Sunday, September 27, 2020

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LET'S DO THE MATH! Promises, Rainbows, and Realities.

 

Let’s Do the MATH!

Promises, Rainbows, and Realities.

 

Jack and Sally went up to Wall Street to buy a bunch of stocks. Jack’s stocks reversed and he freaked out and he stopped out, but Sally went to Starbucks…. OK, wrong story…. Let’s Do the MATH.

 

Jack and Sally were both new to the stock market. They were so excited because they had both heard the promises from the stock trading guru’s that they could make millions.

They both opened accounts with $1000 and had very big dreams. Oh and the best part was, when they opened their accounts, they received 50 free trades as a bonus, so our math will not include commissions.

 

Jack took his first trade with lots of hope. He bought 100 shares of a $10 stock. His total investment was a $1000. The stock dropped $2.00. Where would you’re stop be? Jack freaked out and closed his trade. Jack lost $200. Bummer!

Sally bought the same stock. But she was a little more conservative. She wanted to make sure the promises that the gurus had told her on the online social networks and the spam emails of riches were true first. She bought the same stock, but only 10 shares. When it reversed and went against her, she was having coffee at Starbucks and did not notice. Then the stock reversed and went to $12. Her alert went off and she closed it for a $20 profit. A nice 2% gain and she is happy that her first trade paid for her coffee and left her some lunch money. By the end of Sally’s free 50 trades, she is up $1000 and well Poor Jack…. Is well POOR.

Shall we do more MATH? I don’t think so. But you should get the point. We should be more like Sally and less like Jack.

Wouldn’t it be nice to make 2% a week with no worries and not stare at the charts all day? By the end of the 50 free trades, Sally has made $1000 stress free and Jack, well he has borrowed money from his credit cards MULTIPLE TIMES…….. Still hoping for those promises he has heard so many times from the gurus about the stock market being his pot of gold.

When you hear of promises of rainbows and pots of gold, especially if there is something being sold like a trading course….. run very fast the other way. Does the guru ever tell you what size account you have to have to make millions? Or how much you could lose trying to hit it lucky? Sometimes people do hit it lucky, but that is not the norm for most traders that are successful. Be happy taking small wins and Rinse, Wash, Repeat.

 

Good things happen to those who trade small and wait. Here’s why.

1. Trading small allows you to wait or stop out quickly without huge losses to your account.

2.Trading small allows you to not get emotionally involved or attached to your trade when the market does not go your way.

3.Trading small allows you to diversify and open more trades across several markets and become a MONEY MACHINE that continues accumulating profit.

 

 

Trade Happy My Friends. You will be a success. 


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