott says:

    Asset allocation is what I have always been told is the key to successful investing. It’s very true that most people think about it the same way they do gambling. For someone starting out, what would you recommend they have in liquid cash before they start investing in the stock market etc? I feel like people should have some type of cash reserves before getting too deep into other things…

    • Matt Thomas says:

      Hi Scott – I won’t give any specific numbers but if an individual doesn’t feel comfortable trading or only has money that they can’t afford to lose, then they probably shouldn’t put that cash at risk. Of course nobody’s entering the market seeking to blow up their portfolio; we’re all aiming to grow our funds, but trading with money that’s needed for rent, groceries, car payments, etc. will only add stress and emotion to the entire process. And trading based on emotions leads to irrational decisions – that’s something you want to avoid.

      The good news is that there’s a lot of free resources and paper trading platforms to start learning and gaining experience in the markets risk-free. And again, everyone’s financial situation is different so each person needs to decide for themselves how to use their personal resources. One of the best quotes I’ve heard from one of the best penny stock traders out there is that “beginners should be focused on building their knowledge accounts first before their trading accounts” – that focus on education should be everybody’s focus, and in many cases, it’s free. Take care!

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