I just finished a little phone call with a member of my trading room.
He had two phenomenal mornings these past two days. Locked-in gains, then ended up net negative each day.
We spoke actual numbers. For the sakes of this post, let us just use a hypothetical amount of $5,000 and I’ll ratio-adjust it.
So you’ve got a $5,000 TRADING account, and you go into the market into the morning and have the luck of making $2k.
That means your account grew 40% in A DAY! Most people trying to ‘beat the indices’ are looking for on average over 20% A YEAR.
While it is impossible to have such gains every single day (as your portfolio gets larger you face special issues….and beyond those, nobody is right about every trade they take).
So After Those Kind of Numbers
, He’s Back to Where He Was Last Week
As we were talking an analogy came to me to try to make my point and I thought it was worth sharing.
Whatever size your portfolio be at the present moment, consider that your foundation.
DO NOT LOSE THAT BASE. If you start to erode it, you’re likely doing something wrong unless you’ve got money in a name you have a great deal of faith in and have no plan on moving.
For that matter; stop reading here if you are an investor. This is Trader’s Anonymous.
“Don’t lose your fortress of solitude.”
Alright that was a side note but it actually makes my point better than the analogy. I only realized that as I was pulling it up was an interlude.
But after you watch that…here’s my lego version.
If you’ve got 10 legos and you magically get an extra 4 legos…keep 1-2 of those legos away and go back into the market with the other two or three legos. If you’re day-trading and trying to build a solid account, if you are up on any given day…make sure you don’t give it all up that same day. If you’re down on the day, don’t get aggressive about getting back up because will be trading emotion. Don’t do that.