In this solid post, my web designer/business partner Pallian asks this very question:
He goes on:
I’m a gambler – I like taking big risks and 90% of the time, my gut instincts have been right. But for some odd reason, I’m having absolutely no luck when it comes to trading stocks. In spite of having TIM right next to me giving me unlimited stock advice, I tend to ignore his rules and trade stocks that are not even on his radar. And as expected – I end up losing big. Why is it that I’m trading so erratically? Am I a victim of the Erratic Trading Syndrome (I just made this up – don’t google it!)? It got me thinking – is stock trading for everyone? Am I the 99% of so called traders who lose money consistently in the markets? Have I become a statistic?
I enjoy going to the casinos – 90% of the time I make money on the blackjack table. My girlfriend, on the other hand, hates the casino. So the one time that I did take her to one, I sat on a table and walked out doubling my money in 2 hands of blackjack. She was still not impressed. But now, I’m applying my same gambling instincts to the stock market and it’s just not working. I bought 50 shares of RIMM at $66 when I thought it hit the bottom – and look at it today ($57)! I bought 200 shares of MS at $22 thinking that was the bottom – and look at it now ($18). I’m not sure why I even play these big stocks – none of them have made me any kind of money – ever. Today I shorted MKTS after listening to Tim’s alerts and I finally made some money.
So – should I be listening to Tim from now on and forget all my gambling habits when it comes to trading?
Amazingly, this is soooooooo common. People get into trading because they want to make $, gamble and have a little fun.
THIS IS NOT THE CORRECT WAY TO START TRADING!!!!
Trading all the most popular/random stocks like RIMM, GOOG, BIDU might seem fun, but when your odds of winning are somewhere around 50%, you have no gameplan for when things go right/wrong, have little to no discipline in regards to gain/loss cutting, you’re pretty much setting yourself up to fail.
And when you fail, you’ll blame trading for being random when in fact you only have yourself to blame for you haven’t done the research, you have studied any educational materials and you went into a game that is stacked against you and you didn’t even realize what the hell was going on!
I know, I know–I should be patient and explain the correct way to view trading, that is by studying patterns and variables until your eyes are red and sore, understanding your strengths to your advantage (example: determination, reason) while minimizing your own personal weaknesses (example: impatience, ego) in order to formulate a specific gameplan as to attacking and profiting form these patterns and variables , in order to prevent people from becoming part of the 90-95% of “traders” (PS if you continually lose without changing your approach, you’re not a trader, you’re an addict/loser) who continually lose $.
Well, I am a trader and I don’t have patience to explain the basics over and over again in blog posts. I’d rather use these posts to explain to you mental midgets that I created an entire set of educational trading DVDs so you can just buy them and leave me in peace.
Of course, AFTER you watch these DVDs I’m more than happy to answer any and all questions because then at least you’ll have some grounding in how I continually make $ and how it’s possible that I can be up 150% in the last 12 months even while making tons of mistakes, dealing with the ridiculous pattern day trader rule all while spending the majority of my time blogging, working on my new websites/DVDs and taking cool little mini-vacations.
In short, I do believe anybody can trade, just like anybody is capable of going to college. In both cases, you have to study your asses off as the better trader/college student you want to be, the more you’ll have to study/prepare/go over course materials again and again so as to better understand the subject matter.