Success Comes Before You Buy the Stock

Have you noticed that once you’re in a stock, it’s easy for emotions to take over?

Once emotions take over, everything goes off the rails, okay? So, let’s work on building one habit that helps every trader once they put it into action.

For Decades, I’ve Used This Secret To Crush the Top Players on the Street

The Big Picture

Once you’ve bought the stock, you own it. Consider that for a moment, because I think too many traders treat this as a game.

You own it.

That means all the work is done before you buy it. Once you’re in a trade, all the variables should already be determined.

For example:

• What am I gonna do if this stock trends up?
• What will I do if this stock gaps up hard?
• What if this stock goes sideways?
• What’s my plan if it falls back to this level?

All of this is determined before you buy the stock.

All the due diligence, all the thinking, all the decision-making is done before you buy, okay?

Now, if you can’t spend a few minutes doing that, it’s probably why you’re struggling.

What If There’s No Time?

People will say there isn’t time. I say there’s time.

Anyone who tells me they can’t spend a few minutes before risking hundreds, thousands, or tens of thousands of dollars is asking for what the market does to them.

When you’re day trading small caps, it only takes a few minutes to do due diligence.

If it takes you three or four minutes and you miss a trade, guess what? There’s another one coming.

After you buy, it’s just managing the position. What is the stock doing?

• Is it fading back to my stop? I’ll cut it.
• Is it tracking sideways? I’ll give it a little extra time. Or, maybe, I won’t give it more time.
• Oh, it just gapped up huge. Well, geez, I’m gonna take profits.

What About Black Swans?

Pay attention. They happen and you can’t plan for them. For example, midday dilutions happen.

Guess what? I think I’ve been caught in one midday dilution in the past three years.

It happens, you can’t plan for it, and it sucks. But if you’re using it as an excuse to avoid doing the work before you buy, it’s just another excuse.

My Take

People like to make excuses. They bring up the outliers and the black swans like they happen every day.

They use that as an excuse to not have a trade plan. Sure, wacky stuff happens. But people act like it happens every day. These outlier events and black swans come maybe once a year, okay?

What’s important is what you do the other 249 trading days a year.

Watchlist

GoPro, Inc. (NASDAQ: GPRO) has been fading for most of the past year. The chart looks like a penny stock company on life support:

On Monday (August 31) retail traders figured out that YouTuber Mark Fischback (Markiplier) disclosed an 8.5% stake in the company on August 20. It sent shares soaring in after-hours trading.

The stock halted at the open on Tuesday so the company could announce a merger with Starman Optical.

GPRO was a solid dollar cross play after-hours on Monday.

As I write, it’s trading in a range between the $1.20s and $1.50s with major resistance (M/R) at $1.97.

If it continues to hold, look for a continuation play today or tomorrow. Remember, this is the slowest week of the year for traders. So, unless it gives everything back, it’s worth keeping GPRO on your rolling watchlist into next week.

On My Radar

• The best book on black swan events (a must-read by Nassim Nicolas Taleb)
• My favorite by Nassim Nicolas Taleb is “Antifragile: Things That Gain from Disorder”
• If you like the idea of catching after-hours runners like GPRO, sign up for the Night Tape watchlist (it’s free)