My guess is many of you are finding trading difficult in these days of incredible uncertainty. I am thinking this because of, well, the incredible uncertainty in the market. As well, the question below provided another clue.
Is currency trading safer than buying stocks?
The general answer is that all trading has inherent risk, and when one trades without adequate knowledge, skills, or experience, one compounds that risk to a great degree. More specifically, this type of market compounds the inherent risk to a much greater degree, and if you are trading without adequate knowledge, skills, or experience, you are in trouble, to say the least.
Currency trading and stock trading are two different animals. Each requires its own set of particular skills to trade the market successfully. As to the safety issue, I don’t see one market as more or less safe than the other market. I see both as potentially unsafe, given what I said in the paragraph above. As to my opening paragraph …
Yesterday, I received a call from my brother who has his retirement vested in the market. He said he was beginning to panic and who could blame him, given what he and the rest of us went through just two short years ago. He asked if he should sell off his retirement to protect it. Mind you, this is a big question for me, as he looks to me for guidance in this area. I gave him the same answer I gave him back in the fall of 2008 when he was panicking about the precipitous decline in the market back then …
“No.” When you are in the market for the long haul, the last thing you want to do is sell in a rapidly declining market. All you do is add to the sense of panic. I told him them to hang on, grit his teeth, swallow the fear, and be patient. He did as I suggested and before this past week, he was thanking me for the advice.
This week, however, his mindset had reverted to fear-based, reactive thinking, and this, my friends, is the reason this type of market is so difficult to work. Fear-based, reactive thinking is driving it, and that mindset can change from one day to another. The fundamentals are out the window, replaced with assumptions and bad, and I do mean really bad information.
I also told my brother that the market today is completely different from the market in 2008. The difference is the fundamentals. Back in 2008, we were in a recession caught in an avalanche of truly bad news about the occurring financial collapse. “Bleak” is a word that hardly described the immediate future back in the fall of 2008. “Despair” is a word that described the general sentiment of most folks who did not understand, who simply followed the breathless media down the path to emotional oblivion. I suggested that if he did not sell back then, he should hold on now, as the word “bleak” hardly describes the immediate future and “despair” hardly describes the general sentiment of those who do not understand. He took a deep breath and then thanked me because he felt better. If you are panicking, take a deep breath …
Trade in the day – Invest in your life
