Track 2 · Lesson 13 · 5 min
Seven common mistakes
The errors that turn a sensible play into a losing habit, and how to avoid them.
- Picking the best-looking backtest. With 100 plays and 377 stocks there are 37,700 combinations, and some will look amazing by luck. Look for plays that do reasonably well across many stocks, not one that did brilliantly on one.
- Acting on intraday moves. A stock dipping below its average at noon isn't a signal. Wait for the close the play actually uses.
- Forgetting costs and taxes. A fast play that switches 30 times a year can lose its whole edge to trading costs, and in a regular account it can create a pile of tax bills.
- Quitting after a run of whipsaws. Every trend play has stretches of small losses. Dropping it then usually means missing the one big call that pays for them.
- Treating a micro cap like an index. Plays behave very differently on tiny companies: prices jump, trading is thin, and a single news story can wipe out half the value before any play can react.
- Confusing a good company with a good trend. A play doesn't know whether a business is good. It only knows whether the price is behaving a certain way. Both can be true at once, or neither.
- Expecting timing to beat buy-and-hold. Across Be The Puck's tests, most plays earned less than simply holding but lost less in crashes. Judge a play by the job you hired it for.
Where next
Put it into practice: Call it on real charts, drill the flashcards, or head back to the signal board and sort it by "All plays" to see which stocks most plays currently agree on.
Check yourself