Bulls on Wall Street
Over the past 18 months we’ve seen droves of retailers enter the markets.
Regardless of how long you’ve been trading, this important question needs to be asked yourself whenever you are struggling in the markets:
Am I treating this as a hobby or a job?
Trading is easy to get started, but not easy to succeed. Anyone can open a brokerage account and buy and sell stocks. That doesn’t mean you are a trader. Pick-up basketball against the NBA. Same sport, different league.
Read this carefully:
Gambling vs. Trading
One of the most common misconceptions is that trading is the same as gambling. Trading CAN be treated as a game of chance. But unlike slot machines in the casino, trading has the ability to give the player a statistical advantage. Here are the main differences between trading and gambling:
Traders don’t act for the rush. You act to make money. If you’re trading for the thrill, that’s fine. It means that for you it is a hobby, not a profession.
Your trading business plan
When you commit to trading, you make a commitment to starting a small business of which you are the CEO. They all name shots.
You wouldn’t go to a bank to get a business loan without a comprehensive business plan to make sure you are worth the risk. The same approach is required for your trading. You must be able to answer all of these questions in your business plan:
What do you do before the market opens? I can tell how good a trader is by his pre-market preparation routine. Commerce is one of the most pressurized professions.
How do you expect to make the best decisions when you roll out of bed 15 minutes before the market opens without a watchlist or game plan?
You need to be at your computer at least an hour before the doorbell rings. Look at the stocks that are gaping in front of the market. Check out the company’s press releases. Look at their diagrams. Create your watch list. Identify the most important levels. Plan for different scenarios.
What do you do before a trade?
An impromptu trade with no plan for the world’s best stock is a bad trade. You can’t enter a trade without identifying these 5 things:
If you don’t prepare to trade, prepare for failure. When you know what to do before you trade, you need to know your trade metrics.
What are your trading metrics?
How much is your profit share on your trades? What is your average risk vs. reward? What’s your top performing setup?
You need to know your trading metrics by heart. You cannot risk your hard-earned money if you cannot ignore the likelihood of a particular market scenario.
You wouldn’t bet in Texas Hold’em without knowing the river. This is what you do when you place trades without knowing your metrics. Your trading journal should be your best friend as a budding professional.
Hobbies are activities that you enjoy doing. Professions are activities in which you strive for excellence and perfection.
Look in the mirror. Are you doing this for fun Or are you actually trying to make money? Do not hesitate to contact me if you have any questions!
July 4th discounts are here
These discounts won’t be around for long.