Trading scars

Buying stocks
It is good to see many of our trading members transitioning to stock accounts from spread betting.
Spread betting has its place but note that the vehicle is not set up to provide a permanent source of income.
We learnt that back in 2006 on a course in Davos (which a few of you had attended with us).

The recent discussions I have had with a few members of +100k profit and some even reaching +400k profit since 2020 are very good returns but holding onto them during the smallest of pullbacks is never an easy task.

The argument we often hear is spread betting is tax-free.
The reply is always the same. What is 50% tax of nothing?

Try and focus on the long-term outlook of a company and invest with that in mind.
If you are holding a stock for 3 years or more, which could well be very likely for some growth stocks, then you already know it is near impossible to do that through spread betting or any form of leverage.

You have to be in it to win it.
If you know why you are invested in a stock, you will be happier to hold it through some of the more testing times.
The stocks we currently own are good but the market has moved many of them down.
This, of course, may not be permanent - but we are at the mercy of the market as to when it feels this turnaround should occur.
During this time, holding onto good stocks with leverage is likely to be very difficult.
However, owning the good stocks and holding them during this period will still allow us to have a good night's sleep.

So consider using a 401k (U.S.), ISA (U.K.) or regular share dealing account (worldwide) as your vehicle for trading.

If you are able to spreadbet, use this for shorting, hedging, FX and commodities.

Since April 2020, we have entered into about 50 stocks.
This is a lot of stocks and we did expect some of them to fail - after which, they would have been removed by the end of 2020. But that did not happen as all of them performed well.
However, every quarter we can assess our stocks and axe or trim some of them if we need to.

I know some traders have had over 100 trades in spread betting. This is far from ideal to manage and can put a lot of strain on trading.

Speaking with one of the more experienced members this morning, this person has around 25 stocks since April 2020, which is actually a really good number to contend with and manage.

Profit.
Many traders often give up consistency for profit.

Trading is a way of supplementing an income or creating a sole income but this takes time and hard work.

Over the last 20 years, the common reason why I see traders fail stems from them thinking they are smarter than the market or other traders.
They don't put in the time or effort and often think they can waltz in and outsmart the traders who have 4 or 5 decades of trading experience and understanding.
Making big money in a short amount of time makes them feel invincible.
Then they get hit big by the market.

If making money consistently over a short period of time was possible on a consistent level, wouldn't all the smart money traders around the world do that all the time instead of taking a long-term view?
Warren Buffett would surely not have been the richest person for so many years as he holds his stocks 'forever'.
The simple truth is, like with everything in life, it is hard work and time that provide results.
You must immerse yourself to get good at it, otherwise you will be average at best.

Scars.
We all have our own trading scars.
No proper trader is immune from having them.
I have lost count of how many I have, but they have all been another layer of learning and experience.

Learn from your mistakes and improve on them.

Let's go trade!