Read? Investing vs Trading (5) - Key differences???
Frequency of Risk Taking
In investing or trading, you are required to take risks to deploy your capital. You must be RIGHT in your direction to make more money from the stock market. If you get the direction WRONG, you will be punished either with realised losses or sitting on unrealised loss. For any unrealized losses, you may be comforting yourself that they are not losses yet.
For those who still strongly believe that unrealised losses are not losses yet, may be you should be learning this financial function available from Microsoft Excel called XIRR.
What lessons did Uncle8888 learn over past decade in short-term trading and long-term investing?
On Short-Term Trading
Read the newspapers or visit investment blogs which have clear commercial interests of inducing you to buy that belief that you can trade for a living or build up your wealth in the market with their "Secrets" that can be sold for $X,XXX
What you may not know or not told by the "Gurus" at their previews?
In trading, every time you put in a trade, you are taking calculated risk of losing your capital for your limited reward. All experience and successful traders will follow their Trading Rules for clear Entry and Exit point or follow some popular Stop Losses Rule e.g. 2% and 6% Rule.
When the traders are RIGHT, they will make money from the market. When they are WRONG, they will lose it back to the market.
In trading, you are in a Rat Race to make money from the market. It is endless risk taking to make money. You must win more and lose less in order to survive.
You have to make endless trading decisions, endless risk taking, and endless to be RIGHT one more time to make money.
Is this somewhat similar to those employees working in a Rat Race environment at their office?
Are you running another Rat Race in the stock market???
Can such frequency of trading really lead you to financial freedom and out of Rat Race?
Do your own thinking!!!
On Long-Term Investing
At first, it is no different from short-term trading, you have to take calculated risks and be RIGHT.
When you are DAMN BLOODY RIGHT in your direction, easy money will soon fall from the MONEY TREE into your pocket without you doing anything else to collect this money.
After X or XX years, you will be in RISK OFF positions to continue to make more money from the stock market.
It is where traders cannot never never dream of!!!
RISK OFF to make more money from the stock market!!!
In Hokkien, they called it: "KIAO KAH YO LUM PAR/K.K.Y.L.P."
What do you think???