The Plain Facts About Stock Trading
Want to hear a scary statistic? Well, here it is – whether you want to hear or not: “At least 70% of traders lose money” in the stock market. This is according to a report from the North American Securities Administrators Association (NASAA). The report goes on to add that “70% of public traders will not only lose, but will almost certainly lose everything they invest.”
Yikes! Everything? How can that be? Especially with all the charting tools, the stock trading simulators, the books, courses, coaching, and seminars from stock-trading gurus that are available today.
One more little statistic from that report: In all, only “11.5% [of traders] might profitably trade” the markets.
And yet you constantly read about people raking in bushels of cash by day trading – most especially penny stocks. It doesn’t seem to add up.
The Difference Between Winners and Losers?
The difference between the 70% of losers and the 11.5% of winners is – what do you think? The best strategies? Guess again. It is, hands down, a good foundational education about trading and about the markets.
Case in point. A number of years ago a man named Ralph Vince (an expert on the mathematics of trading) conducted an experiment. He chose forty highly educated people – all with doctorate degrees — and gave each of them $1,000 in play money. He then invited them to participate in 100 rounds of a computerized stock trading game. They were even supplied with 100 trades that had a 60% winning percentage.
At the end of the experiment only two of these highly educated individuals – armed with winning strategies – made a profit. Thirty-eight failed! Why?
Specifically because winning strategies do not a trader make!
The criteria that will turn you into a successful trader is time, knowledge, experience and proper guidance. In a word, find some good day trading courses and see which one fits your needs.
Two Ways to Learn
As with most any endeavor there are basically two ways to learn. The first is, obviously, through reading and studying (seminars, online courses, books, videos, etc.). We might call this the formal training.
The second is by experience. The hands-on sensation of the actual day-by-day buying and selling which trigger your roller coaster highs and lows of wildly gyrating emotions. Most day-trading courses included both.
The formal training allows you to learn from the mistakes of others. From their teaching you can learn to avoid the worst of the pitfalls involved in day trading.
Hands-on training helps you get the feel of entering and exiting a trade. The feel of watching that chart move once you’ve pulled the trigger on a trade. The act of exiting at just the right moment to make the profit!
Can you imagine learning to drive a car from reading a book? Or learning to swim from reading a book? So much of it has to do with getting the “feel” of what you’re doing. Trading penny stocks is the same way.
Hands-on training will also help you to know yourself. (It is highly recommended that you begin by paper trading or other means of simulated trading.) What are your basic emotions with regard to money? To investing? To winning? To losing? You had better know ahead of time. Believe it or not, your own basic emotions will play a big part in your success or subsequent failure in day trading penny stocks.
Watch Those Emotions!
Fear is that emotional state of anxiety due to a real or an imagined presence of danger. Fear can impair judgment and cause a trader to recoil from making a trading decision, or to delay a trading decision response.
On the other hand, a self confident person, one with a positive attitude, has a more positive expectation. That person is more likely to take action in spite of a sense of fear. Consider this: winners manage their fear; losers are controlled by their fear.
However, even the most fearful person can overcome that fear with the proper education and training. Using day-trading courses can help to develop self discipline. Self discipline will evolve into self confidence. Once you fully believe in your own abilities (to successfully trade and profit from penny stocks), you will be able to assess and accept risk, and then take decisive action.
If the fear seems overpowering, it is vital that that fear be analyzed. Where does it stem from? From childhood? How can it be faced and worked through? The answer most usually comes through more and more education – both formal and hands-on.
Day Trader’s Traits
Successful day traders must think outside the box. They have to think quickly and wisely. When stocks are fluxuating at split second intervals, making a wrong decision, or ignoring a trade could result in the lost of a great deal of money. Does that describe you?
From the outside looking in, it may appear that day trading penny stocks is akin to gambling. And of course, some traders would prove that assumption to be correct. But they are not the ones who are consistently in the profits.
Day Trading as a Business
Rather than gambling, day trading penny stocks should be thought of as a business. You are both the employee and the boss in this business. You will need another employee – your broker. There will be competitors – the other traders out there, and of course the stock market itself. Just as with any business, there is buying and selling going on. The difference with day trading penny stocks is that this business is extremely fast-paced. (Roller coaster, remember?)
Another part of your day-trading training is to take a realistic look at your day trading business and make plans that will carry you through the long haul. What are your goals and aspirations? The first of course is to make money. But, just as important, is to make money consistently. How is that going to happen?
Working Capital
Understand that your working capital is vital for your business’s survival. Capital preservation is more important than capital growth. Reinvesting profits back into your business should be high on your priority list. What percentage of your total portfolio will be given over to penny stock day trading? Part of it? Half of it? All of it? Make that decision before you plunk down your hard-earned cash.
Can YOU Profit With Penny Stocks?
So can you profit with penny stocks? Absolutely, you can. I encourage you to learn all you can about day trading. Look for good day-trading training courses. Day trading penny stocks can be exciting and rewarding. And with regard to those statistics cited in our intro – they’re really not that scary – as long as you are in that 11.5%. And you can be. Keep your feet firmly planted in good basic foundation of education, and don’t allow yourself to be swept along by hype and high-pressure come-on’s.
Do that and you too can enjoy the cash rewards from successfully day trading penny stocks.
Three of the better day-trading training programs out there are outlined here.
There are plenty of freebies offered to get you started. There are simulators, coaching programs, webinars, mentoring. You name it, it’s included! And you’ll see there is something here that fits your wallet precisely. If you think education is expensive – try ignorance!!