Question:
I am a fresh face novice venturing into this unknown world. I have very little resources with a big ego to strike it big. I need advice and guidance.
Kingsley from Noviceberg
Answer:
Kingsley’s question is one I have addressed in this column before, and I will address it again directly in a moment. Before I do, however, I want you all to know it raises an issue I have thought about for some time now …
Kingsley, it pleases me that you want to trade and it concerns me that you outright say your goal is to “strike it big” with minimal resources. The implication is that you see trading as a quick way to the riches you apparently desire. If you don’t lose this notion, you will lose your money, however little that may be. One more time for all those who might have missed this before—trading is work. It takes time and effort to learn how to do it properly, as well as to achieve consistent success. My advice is to reconsider your desire to trade until you have the correct attitude, solid skills, and you have more capital resources.
The issue I mentioned in the opening directly relates to Kingsley and the millions of other beginners like Kingsley who are trading real money on a global scale everyday in every market around the world. One study I read concludes that some 70% of retail day-traders lose money. If this is true, or even close to true, what is the implication for the rest of us who trade retail, either on a day basis or for the short term? Does it mean there is more “money in the pot,” as it does in poker, or is it a negative that actually hurts us? Certainly the fact that millions of amateurs are trading daily increases liquidity, which is good, but it also has the potential to move markets based on hunches, gurus, manipulators, and bad skills. Even though I encourage folks like Kingsley to learn how to trade, as it can be rewarding, I wonder if this is a good thing or a bad thing? What do you think?
Trade in the day; invest in your life …
