3 Pieces Of Advice For New Stock Traders Coming Into The Market

Michael Katz, CEO of Trade The Pool joined Benzinga's Premarket Prep team and gave 3 pieces of advice that all new traders should pay attention to.

Transcript

00:00No, I had a question for Michael. Michael, seeing traders come in and come and go,

00:07what are the three things of advice that you give to new traders, people that are coming in,

00:14even before they get an approved account? What would be three things that, I mean,

00:21things are always changing, there's different market conditions, but seeing a lot of people

00:25come and go, what three things, words of advice would you give the traders?

00:29Yeah, I mean, that's a great one. First of all, obviously the risk side. I see a lot of traders

00:36coming in and, you know, just swing for the fence and trying to make it on one big trade. But

00:41actually those that pass the evaluation and succeed also in the funded phase are those that

00:47start in the position with a small chunk, you know, just a feeler. So you start the position,

00:53you test the water, you understand if it's going to your direction, and then you add more to your

00:58position, something that a lot of the traders don't do, even though, you know, they maybe learn

01:03it on other courses. And we, of course, talk about it many times on our education. You got to start

01:10by testing the water. If you're risking $100 per trade, don't risk it all in one click. Start with

01:15$20 risk, add a little bit more, another 20, another 20, another 20, build your position.

01:21That way, you will have much more higher success rate, no doubt about it. And you will know that

01:27this is the right trade that you want to take. And once, you know, the stock goes to your favor.

01:33So this is by far the most important one that I see repeat itself over and over again. And of course,

01:40the other stuff are straightforward, over-trading. A lot of the guys just go and click the mouse key,

01:48you know, just want to grab that trade. But you actually need to take a step back, focus on the

01:55setups, the A plus setup, A setup, wait for that moment when you actually need to click the mouse

02:02key and not just because the stock is running. I'm looking at the, you know, some of the charts

02:06that are here, VRAX, right? V-R-A-X, just popping from $2 to $6. Some of our traders are in right now

02:16and also took some profits already. But if you look at it, in most cases, when it's running,

02:23also NVIDIA, Tesla, anyone, you know, any stock that is just running, in most cases, you want to

02:28jump in and not miss the train, right? But on those cases, in most cases, you will lose because

02:35you need to wait for that pullback. You need to wait for a consolidation before you jump in

02:40and so on. Like you said also, Dennis, about Tesla or NVIDIA jumping in at $1.25, right?

02:48So you need to wait a little bit. This is also something that I see a lot of the times going on

02:54when traders does that. And so it's kind of straightforward, you know, trading in general,

03:01the same concept, the same tips that you'll give a new trader will apply here as well.