Recap – Stock Market Journey (90’s)
Previously, I mentioned how my stock market journey began in the late 80’s. I “cut my teeth” on trading the Johannesburg Stock Exchange, when it was still on Diagonal Street. Much later, I traded stocks on the London Stock Exchange. As I went along I learned new things, re-learned old things (the hard way), and gradually expanded my stock market trading theory. I used my time and applied my trading rules very inconsistently. I attended courses and stock market seminars, sought online tips and tried different things, but nothing really seemed to work consistently.
So many courses and stock market seminars – can I trust anyone.
The problem with attending courses and seminars, even when they are free, is there always seemed to be a catch. There was always something to draw you in to wanting more. I too got caught in the huge spiral of wanting to make a quick buck trading the stock exchange (this is called greed by the way), but at the same time was too concerned about losing my money or doing the wrong thing (fear in this case). Greed and fear have the ability to wipe you out of your trading capital VERY quickly. They are good indicators to pointing out whether or not your Risk Management or Money Management are sound… but can also mess with your head. Trading Psychology is a really big ‘self awareness’ topic I believe all traders need to get their heads around.
So many courses, seminars, promises, get rich quick hopes… and yet, although my theoretical knowledge was massive and growing really fast, I still wasn’t really profitable and still didn’t have a very fixed or consistent process. I am not saying there is anything wrong with courses or seminars. In fact, I think they are a key part of the education. This is key spend you should budget for as part of learning the new craft. However, a problem arises when you start becoming a “stock market seminar junkie”, rolling from one to the next, buying course after course, chasing one strategy only to abandon it after a few bad trades… The other issue I find particularly irritating, is when the marketing material says something like
This strategy is a secret the pro’s don’t want you to know!
Turn $10 000 into a million dollars in 8 months!
This private strategy will make you rich, using a never seen before proprietary technical indicator.
Blah, blah, blah – greed appeal – etc
The bottom line is there is no get rich quick route to trading. Trading the stock markets is a craft, which takes time to learn. That doesn’t mean you can’t make massive profits in a short time – but doing that will normally mean you’ve taken too much risk, and you could equally make massive losses in a short space of time. Do you want to learn to trade properly, or do you want to gamble? Well, that’s my opinion based on my experience so far. I’ll cover things in more detail later…
What’s my point?
Well, the point I am making here is that my trading wasn’t working. I loved trading, watching the stock markets and the potential financial blessing they could provide… but I wasn’t seeing any of the upside. Something was still missing… Actually, a number of things were missing.
Specifically:
- Getting my trading psychology right, and spotting the dangerous triggers.
- Having reasonable expectations.
- Sticking to my rules and strategy – buying when I should, pulling the trigger at the pre-determined time.
- Proper, consistent risk management.
- Trading small and trading often.
- Simplifying my approach – getting rid of the millions of complicated technical indicators.
- Testing my strategy, continually.
- Journalling.
My Lessons:
- Set budget aside for your stock market trading education.
- Some things in life are free, but for some real depth, it’s worth paying a little to learn.
- Trading losses are a great teacher. Think of this as part of your learning – assuming you are actually learning.
- Proprietary strategies and indicators aren’t really what they seem
- Copying someone else’s strategy may not work for you. You ultimately need to find your own, document it, track it, tweak it, analyse it.
- There is no holy grail in trading.