I often hear traders tell me how they lose: they increase their
expectations from, say 8% to 15% as the trade starts heading their way.
They analyze trades and see a preponderance in higher returns, some well
over 50% some days. "Why can't I have some of that action?", they ask.
Seems like a logical question. But the reality is that very few traders actually take massive run ups with a huge gain on the one day. If you bought in at the low of the day or sold at the high, you likely struck it lucky. If you got both the low and the high of the day, congratulations on being one very fortunate trader! Don't count on it happening again. Therefore, do not think you are good; you simply got lucky. Big difference.
The danger in getting lucky is that traders tend to think it can easily be replicated. Trying it again proves futile and they end up losing. It's important to recognize the difference between intelligent, well calculated trading and getting lucky.
The secret to making more money is to take a small piece of the action in the direction of the move. By taking smaller chunks along the way, you spread out the risk and exponentially increase your chances for long term wealth. It is much easier to reach 8% than a 15% gain. You may also score 10 times for a 5% profit than once shooting for a 50% target. In trying to obtain those huge returns, you run the risk of the stock turning against you.
Maintain that respectable but reasonable percentage in all your trades. If you trade trends, in all likelihood, the trend has already been established and there may not even be much left in the trade.
Everyone would like to make more money. Fair enough. The best way is to keep your percentages the same - maybe even lower them - but trade more contracts. If you make 8% on $1,000, that's $80. A gain of 8% on $10,000 is $800. But if you're trading $10,000 and are satisfied with earning $500 that day, just aim for 5%. It's much easier and faster to reach. Earning $500 a day is $125,000 a year if you trade once a day. That's well over twice the average wage earner in the United States.
Want more money? Trade more contracts.
Seems like a logical question. But the reality is that very few traders actually take massive run ups with a huge gain on the one day. If you bought in at the low of the day or sold at the high, you likely struck it lucky. If you got both the low and the high of the day, congratulations on being one very fortunate trader! Don't count on it happening again. Therefore, do not think you are good; you simply got lucky. Big difference.
The danger in getting lucky is that traders tend to think it can easily be replicated. Trying it again proves futile and they end up losing. It's important to recognize the difference between intelligent, well calculated trading and getting lucky.
The secret to making more money is to take a small piece of the action in the direction of the move. By taking smaller chunks along the way, you spread out the risk and exponentially increase your chances for long term wealth. It is much easier to reach 8% than a 15% gain. You may also score 10 times for a 5% profit than once shooting for a 50% target. In trying to obtain those huge returns, you run the risk of the stock turning against you.
Maintain that respectable but reasonable percentage in all your trades. If you trade trends, in all likelihood, the trend has already been established and there may not even be much left in the trade.
Everyone would like to make more money. Fair enough. The best way is to keep your percentages the same - maybe even lower them - but trade more contracts. If you make 8% on $1,000, that's $80. A gain of 8% on $10,000 is $800. But if you're trading $10,000 and are satisfied with earning $500 that day, just aim for 5%. It's much easier and faster to reach. Earning $500 a day is $125,000 a year if you trade once a day. That's well over twice the average wage earner in the United States.
Want more money? Trade more contracts.
Trader Hugh is a successful, full time options trader and trainer
on the NYSE. Learn but one strategy well and you could make an
excellent living. As part of the training, Hugh provides 'one on one'
sessions and Live Trading, where you watch and learn, trade and earn,
every Tuesday and Thursday morning.
