Read? Investing or trading ???
Both Bunnies in the picture are really good at their act;
but who may become rich in stocks???
Bunny T on the Right side is a successful retail trader.
Bunny I on the Left is a successful retail investor.
Look at picture again and think over it carefully.
Who may become rich in stocks?
Bunny T on the Right or Bunny I on the Left?
I am telling you Bunny I on the Left side is more likely to become rich in stocks.
For two simple reasons:
One, Their mind: The difference in Investing mind and Trading mind can be startling and that may prevent many retail traders to become rich in stocks.
Famous stop-loss strategy: 2% and 6% Rules and Trailing stops!!!
Have you come across any successful retail traders who proudly and loudly tell you that they don't have stop-loss and trailing stops???
These stop-loss and trailing stop rules are self-limiting to protect traders against losses and limiting huge profits in endless market cycles of Bull and Bear. Finally, the market action by itself will stop out their winning or losing positions either by stop-loss rules or trailing stops.
Second, Their winning position sizing:
It is quite common for successful retail investors to hold winning position size that is X% or XX% of their Net Worth. Read again. It is NET WORTH!!!
Get it or not?
It is X% or XX% of their Net Worth. Right sizing of winning position that counts!!!
Have you ever heard of successful retail trader holding position size of X% or XX% of their net worth?
Uncle8888's advice to anyone want to become rich in stocks by creating wealth from the stock market, learn to be successful retail investor like Bunny on the Left side. This picture is so obvious to understand unless you really have poor eyesight hor!
You can trade for some income. No problem. But, you must invest to become rich in stocks for two simple reasons. No meh???
Thanks for sharing. Yes, I believe Bunny I will be richer overtime.
ReplyDeleteOne correction in your note"
"I am telling you Bunny I on the Right side is more likely to become rich in stocks"
I think you mean Bunny I on the Left side.
ooch.. Corrected. Thank Ray!
DeleteHa! Ha!
Deletei was confused for a moment. How can big head with small body don't tumble easily as he walks further (in the long run.) Nobody can defy "Nature" or the "Law of Gravity on Earth".
CW8888,
ReplyDeleteIt's clever of you to use the word Retail Traders and Retail Investors.
We know that most professional institution traders earn more in salary and bonuses than the average retail investors' full-time job - and that's before comparing portfolio returns ;)
I can relate to what you are saying. But when comparing performances, we need to have a timing context.
During 2008, I think some retail investors would have wished they were retail traders and have cut-loss and shorted stocks instead. "Wind water alternate turn".
Why split hairs between traders and investors? To me, there are people who make money in equities; and there are people who lose money in equities.
If I make money, you can call me whatever you want! LOL!
Important leh. If not, how to shake off the seller mindset of a retail trader?
DeleteRead more? Shake Off That Seller's Mindset (2)
LOL!
DeleteIt's letting your profits run or "throw long line; angle for big fish!"
Yup, Jessie Livermore also have the same view later on his trading journey. It's the "waiting" that brings in the big money - not the quick ins and outs (no naughty thoughts leh) of the market.
Although you must agree to have some "trading" money for kopi money does no harm; just as long we don't forget the big picture ;)