85% of Day Traders Fail: 5 Trading Rules | Peter Tuchman, The Einstein of Wall Street

0:00 85% of people who try and day trade the stock market fail. It's way more complicated than that. Time is the one commodity we cannot get back. These are all the little components that make the difference between a successful trader and an unsuccessful trader. Look up in the sky, it's the burns of plants meet the onset of Walsh here from the balcony at the New York Stock Exchange.

0:18 Let's just break down trading, right? I mean, 80%, 85% of people who try and day trade the stock market fail. You ask yourself, well, I mean, it shouldn't be rocket science. You know, they're gamblers, they're people who started, you know, um working on keyboards, you know, playing video games and whatnot.

0:36 A boon needs to know that the generation of people who are now trying to learn how to trade came to us through gaming. Right? Anybody here age 12 through 30, right, was playing video games when they were growing up. So they know how to work a keyboard. They know they're very dexterous with their hands.

0:54 So why shouldn't they just be able to trade? I mean, it's just like you have a chart, you know, you've got moving, you've got lines on a graph. You know, you should be able to figure out when to get in, when to get out. However, it's way more complicated than that. Discipline and consistency are the keys to the castle.

1:12 Today trade the stock market. You said, first of all, language of the stock market, you need to understand what is a bid or an offer. What does it mean to take stock? What does it mean to sell stock? Uh, you know, it's a lingo, it's been going on for hundreds of years. You need to know the lingo. Secondly, you need to go and know the psychology of trading.

1:32 What does that mean? Well, anybody can be taught to get into a stock or out of a stock, get into a stock. You hit a button, the graphs line up, the trade, you know, the the the uh uh the lines sort of intermix a little bit, but it's what you do when you get into the trade that makes all the difference in the world.

1:50 That's the psychology. People tend to get emotional about money, right? They want to they want to hit a home run every time when this is a game of hitting singles and doubles. These are all the little components that make the difference between a successful trader and an unsuccessful trader, right? I mean, it's actually it's really very difficult.

2:11 It's simple, but it's very difficult. And we tend to overcomplicate it in a big way, right? We just want to get in, we want to make a whole lot of money, we want to hit a home run. What people will do is they will get into a stock using FOMO, hype, hope. Those are not successful trading strategies. There are simple and determined ways to become a successful day trader.

2:31 Discipline and consistency is the name of the game. First of all, you want to have a plan when you get into a stock. How much money do I make it want to make in my day? $100 a day, $25,000 a year, $200 a day, $50,000 a year. When I hit my limit, when I hit my goal, I turn the machine off and go home.

2:52 The alternative to that is overtrading. If I overtrade, if I've been for if I make my $100, right? Oh my god, I made a hundred, I can make two hundred. Chances are that you're gonna give back that hundred. I can made two hundred, I can make a thousand. Overtrading is the end-up culprit of making a successful trader an unsuccessful trader.

3:13 Secondly, having a stop order on every trade. A stop order is established by the stock exchange to protect you on your downside risk. I'm willing to risk $50 to make $200 every day of the week, but I'm not willing to risk $200 to make $50 because if I have one loser, I need four winners just to break even.

3:30 So if I buy $100 shares at $50 and I have a stop order at $49.5, now there are different reasons, different ways, different price action that give people the idea of when they should put in a stop order, which is how much they're willing to lose. Some use the average daily range, the ADR. Some people use a 1% of the price of the stock.

3:49 If I buy 100 shares at 50 and I have a stop order at 49 and a half, if it goes to 49 and a half for whatever reason, Mr. Trump sends out a quote a tweet, the earnings come out that are bad, the market goes to, the world goes to war, any number of things. Market goes through, it gets to 49 and a half, or I have my stop order, I get executed, I'm out, I lost 50 bucks.

4:12 On the other side, if it goes from $50 to $50.5, nobody got broke taking a profit. Everybody who's in the stock should pick an amount, half a dollar, and immediately sell 50% of their position. I bought 100 shares at 50. If it goes to 49.5, I get stopped out, I move on to the next trade. If it goes to 50 and a half, I sell half my position, I move my stop up to break even.

4:38 Now I just made a little bit of money and I cannot lose money on the trade. Okay? That's incredible. That feeling of building confidence where I just made a little money and I cannot lose money on the trade because if it goes from 50 and a half to 50, I get stopped out at break-even. I had made my 50 cents on the first 50% of my uh uh uh order, and I have a stop order at break even, so I'm not gonna lose money.

5:02 If it goes to 51, I sell 25% more of my position, and I move my stop up to lock in a profitability of half a dollar. That's what makes a successful trader consistency and discipline. You never want to turn a winning day into a losing day. That is incredibly important. What does that mean? Well, if in the stock, I watch it go up a dollar, I don't make a sale.

5:25 I go get a coffee, I come down. First of all, I'm not using a stop order, I'm not making a sale. It goes down. What do I do? If I bought some at 50 and it's trading at 48 and I don't have a stop order, I'm gonna buy more. It goes to 46, I'm gonna buy more. Averaging into a trade and not having a stop order are the only ways you can blow up a trading account.

5:45 Never turn a winning day into a losing day. If I have my goal and I make my $100, I should turn the machine off and go play golf, go to the beach, go do whatever. Time is the one commodity we cannot get back. But people think, okay, if I bought I want to make more money, I'm doing so well. FOMO, hype, hope are not sustainable trading strategies.

6:06 Turning a winning day into a losing day means I'm up a hundred bucks, I'm up two hundred dollars. And I feel like I got golden hands, I gotta keep trading. And I turn my winning of $200 into a loser of $200. The worst feeling in the world at noon after trading, I'm up $200, I'm up $500, and I give it all back, and I end up at the day, at the end of the day, having lost money is the worst feeling in the world.

6:29 Know when to stop trading when you're losing money, know when to stop trading when you're making money. If I have three max loss trades, I lost $50, $50, $50, I turned the machine off, I'm having a bad day. I will come back from a bad day, but I will not come back from revenge trading. I said it to you earlier.

6:45 If I'm over trading is the culprit of not wanting to turn the machine off when I hit my goal. Revenge trading is the culprit of me losing $150, three max loss trades, and I just can't walk away from the machine. I have to get that money back. I can't, I cannot go home a loser. It doesn't make you a loser.

7:06 Having a losing day does not make you a loser. Okay? But the bottom line is revenge trading will take a $150 loss and turn to a thousand dollar loss. Those are the five secrets of successful day trading. Have a plan when you get into the market, how much you want to make when you hit your goals, turn the machine off.

7:23 Have a stop order on every trade that you do, okay, so that you get stopped out, you only lose a certain amount, predetermined by you. Think about hitting singles and doubles and not going there to hit the home run. Never turn a winning trade into a losing trade, never turn a winning day into a losing day.

7:40 No when to stop trading when you're making money, no one to stop trading when you're losing money. Those are David Green's five commandments of love for a successful day trader. If you do just what I told you to do there, have a plan, have a stop order in every trade, never turn a winning trade into a losing trade, never turn a winning day into a losing day, no one to stop trading when you're making money, no one to stop trading when you're losing money.

8:04 David Green says after 40 years of trading and teaching, you have the chances. The probability of you becoming a successful day trader are way more. Consistency and discipline. That's all I gotta say about that.