Sunday, August 23, 2020

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So why is this site called Lunch Money Trade anyway?

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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