7 Reasons Why You Still Trade Like A Noob

I remember catching a clip of Wall Street Warriors once and this young twenty-something was having a ballin’ roof-top party because he just scored $500K trading for a WS firm! Problem is, trading is rife with these kinds of black swan-type success stories however, the reality is 90% of those who prop trade fail and the 10% who succeed profit less than 50% of the time. So what exactly does an amateur look like? Marketkronicle has defined them in an infograph by comparing them to professionals. Read on to see how I relate their points to what I’ve learned from my trading days…

AND THE 7 REASONS ARE...

1. The glass-is-half-full. A noob is only concerned with “how much they can make” and their eyes light-up like the Vegas strip when they see the green flickering across the trading screens. Seeing this I thought that money could be made randomly by throwing an order into a volatile stock while it’s going up and BAM-O…out comes the dollars! As an example, I once took a crap shoot on AMZN earnings numbers and made $70 in less than three seconds! In trading, the glass is alway half-empty because it's all about RM.

2. The alpha trader, “Go-big-or-go-home.” More like go-big-and-go-broke! I sat next to someone who was aggressive and when they won, they did well but when they lost, it was ugly. One day they’d be up a few hundred and then the next it was down over a G! The only consistency was that that their trading performance was unpredictable and I saw two other guys blow-out their accounts, so as an amateur I think trading BIG is trading stupid!

HAVE YOU DONE ANY OF THESE MISTAKES? IF YOU HAVE, SHARE YOUR EXPERIENCE!


3. The strung-out news junkie. We ran CNBC and TTN 24/7 plus we were all over pre-earnings news releases at out shop. However, Nassim Nicholas Taleb makes a good point in his book Fooled by Randomness that no profitable utility comes from mainstream financial news and my research shows that these pundits still fall victim to the same fallacies and biases as everybody else. The only real benefit was that I could talk like trader to the average joe and they’d be impressed by how good it sounded!

4. Reverse retirement. I had it all I figured out. All I needed was to score $50 a day per week per month to supplement my job at the liquor store. From there it was matter of scaling up the shares to financial independence! Once I could master equities it was on to the real money maker, futures. The heck with waiting until 65 to retire, I wanted to live my best years starting at 28!


WHERE'S NUMBERS 5 - 7?

For the sake of conciseness I’m going to have to wait until next week to finish where I’ll be commenting on the professionals and my transition to their thinking. In the meantime, I’ll leave you with the rest of the amateur teaser titles…

• Mirror-mirror-on-the-wall
• Action anonymous
• $50K, how about 4X

If you enjoyed it then tune in next week!