When people are just starting out investing or trading in the stock market and I see the same pattern in their thinking when I meet them at seminars, answer emails, or read their comments. People tend to be focused on learning the techniques or the one technique that will make them a million bucks. And that is important at first but in reality, it isn’t the trading techniques that will make them successful—it is the emotional control and discipline that is required shortly after learning the actual technique.
Take the top professional sport athletes of especially individual sports like tennis, golf, swimming and many others. You notice that the top 20 players can at anytime win the tournament? The 20th ranked athlete can beat the #2 or 3 ranked person and sometimes the #1 person. Why do you think that is? You think it is their golf swing or technique in tennis or swimming? I don’t think so. I can visualize an old man saying “it is all in the mind” while pointing to his head. And it is true.
What kind of thoughts do you have when you trade? What are your expectations? What kind of emotional reactions do you have when you have a losing trade or set of trades or have a bad day? How do you view money? Does greed control you, are you a gambler, do you feel some sort of pressure to perform, do you need the money that you are trading or investing with to pay next month’s bills? These are all factors that influence the decisions you take with your trades. There is a lot more to this than technique.
I can teach you to be proficient at stock trading technically within a short period of time, perhaps within a couple of months. It is the emotional control that takes more time to learn. But if you can learn more about yourself before you open your first stock position, you will make much more money and have fewer mistakes early in your investing or trading career.
Mitch King, Founder
www.TradeStocksAmerica.com
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Investing, Stock Trading
stock market education, stock market investing, Stock Trading
Thoughts from The Daily Stock PIcks Newsletter that I write. I still think we are going to have a lot of opportunities both long and short with continued volatility. Currently, this makes intraday and swing trades the highest probability for the most profit in stock trades. If your desire is to not trade frequently and you are looking for stocks to buy and hold for several months, then it would be better to wait until we see a more obvious point at which stocks may rebound substantially for an extended period of time. You may be waiting for some time though. In the meantime, the short term strategies we have been using from intraday to swings and lately as long as 5 days, have been working for us. I like the idea in this market of taking small bites as opposed to going for a home run.
Best odds only, be decisive, aggressive, mentally flexible, stay in position size, don’t overtrade and wait a little longer to buy and wait a little longer to sell. You will find that will make you more money on your trades.
Mitch King, Founder
www.TradeStocksAmerica.com
Investing, stock market education
short term investing, stock market education, Stock Trading, stock trading education
One of the things that I look at when I am trying to get an overall picture of the financial markets are technical indicators that give the sentiment of investors. What kind of thoughts, as a group, do people have? And it is very negative at this moment.
To try to get a feel of the mood of stock market investors, mutual fund managers, or even day traders, you can look at University of Michigan Sentiment Survey that comes out each month, the volatility index (VIX), which can be used as a contrarian indicator (1) of a pending turn in the market direction, and a variety of other technical indicators that tell us what stock market investors have been doing with their stock positions.
I make the most money in the stock market when I identify individual stocks or sectors that stock market investors or stock traders are selling out of at an increasing rate until ideally, they panic. (Panic doesn’t occur too often). I’ve said for years to people that you want to try to gauge the maximum point of enthusiasm in investors to sell your current stocks (or sell short) and the maximum point of despair in order to buy.
It takes a lot of discipline and courage to do this because it feels like you are going against the grain where nobody else agrees with you. But to quote myself from a book I wrote in 1997, “You don’t make a lot of money doing the same thing everyone else is doing at the same time.”
Here is a quote I just ran across last week that is supposedly from Warren Buffet ….. “Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.”
Warren Buffett
Just remember I said it first! (lol).
Mitch King, Founder
www.TradeStocksAmerica.com
Investing
stock investing, stock market education, Stock Trading