So why is this site called Lunch Money Trade anyway?
YOU WILL LOSE. THE MARKET IS NOT
YOUR FRIEND. THE MARKET HATES YOU!
(Everything in this feed is in chronological order. Make sure you start at the
bottom of the feed and work your way up).
So why
is this site called Lunch Money Trade anyway? I am going to let
you in on a secret. Or a trick. It is so simple that anyone can do it, but no
one ever does. The secret will set you free. And it will set you apart from
other traders to be a success in the stock market.
Here is the
secret. The reason why most new traders loose is they trade like they are
eating filet mignon and then out of desperation when their trade goes the wrong
way, they stop out only to watch the trade turn around and go into huge profit.
Upset, they think to get their money back they trade an even larger amount of
money or shares the next time and panic again when it goes against them. And thus,
the cycle begins of losing more, than winning.
Most traders
finally come to the realization that the market is not a get rich scheme
waiting to happen and most find out to late. It is really all about controlling
emotion, trading a ridiculously small or tiny amount of money or shares which
you are super comfortable with and accumulating.
Lots of the trading gurus will say
do not trade with money you cannot afford to lose. Ok that sounds good. I can
deal with that…. Well maybe!
Here is what happens. We enter the
stock market for the first time, and we get all excited because of a broker we
find that has a beautiful trading platform or software with all the bells and
whistles. AND LOTS OF PROMISES.
With all that stuff, we are sure
to win a lot and get rich quick. The
broker has a fee or commission of around $20 for each trade we open and close. (UPDATE
because of competition most brokers have lowered their fees). And a huge
minimum deposit to open an account and start trading. But that is ok because
the software is fancy and cool, and we will make it back…. Because we are excited,
and everything seems so cool.
And if not. It is
ok because I am only trading with money that I can afford to lose. That
is what the trading guru said!
We get our credit card and we
borrow $5000 or $10,000 and its ok because we will make it back or we can pay
it back because we can afford to lose that. Well we think so! We take our first
trade and it goes terribly wrong and we lose about 10%. That is ok, we will get
it back on the next trade. The next trade starts heading south, and we panic
and close it at a loss, only to watch the trade turn around and go into profit.
Well that is ok. Let us borrow some more money so our account looks like it was when we
first started. And the cycle begins.
DON’T DO IT-YOU
WILL LOSE IT! AND DON’T BE STUPID OR IGNORANT AND BORROW OR USE CREDIT CARDS TO
TRADE STOCKS!
(Read my post about brokers. I use
Robinhood. They were one of the first to come out with commission free trading).
Have you ever left the house forgetting
your lunch money at home? Meaning you left your wallet or credit cards at home.
How bad did you freak out or panic? Not too bad, right? Maybe a little
discomfort. Ok so you must go a few hours without food before you can eat. And
most likely, if a co-worker was around, you were saved. So that is why we are
starting with lunch money. We are starting with a lot less than what we
can afford to lose or what we think the trading guru is telling us.
There is no one around to save you
and buy you lunch when you take a trade. It does not matter what the market
does, win or lose, the most we can lose is our lunch money. And I really am
just talking about $20 or so. Let us have fun trading, not stress! Start at the
value menu and work your way up.
Remember this. When you buy one
share of stock, it takes a lot longer to lose lunch money than it does when you
trade 10, 20, or 100 shares. Trade small. Trade happy. Maybe start with one
share or even a fractional share. Set a goal of making $1 per trade. If you cannot
make $1, skip trading, and maybe take a cooking class.
My goal with
the lunch money trade is to fill up the big change jar until it gets really heavy
and take it to the bank and cash it in. Just like when we empty our pockets
every day.
We are going to start with our lunch money,
around $20. Why so small!
Here’s
another secret. We want to win!
But how much can I win just trading with my
lunch money? That is the wrong question to ask. The question should be how much
can I loose! The answer is your lunch money. And in no time, we will be moving from the drive thru lane and
value menu to inside the restaurant, where they serve steak.
Let us fill up the coin
jar first. I know you can do it and I know you can be a success!
Next, we need to talk
about PDT. Pattern day trading. It is easy to get caught up in that, and we want
to make sure we do not.
Any stock mentioned or
thought expressed is not a recommendation or suggestion to buy or trade. I am
not a financial advisor. Check with your financial advisor for recommendations.
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