It’s deceptively simple. Picture this: move your mouse over the BUY button and click. A little while later, move your mouse over the SELL button and click. Immediately, your account registers an additional $1,027.03
If you were watching a professional day trader in action, that’s all you might see.
Let’s tally up what it takes:
• Calories expended for this money making activity: very small.
• Experience required to pull this off time after time: significant.
• Emotional discipline involved: huge.
So, do you want to make fast, easy money with a few mouse clicks before you head out for a round of golf? Sure you do. If it really is that easy.
Is it? Yes and no. It can look like it’s really easy to day trade. But, and this is a HUGE ‘but,’ you need experience and discipline to actually pull it off. The problem is that you can’t buy, beg or steal this experience and discipline. You have to earn it.
You see, money changes people. Money changes you. I recently read about the largest Powerball winner in history. Two years after he won, he wished he could put the genie back in the bottle. All that money had destroyed his family, killed his daughter and turned him into an alcoholic. Like I said, money changes you.
You can learn about the technical aspects of trading from books. There are lots of different ways to trade profitably, so pick the one that’s right for you.
You can learn about the psychology of trading from books as well. My favorite is Trading in the Zone, by Mark Douglas.
Let me explain what I mean by ‘learn.’ I mean that you can memorize the intellectual facts involved in developing a successful trading psychology. This is NOT the same as truly UNDERSTANDING the psychology of being a successful trader. Only the school of hard knocks can teach you that.
I warn you, this is not going to be easy.
Why is that? We all like to believe we’re “special.” It’s nothing to be ashamed of; we’re biologically wired for this belief.
But here’s where you run into trouble. You see, the stock market is ingeniously designed so that everyone has an even chance to make money. (Aside: don’t get me started about scams and back room dealing.) Everyone can see the same bid and ask prices and everyone has the same BUY and SELL buttons under their itchy index finger. NOBODY IS SPECIAL. (Another aside: let’s leave the market maker out of this.)
Everyone has the same information for picking stocks, buying or selling futures, or going long or short an option, etc.
Perhaps you can see where the problem is. We all like to be treated as if we’re special, but the markets are designed so that nobody is treated this way. This goes against the very grain of what we believe about ourselves.
The solution to this? Humility. True humility. There’s no faking it. You’ll fool nobody but yourself. The markets will simply ignore what you believe about yourself and take your money. And, if you are truly humble, skilled and experienced, it will give you back more than it takes.
One final warning: being humble is a lifelong battle. Slack off a bit and your need to be special sneaks back in.
Is trading easy? Yes, if you’re experienced, skilled, and most important, truly humble.
Doug Newberry is the founder of Investing Systems Network. He builds very reliable financial software so investors of all kinds can trade stocks with confidence. Tens of thousands of investors in more than 25 countries enjoy his weekly radio show and his newsletter.