Have you ever seen a Jackson Pollock painting? Probably.
If you haven’t, it’s a trip: lots of crazy colors, splattered all over the place, with no rhyme or reason to the whole thing. Seeing it for the first time, many people say, “This is considered art?” Quickly followed by, “I could do this!”
But the difference between Jackson Pollock and you is that Jackson Pollack actually did it. Furthermore, there is a craft to what Pollock did – a disciplined, well-honed, practice-driven craft.
Day trading isn’t much different. Folks hear about people making millions day trading and they say, “I can do that,” or “How hard can it be?” but many times those who fail lack a disciplined plan.
Such a plan involves a stop loss – your entry, exit, and escape price for a specific stock – as well as a disciplined adherence to technical analysis, be it stochastics or day trading wedges.
There is one area, however, where it pays to not be like an artist, and that is to approach your craft without emotion and know when to take a loss. (Artists tend to be an emotional bunch and then to thrive on drama.)
I just had to take huge losses in BION, HHII, and PLPE. PLPE gave back the 27% gain it made the day before. I couldn’t let PLPE turn into another losing trade like BION and HHII. I have wide stop-losses in place for penny stocks because they are so volatile. You have to set what your stop-loss is and then stick with it.