Teri Ijeoma on "The Risk Worth Taking" & Building Your Own Trading Plan

Morning Movers. I'm coming to you live from the floor of the New York Stock Exchange. Retail participation in equities sitting at near record highs, with individual investors now making up more than a fifth of total equity volume here in the U.S. But some potential traders investors feel like they've missed the boat. For more insight, we want to welcome in Terry Ijeoma. She's the author of the new book The Risk Worth Taking and founder of a Trade and Travel. Terry, it is good to see you again. So good to see you, Diane. So you are in the middle of your book tour right now. You say investing doesn't have to be intimidating for some. We do have some sophisticated investors, but we also have some novice investors. We have a big retail investing trading community who follows us. Tell us, especially for the novice investor, why doesn't investing have to be intimidating? Yes. For so many retail investors, they think the first thing about investing is it's a gamble and it's risky, but they need to know that you actually can take steps to make it less risky. You can have risk management, you can have charting to make you have a little bit more discipline in your trading. I'm so glad you mentioned that about it's a gamble because there's been more conversation about it feels like gambling now. This feels like a casino. I just had a guest on earlier who said one of his concerns is these single stock levered ETFs. Right. And so it kind of increases that gambling mentality around investing the zero day to expiration options. That's picked up a lot of demand. Talk to us a little bit more then about risk management. You say that's more important than big wins. Yes. A lot of the things that I teach is all about protecting your risk, having a stop loss in to make sure that you have some protection. On the downside, if your stock goes down, making sure that you, you calculate your reward to risk ratio on the front end, making sure your reward is three times higher than your risk, looking at charts to figure out when to get in and when to get out of a trade. All of that is part of risk management to protect you on the front end before you even take the trade. Tell me a little bit more about the three C's of investing. That's one of your mantras. Tell us what that means. So in the book, the Risk we're taking, the grandmother tells her daughter, anytime you're trying to take a risk, you should do three C's. One is have well, actually four C's. One is have courage, then clarity, which is getting to know the basics, then caution, which is risk management and then confidence, which is finding the edge. So in trading, what that looks like is mastering the basics is how do you press the buttons to get in and out of a trade, but then with caution, how do you have risk management, which we just just discussed? And then with confidence that's reading charts or even getting to know other investors who've been doing well and following their trading plan. And I want to jump in and just actually make a note, because I think I should have started with this because I started reading this book and it's different than your usual like finance book, because I did think it was going to be one of those prescriptive books, right? This is what you need to do. And some of them are like very interesting, but some of them can just, you're reading and you're like, okay, I can't even get through this book. What I notice about this, it's essentially a novel or some might say a parable or there are parallels in this. What made you take that approach? Because it's it's a novel, but it's clearly infused by some experience. Yeah. When an editor first approached me, they said, Terry, I want you to make a technical analysis book. We want people to know how to read charts. We know in the zone has done well for years, but we need a new, fresh technical analysis book. So I started, I took my trade and travel course and I made like a how to on charting. It was so boring. I was falling asleep reading my own book. So then I said, okay, how do I make this fun? And I thought about when I had first learned about trading, I've been trading 16 years, but how did I first learn? And it was when I had left my job as assistant principal and started traveling, and I was teaching myself how to trade as I traveled. I figured if I could put that story into a book, people would learn how to trade. One of the things that stand out to me, if you're not going to be able to see this on camera here because the words are too little, but page 230. That is where you there's a chart and there's a graph. We'll call it a graphic, but it's an illustration. And I love the way you do this because you show what support and resistance looks like. And we do these charts all the time. We are, we have the thinkorswim platform as you know, and people don't always understand that. How do I read this? How do I read this candlesticks. But you draw a, you know, a really cool chart or you have an illustration of this chart of how to read and how to understand charts. I wanted to show people that there's a turning direction in the candlesticks, but I use the idea of a tug of war. There's a tug of war between buyers and sellers. The buyers are winning on the green candles, and the sellers are winning on the red candles. And when you see that change in direction, that's when you're looking for a support or resistance level. And when I could show that, then it's easier to understand. Okay. And let me ask you this. You say confidence comes from education, not luck. Some people have sometimes gotten lucky, right? And then that creates some feel a feeling of confidence. Is that a mistake? Oh it's euphoria. I feel like when you win too soon, you feel like it's easy. But I want people to have consistent small wins over time. I think that's how retail traders and investors do well over time. So if they can have consistent small wins, they can be traders for life. Tell me about one of your biggest wins. One of my favorite wins was I made over $1 million in a day trading Amazon. I've done that several times. One of my favorites recently was selling puts on meta. I did a really, really great. I feel like I did a great job, but okay. Yes, I've made over $1 million in a day several times and that's been exciting. Tell me about one of your biggest, we'll call it losses. I was going to say laggards, but you know, yeah, in that experience, I actually put on my YouTube channel. I had lost $400,000 on a Chipotle trade. Now my account is substantial. So that didn't hurt me too much. It was still in my reward to risk ratio, but it was one where I didn't actually look at the chart in advance. I didn't follow my own trading plan. And that's one thing I tell investors all the time you have to have a trading plan that includes these pieces of risk management and also looking at your your charts, but then you got to stick to it. And having that discipline and patience is the most important. And I want to leave our viewers with a final thought. What's the biggest takeaway you want to leave us with, Terry? Trading is the risk worth taking. But you need to have a trading plan so you can be consistent, have a plan, execute that plan, be disciplined. That's Terry Ijeoma, she is author of The Risk Worth