Let’s get one thing straight… if you are investing in the market, you’re losing money. Sorry to be so harsh, but it’s just the hard, honest truth. You can’t be an investor anymore. Sure, we’re talking about semantics here, but the set it and forget it mentality of automatically “investing” ten to fifteen percent of your salary into a mutual fund or stock has gone the way of the dodo. As in extinct.
The buy and hold strategies from a decade ago are going out of the window, and the basic fundamentals that generations grew up learning to use to gauge the market are gone. Well, not gone exactly, they are still there, but they can’t be used as accurate judges of buying a stock. P/E doesn’t work… balance sheets… so much useless paper. Investors are losing their shirts, their savings and their taste for the stock market. Why?
Traders rule the market right now, and it doesn’t look like they’re going away. Remember several weeks ago we talked about using mass psychology to read how the market will react to news? Let’s revisit some more psychology and talk about the generational gap for a moment.
Every year, more and more traders jump into the market with new tools and technology for trading. Many a guru has positioned themselves stating “Fundamentals will not change.” But they are wrong. Let’s take Generation X, which grew up on Atari, weaned on Nintendo, and were the first movers into laptops and mass personal computing. Gen X made AOL and “You’ve Got Mail” a cultural icon, and become very comfortable transacting through cyberspace. Gen Y, the group right after turned working on the internet into almost second nature. These were the groups that created and embraced the dot com era.
The generations that followed grew up in a world of computers, and instant information. This group embraced Second Life, an actual “alternative life” online! Their comfort level with technology is second nature, and as they entered into the workforce, GenX and GenY are combining acceptance of computing and statistical analysis to trade by the push of the button. It’s e-trading to the next level. It doesn’t matter what a company looks like, or the numbers behind it, the generations that are in charge of hedge funds have taken over.
They love computers, they love computer models and stats, they are not investors, but they are traders.
So you love computers, you love computer models and statistics, and you want to be a trader? How can you play like the big boys and not lose your nut?
Easy. Use your computer. Well, maybe we should say simple, but not always easy. You have to be willing to learn. And this is where most folks bug out. They don’t want to learn.
I once worked with a guy who loved to fish. He was always late for work, and he always complained about the job. Anytime we introduced new software, or there was a change of any kind, technological or otherwise, he would piss and moan and drag his feet on learning how to do it. He hated learning. And yet, he could talk to you for hours about tying flies, or building lures, or the intricate details of how a spinner bait works. On his days off, he would rise before the sun to practice his hobby, and spend hours devouring texts and how to manuals on lures, locations and other information involved in fishing.
It wasn’t that he couldn’t learn he just didn’t want to learn about how to do his job better. He didn’t have passion for it.
So the single most important ingredient for day trading is you must have passion. You don’t necessarily need passion for the companies, or even passion for the market, but you must have a passion for money. I quote Gordon Gecko here, “Greed is good.”
Look, money is a tool, and a resource for you to use, so never blame money or lack of money for anything. One of the best things I ever learned from one of my mentors was never to say “I can’t afford it,” but rather to say “How can I afford it.” You must ask yourself, “How can you afford to NOT learn how to trade today?”
If you are ready to learn how the big boys are playing the game there are several steps you can take. This includes learning to read puts and calls on the board, and how to automate your trades, and set saddles and protection.
It’s all basic stuff that you can find in our day trading course at www.insidetradingstocks.com. Go enter your e-mail address right now so we can send you a ton of value packed information you can use to profit in this new market.
But if you don’t think you can learn to read what the big boys are doing (and remember we’re defining big boys as hedge fund managers and brokers) then take your ball and go home. I think most CD’s are paying 3-4%, and those are super safe investments. You could earn $3 every year for every $100 you invest. There are charts online that will show you how much you can earn by the time you retire, but trust me when I ask, do you want to work hard when you retire and live like a pauper? That’s what CD’s will get you.
Or you can embrace this new market and keep educating yourself for how it’s changing. Take GM for example. GM is in bankruptcy right now, but the stock is still trading. How, you ask? What would you consider the old school fundamentals on this company to be right now? You’re not wrong, you’re just not thinking correctly.
See, the big boys saw GM stock drop to just over $1 per share, and then bought up blocks of shares using options. We’re talking billions of shares here, and as the market reacted, the stock price went up pennies. Can you multiply a billion times .05 cents? They cashed out and shorted the stock, and it went down pennies. And they repeated, and repeated, and based on volume alone, made a ton of cash and consequently drove the price of the stock up to $1.50 where it’s trading around today.
Simple right? All you would have to do is learn how to read the options board to see which orders are trending, and you could turn a profit too.
But you don’t have billions to invest? What? Are you telling me that you’re hard working individual, and you haven’t tucked a billion dollars into your savings account yet?
What’s stopping you?
Oh right, there is the whole hour of time for wage thing that the majority of people do. Okay, we’ll cover that in the free material you can get at our website just by entering your email and tell you how you can work two hours a day and make more than your salary. But we’re talking about you playing a market trade on GM right now.
Let’s say you dropped $5K on GM stock trading at $1 per share. (I’m doing this for math purposes, because you would buy it at $1.06 per share so you wouldn’t quite own 5000 shares, but you get the idea.)
You control 5000 share of GM, and watch the board, and if it rises .05 cents, your protection kicks in and you cash out. What is 5000 x .05? $250 right? That’s an annual salary of over $60K. (Yes, you’ll have commissions and fees, but those are tax write offs, remember? You’re a business now, you write off everything.)
How many times per day could you repeat that? If you know how to read the market (i.e. orders) maybe once an hour or once in the am and once in the pm. Do you see how the big boys are playing this game?
Now will you make a profitable trade every time? Probably not. There is a learning curve associated with this, but you have to ask yourself how much time you’re willing to invest in learning how to make money using the new rules of the stock market.
Your research is going to include which stocks you should invest in, how to use the news to profit, and how to play the market, and how to understand what the big brokers and hedge fund managers are doing so that you can profit too.
It’s a new world out there, and people get scared by change. Yet incremental changes occur every day and we embrace them. Think about your cell phone. You could only imagine the possibilities five years ago that are in your pocket right now. Wireless connectivity to the internet through your cell phone, automated applications, bill payment, etc. You are embracing the change, you just didn’t know it.
As the world changes, you can change with it just by learning the rules of day trading in this new market. It’s going to go up. It’s going to go down. And if you learn how to play (visit our site for more free info), then you’re going to make money no matter what the market is doing.
