Who do You think you are?

One of the lessons in our course is about identifying whether you are a trader or an investor. A simple concept seemingly, and in theory, too basic to actually spend a whole video on it perhaps.

However, when you have been around the stock exchange block for a while, you will know that if you are unsure of who you are in the financial market, your identity crisis will eat your account before you can say “shares”.

Indeed, when starting out as an investor, one of the best things that can happen to you, is a losing trade.

What? Yes, you read correctly.

Why? So you can learn. And quickly. How to determine the correct position size.  How everything you touch doesn’t turn to gold in the financial market. How to keep your boat afloat in stormy waters, as the markets roll and fluctuate all the time.

If this sounds like a metaphor for life, it is. I have learnt so much about life from being a trader.

I have seen time and time again, how excited traders are when they start, particularly when the first 5 trades are successful; they think trading is easy and then they make their position sizes bigger than what their risk profile allows. Obviously that trade is then the one that burns them purple, leaving them anxious to make up the loss by trading bigger. This just adds fuel to the fire and they experience a Hiroshima bomb before their trading journal has 50 entries in it.

They close their account and never want to hear about the financial market again. “Stock markets suck,” they cry out, head in their hands.

The solution? Make wise choices early and avoid the cycle. I am going to share my own life/trading lessons that helped me identify who I am as a person and as a trader.

 

 

FOR THE TRADER

FOR THE INVESTOR

 

1. Take inventory of your strengths and weaknesses

Patience

Don’t want to spend a long time on a share

Prepared to spend more than 6 months on one share

Understanding CFD’s/Futures

Understand good risk/reward ratios, know how to determine your position size

Don’t want to take leverage on a share, happy to pay the full price

Discipline

Critical ingredient to be successful, once you have a model that works stick to it

Critical ingredient to be successful, once you have a model that works stick to it

Time

Can spend time on graphs on a daily basis

Can spend time on graphs once a week

Knowledge

Keen to read and be open to learn on a daily basis

Keen to read and be open to learn on a weekly basis

 

2. Keep a journal

This will highlight your errors and successes so you can learn from them and keep track of how you grow

This will highlight your errors and successes so you can learn from them and keep track of how you grow

 

3. Let go of perfection

Make peace with the fact that you can't always win all the profit

Make peace with the fact that you can't always win all the profit

If you try to eat a whole cake every day, you’ll benefit from getting “fat” but you will also get sick, on a slice a day you’ll still put on a lot but without the downside

If you try to eat a whole cake every day, you’ll benefit from getting “fat” but you will also get sick, on a slice or two a couple of times a month you’ll still put on some weight but without the downside

Accept that over 3 year period your Billiton trades did not give you a return of 300%

Accept the fact that you couldn’t enjoy the 15% spike in one day on Impala Platinum and that you have to wait for a weekly close

 

4. Don’t compare yourself to others

Don't listen to your trader buddy who brags about his/her wins, unless they show you a 2 year account statement don't believe them

Don't listen to the young financial advisor who has never seen a bear market and tells you that shares can only go up and that you cannot lose all your assets, trust me you can!

 

5. Get your priorities right

Trading is about doing it right not about being right, don’t walk away to make tea before your stop loss is secure in the system

Don’t put all your eggs in one share/ETF or sector no matter how positive the news are around them

 

6. Take responsibility

The market is ALWAYS right, if you are not on the right side you are wrong

The market is ALWAYS right, if you are not on the right side you are wrong

 

7. Stop trying to be like someone else

Your model and decision making process will look different than other people's, stop trying to make money, follow the model, be disciplined, and money will follow you

Your model and decision making process will look different than other people's, stop trying to make money, follow the model, be disciplined, and money will follow you

 

8. Celebrate your successes

Take profit, do what is easy, don't change into a long term investor when you are in a short term trade, CFD interest is a reality

Take profit, you should only have one spouse so don’t get married to your shares

 

9. Life is never perfect so deal with it

There is no perfect trading model, deal with the imperfections and limitations and learn to manage your trades around them, markets change all the time

There is no perfect investors model or perfect sector, deal with the imperfections, learn to manage them and avoid being over exposed to one share or sector, markets change all the time

 

10. Enjoy the ride

If you are not making enough profit trade smaller not bigger

If your shares are not performing as planned, re-evaluate

First get your model right, trade the system and not the share

are you out of sync with the market or is it just the wave you are in, if so, be happy to wait for the next better wave despite the flat tide you might be in

 

So who are you? Are you the short term trader who wants to look at graphs on a daily basis and trade in-and-out based on a proper strategy? Or are you the person who wants to invest in the stock market, but is happy to nibble at a good company, get your dividends and sell it when the time is right even if it is months or years from now.

I am an investor and I love it. As a passionate runner I prefer the slow endurance races over hills and through beautiful valleys rather than the fast pace of the sprinter in the 200m blocks.

Who are you? Or are you still trying to figure that out.

Whoever you are, we can help you: as an investor, for R99 per month you can learn about investing in the stock market, see www.chris-tell.com for more details or if you want more trading ideas, subscribe to our Candle of the Day for R300 per month, see www.fransdeklerk.com for more information.

Till later.

Christelle

Subscribe for R99 per month to learn how to invest on the SA stock market!

Make the first investment in your teaching!

Subscribe now
Close

50% Complete

Two Step

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.