I intend to put some more useful stuff here along the way (if it's OK) but I have a good story first -
Yesterday, one of the mothers from my daughter's school was here, to learn "day" trading, as if "day" trading as any different from "real" trading. She watched me trade S&P futures, which is my game, and since it was sort of a trendless day, the market could not put together a move and I ended up the day 0 for 3.
Hilarious Moments -
1."You can lose money daytrading?"
Well, uh, yes, since it is *still* trading...
2."You mean, I can't use the minimum margin requirement?"
No, since your risk reward matrix will be blown and your probability of ruin goes to something like 99% if you don't have proper risk and money management techniques.
3."What is risk and money management?"
Well, I rest my case. Therein lies the path to ruin...being undercapitalized in the first place and risking too much of the account equity on each trade.
4. "But if I had all this money, I wouldn't need to trade..."
You're doomed because you're gambling. Why don't you pay off all your non-deductible interest and start from there...
5. "But day trading looks so easy, see (pointing at CNBC) all the money being made all over the world?"
Yes, you lose and they gain.
6. "But it won't happen on Nasdaq stocks."
You mean, you think you can scalp against the market maker, who is holding the ORDER BOOK in his hands? I can see we're not getting anywhere here...Ugh...lemme start again at the beginning - do you think the market *always* goes up?
7. "What's do all these graphs mean?"
I see you didn't read a single page of the trading manual that I put together for you, a book you've had in your possession for over a month now.
8. "They look so complicated!"
Yes, trading is complicated. It takes knowledge, experience, and discipline. It's the only "job" where you pay to go to the office. I think you're more suited for a "real" job, Ma'am.
That was the whole day's conversation...
In an effort not to cut and paste a ton of text, I'm going to put up a link to an article I wrote about risk and reward here if it's OK -
intelligentspeculator.com |
