I had a chat with my cousin early today. She’s also into stock market trading but just started a few months ago. Just like most (or maybe all?!) newbies, she got burned and she got burned big. In the middle of our chat, she said that she wants to quit trading. She said that she’s been losing and doesn’t win. I thought to myself that she must be so disappointed – but I understood. Anybody losing big would go nuts.
The line “I’ll quit trading” kept on running in my mind and I kept on asking myself, why do people quit? Everybody might have a different answer but I realized two things that make people quit trading: (1) failed expectations and (2) unwillingness to do the work involved. Let us go through both first before disclosing the one reason why you SHOULDN’T quit trading.
People are so excited when they start trading. In my case, one story that really made a big impact on me was the story of a local individual who earned +127% gain in his first year of trading. Everybody has heard their fair share of stock market trading success stories. There’s definitely nothing wrong with these stories. In fact, these are needed to motivate people to invest more in the stock market. The problem though comes with the expectations of people. Just because they’ve heard or read such stories somewhere, they think that making money in the stock market is easy. Well, it is if you know what you’re doing. Worst, some would even think that they could double their money in a year or even less depending on the stories that they’ve heard or read. Everything is so rosy until reality sets in.
I believe that stock market trading is either a business or a profession; for me, it’s NOT a hobby. A lot of people treat trading as a hobby. One particular author said that if you treat it as a hobby, it will pay you as a hobby but if you treat it as a business or profession, it will pay you as a business or profession. Bad news, hobbies are costly more than profitable hence if you treat it as a hobby, it will cost you more than you’ll earn. I firmly believe that trading is no less than any profession out there, it’s even more sophisticated. No person became an engineer overnight nor a doctor, an accountant or any other profession. It took years and hundreds or even thousands of hours studying and working to hone one’s skill. It’s the same in trading. You want to become a profitable trader? A successful trader? Probably one of the best traders in your community? Be willing to do the work and work means studying and learning whatever it takes to improve your trading skills.
It’s very tempting to quit when the going gets tough. Becoming a profitable trader takes time, it doesn’t happen overnight. You can name all the successful people in trading and investing and I would guarantee you that all of them had that special something (knowledge or skill) that makes them standout among the rest.
Don’t let your losses get the best of you. Instead, think positive. Think that your losses now are just a requirement for what you’ll be earning soon.
Now let me show you a perspective that not a lot of traders realize. I bet if they knew about this, it will make quitting hard for them and would make them strive harder to become a better trader. Always keep this in mind that in trading..
“The maximum amount that you could lose is only 100% but the amount that you could possibly gain is limitless.”
If you put in P100,000 and you lost, the maximum amount that you could lose is only P100,000 but with that the same amount, the amount that you could possibly gain is limitless. In my years in trading, I’ve seen a lot of stocks go the distance in no time. I’ve seen stocks go up by 2,000% in just three months and 8,100% in six years. Your P100,000 could have grown to P2,000,000 in three months or became P8,100,000 in six years. Now tell me, are you willing to risk P100,000 and become P2,000,000 richer after three months? The amount that you could win is far greater than what you could lose.
Only people with the right and tough mindsets can make it big in the stock market. If trading is that simple, then everybody is going to do it. The challenges that you face are just nature’s way of weeding out those half-hearted traders. If you’ll just hold on and persevere, those challenges that you face will enable you to understand the market more and will open up opportunities for you in the process.
Article by Makoy Velasco, Certified Securities Representative
Any views or opinions represented in this blog are personal and belong solely to the columnist and do not represent those of people, institutions or organizations that the owner may or may not be associated with in professional or personal capacity, unless explicitly stated. Any views or opinions are not intended to malign any religion, ethnic group, club, organization, company, or individual.