In the Stock Market Jungle? How Do You Survive?
I often think of the stock market as a beautiful siren that attracts men to the rocks. Of course, there are both female and male traders, but this is my post and my analogy. The stock market sings all the promises that I want to hear, and I indeed listen to the sweet promise of wealth, financial security, and become giddy when I think about taking my father on a cruise for a father and son time. Those of you that know the story of the sirens will recall that a sailor escapes the doom that awaits only if he is able to ignore the sweet tones that drunken his mind. Investors, especially frequent traders, should handle the stock market the same way. The stock market is not an experience that you undergo with a drunken mind blinded by the visions of riches and quick money. It is hard not to dream of the possibilities when you have so many examples in your mind like Warren Buffet, bitcoin millionaires, the guy that brags how he made $350,000 off a penny stock. Don’t fall for it. Trade to trade smart, not to become rich.
I have found that the stock market has a soft side for traders that respect her. How does she define respect? Don’t get greedy. Greed is what kills many investors. In fact, I once read a quote that said 95% of traders that enter the market as active traders fail. Turns out the quote was a good quote. Investopedia states that nine out of every ten people who enter the stock market as an active trader fails (Claytrader, 2018). The reason for this of course is that failure is the tuition for learning. If we don’t learn from our failures, we continue to fail until we can no longer pay the cost of tuition. If you cannot control your greed, you will have a difficult time not ending up in the 90% pool of failures. So how do you control your greed? Establish rules. The rules you establish will help to protect you. No one is going to win all the time trading. No matter how much money, information, experience, or visionary inclinations that a trader has. So, when the market shows you her soft side by rewarding you with profit, show her a little respect, and take it. Do not demand more from her. You might piss her off and let me tell you, buddy when that happens, well you know; Hell hath no fury
Although having the discipline to follow your rules is a big part of trading, there are many sides to trading. There is a technical side, a hunch in your gut side, an informational
Finally, do not use money that you can’t afford to lose. If you pursue the love of money, do not forget that you need your money for current affairs. Dry trade before trying real-time trading. Dry trading is when you use computer (fake) money or write your trades on paper. The trading is not real-time and you lose nothing if your trades go south. If you are trading real-time already, protect your money like it is your family. Don’t place reckless trades. Trading to some degree is gambling, but don’t gamble your money away. Remember there is always a wolf waiting to take money from a lamb. The things to note about trading are:
- Establish and follow rules for trading
- Don’t get greedy
- No one will win all the time trading
- The market will take every dime you have and go on to the next trader
- Dry trade before you try real-time trading
- Never use money that you need for current affairs
- Resist trying to make an overnight fortune and pace your self to success
Good luck as a trader. I hope you have better success than I have had.
The information in this article is not to be taken as advice about trading. The content in the article expresses the opinion the author. The opinion is not intended to be trading advice.
Claytrader. (2018, February 23). The Number One Reason Why Most Traders Fail. Retrieved from Investopedia.com: https://www.investopedia.com/articles/investing/072815/number-one-reason-why-most-traders-fail.asp