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2024/11/02

MYTH: All Successful Traders Do THIS...

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Editor's Note: My friend Bryan Bottarelli, the Head Trade Tactician at Monument Traders Alliance, is one of the most knowledgeable and passionate traders I know.

In today's guest article, he shares the biggest lesson he learned from his early days working on the Chicago Board Options Exchange, or CBOE.

One of my favorite things about Bryan and the MTA team is how they make trading relatable and understandable for everyone - regardless of their experience level.

In fact, next week, they're hosting a free "Election Open House," where anyone can drop by their trading chat room for live trades, training sessions, and discussion with like-minded traders.

I've participated in some of their Open Houses before. They're a lot of fun (and incredibly informative).

Click here to sign up for Monument Traders Alliance's FREE Election Open House!

- James Ogletree, Managing Editor

What Most People Don't Understand About Trading Stocks

Bryan Bottarelli, Head Trade Tactician, Monument Traders Alliance

Bryan Bottarelli

Imagine this...

You've spent your entire life hearing about the importance of investing.

You've seen the success stories...

You've heard about other people turning small accounts into massive, life-changing amounts of money.

And now... YOU want IN on the action.

You've completed school. You're well educated. You've gotten a job. You've started building your savings.

You have a nice car... maybe even a nice house...

And finally, you have enough to stash into the market - so you can get that money working for you.

You're excited to get this going, so you open your trading account and put your first deposit in. You're ready to start making trades.

And then... whoa. Holy overwhelm.

You see all these stocks. Thousands of them. You have no idea where to start. Your beginner jitters kick in.

You feel like a fish out of water. So... you decide it's time to get educated.

You watch a few tutorials on YouTube...

You read some articles in The Wall Street Journal...

You're simply looking for any sort of guidance on how to get started.

Your brother-in-law has plenty of stock market opinions (mostly bad ones)...

And your Uber driver gives out free advice all the time (and it's even worse advice, if that's humanly possible).

But all you want is a stock ticker to trade...

One that'll make you feel secure about where you're putting your money.

Is that so hard to find?

Shockingly, the answer is "yes."

So finally, you just say "screw it" - and you make your first trade.

Some time later, the results are in... and they're bad.

You suffer a loss. So you try again...

And you take another loss. Then another.

Now you feel frustrated - and pissed off.

You feel like you're wasting all that hard-earned money you spent years making.

And the worst part is... you feel like you'll never grow your wealth and achieve the financial freedom you've been dreaming of.

I bet you've heard similar stories before. In fact... this may very well be your own story. And even though this might sound cliché, I can tell you this...

You're not alone. I know - because I was once there.

When I first started trading stocks in my dorm room at college, I was desperately trying to find that one stock that I could consistently trade to make money.

Spoiler alert... I never found it.

And so my college dorm room track record was mixed (and that's putting it lightly).

But that all changed when I took my first job out of college...

When I started trading on the CBOE back in the late 1990s, I was thrown into a trading pit.

I felt as naked and exposed as the day I was born...

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However, on the CBOE, something was dramatically different.

You see, I was taught to read technical charts and pay attention to business fundamentals. I also was taught about volatility - and how the market can change on a dime.

But the most important thing I learned was this...

The best traders trade only a small handful of stocks.

You see... there's this myth that traders are looking at thousands of stock charts every day - and crunching all these complicated numbers to make trades.

Guess what...

That's not true at all.

In fact, on the CBOE, most traders were assigned to a specific trading pit - and they focused only on the movements of 10 to 15 stocks.

That's it.

When you become intimately familiar with 10 to 15 stocks, you can trade them consistently... time after time... with a very high degree of accuracy.

In other words...

This notion that you need to know how to trade 5,000 stocks is a complete joke. No successful trader does that.

The truth is...

The most effective traders have mastered the art of knowing how one small cross-section of the market moves.

This is why investment banks like Goldman Sachs have teams of just biotech analysts... or just retail analysts.

Each team focuses only on one specific sector of niche stocks.

You also see this with some of the greatest traders the world has ever known.

Charlie Munger used to own just three stocks. Three!

Indian billionaire Mohnish Pabrai also had more than half of his capital allocated to just three stocks.

Ryan Cohen - the chairman of GameStop (NYSE: GME) and founder of Chewy (NYSE: CHWY) - traded just two stocks for a long time.

And that's the big takeaway for today...

If you trade less... you could make more.

Yours in smart speculation,

Bryan

P.S. Next week, my partner Karim Rahemtulla and I will be hosting a free, week-long "Open House" in our trading chat room, The War Room.

We've hosted tons of Open Houses through the years... but never on Election Week.

If you're worried about the election - or if you're wondering how to trade in the midst of an uncertain and volatile week - then signing up for the War Room Election Open House is a no-brainer.

It's completely FREE to attend... and it gives you live, real-time guidance from two trading pros on how to manage every day of the week.

Not only that, but you also get five live training sessions, with a new lesson coming each day. Other trading services charge thousands for this type of instruction. But as an Open House attendee, you get it all for free!

The doors open on Monday at 9 a.m. ET, so don't be late!

Click here to make sure your name is on the list for our first-ever FREE War Room Election Open House!

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