We all want to hear your opinion on the article above: No Comments |
We all want to hear your opinion on the article above: No Comments |
Today, the stock market was closed for observance of the President Day. Boy, I wish I could have those holidays and be at home doing nothing the same as bankers, government, and schools. But I still have to work as my trading account is not yet providing enough income to live off of it.
Besides work, I try to do what Warren Buffett did and still does – read. So I read books about history, investing, trading, and trading psychology. And the trading psychology books are really revealing. It shows you how ignorant I was when I approached the markets in the first time.
The books on market predictions and analysis show how futile it is to try predicting the markets and rely solely on ones analysis. And it is also saddening how many people approach and invest their own money having little knowledge about the markets. They are just simply gambling.
Many times I told myself that if I was (and maybe still am) this ignorant and oblivious, I am then shocked. A complete lack of basic principles of investing or trading, very little knowledge of market historical behavior, predicting, basing trades on predictions and biased analysis… it is all shocking and saddening at the same time.
But I guess, everyone must go through this path of realization how stupid one was before making money. I went through the same path. I too thought I knew everything and even believed I knew better than what the Mr. Market tried to tell me.
For whatever it is worth, and you may totally dismiss me, but take my advice – study the markets and psychology of trading/investing, define your plan and stick to it and never deviate, never break your rules because you may think at some point that “now I know everything (or better).” Learn from my own mistakes.
Tomorrow, the markets will resume trading after the extended weekend. As I posted many times before, I use 50% of my options trading profits to buy dividend growth stocks. And since February was a very successful month to me so far, I made more profits last week which now allows me to purchase more shares of depressed stocks.
The fist and second week, I could buy Coca Cola (NYSE: KO), Valero (NYSE: VLO), Realty Income (NYSE: O), and Berkshire Hathaway Inc. (NYSE: BRK-B).
Tomorrow, I will be adding another stock to my portfolio – McDonalds (NYSE: MCD). It wasn’t an easy decision. Many of the stocks in my watch list were in a “correction mode” and I wish I could buy them all. But I do not have enough money to do so. Therefore, at this moment, I had to prioritize. And my biggest dilemma was to decide between JNJ and MCD. I decided to add MCD and hope JNJ stays down longer so I will be able to add it later in February or next month.
Although I am a bit skeptical that I will get another opportunity (but I may) as I see the stocks recovering really fast from the recent correction. But we will see. I might get another chance to buy more shares.
We all want to hear your opinion on the article above: 2 Comments |
I always keep looking for way how to make more money – create a passive income stream. I am lazy and passive income is good because you do not have to move a finger and still get paid.
The video below is interesting in one way – it made me thinking on how to help myself in creating another stream of income. In the past I was vastly unsuccessful. And when watching the video below I realized that as a visual person, visualizing my streams of income could help me to be more creative.
So, now I have some ammunition to work on…
We all want to hear your opinion on the article above: No Comments |
In order to trade successfully and stay in your comfort zone, I believe you need to know exactly what to do in any situation of your trade outcome.
No analysis, no oscillator, no market prediction will tell you what the market would do next. It is impossible and if anyone tries to sell you a miraculous winning strategy secret, he is lying. If any such secret exists, the one selling it to you would use it for himself and get awfully rich.
Trading is 90% about psychology and the rest is skills and knowing what to do. In order to trade successfully and have consistent returns, you must do the following:
1) Have a trading plan and strategy. Always know what to do in any situation.
2) Have enough money in your account so you can manage your trades when they need adjustment. The worst case what can happen to you is to be forced closing your trade at a loss due to a margin call.
3) Never predict the market. Always trade what you see is happening and not what you think will happen because it may not happen at all.
4) Trade only a handful of trades you have time to handle and manage. If you still work a full time job, opening 1000 different trades will knock you out in a sharp sell off. You will not be able to manage them when needed.
I am a visual person. It helps to have the process visible. Here is what my strategy decision process looks like:
(note, I took the IT classes about 10 years ago and no longer remember exactly how to create the flow charts properly. So some ways above may not be correct and I apologize for it.)
When trading options, you must be perfectly OK with anything what’s depicted above. If you are OK with any of the point shown above you will not be surprised, angry or anxious about it and you will trade comfortable. And when comfortable you will also become consistent.
We all want to hear your opinion on the article above: 5 Comments |
Recent Comments