Do You Want To Be a Gambler or a Trading Business Owner?
It’s a well-known fact that the only people who make big money in Las Vegas are the casino owners. They consistently make money because they treat gambling strictly as a business.
Perhaps the best-kept secret of trading is that with a little knowledge, a great deal of planning, and some self-discipline, it’s entirely possible to stack the odds in your favor just as casino owners do.
This business-like approach is the way most successful traders go about their work, and it’s the only approach to the markets which offers any viable chance of long-term success.
Unfortunately, this is a lesson which educator, Ling Thompson of Colorado, had to learn in the most painful way possible.
The Dangers of Emotional Trading
Ling’s approach during her first three years as a trader was the exact opposite of businesslike. By her own admission, she was unsystematic in her preparation and too emotional in the way she managed her live trades.
As a gambler might keep heaping chips on the next spin of the roulette wheel in ever more desperate attempts to wipe out the evening’s accumulated losses, Ling let her losers run hoping they would somehow magically turn around.
Sadly, this same fear of loss also led Ling to close out her winning trades too soon, leaving the bulk of her profits on the table. That’s why it was not surprising that despite trying several trading and mentorship services, Ling had, in her own words, only “huge losses” to show for her early forays into the markets.
“I didn’t have a systematic approach to trading. In the past, trading was very similar to gambling for me. I was prone to taking tiny profits and holding big losses. If I held a loser, I liked to average down hoping to get out breaking even. Most of the times, I just lost more and more money.”
The Zen of Managing Losses
Many gamblers and traders either choose to quit or they’re forced to quit the game at this point, but Ling decided to give it one more go with the help of stock trading mentor, Petra Hess.
Working with Petra, she was immediately impressed with what Ling calls her “Zen-style” approach to trading.
She also likes Petra’s insistence that the calm acceptance of small, manageable, losses is the hallmark of businesslike traders who believe in their plan, and are confident that their profitable trades will outweigh their losses in the long run.
Ling also appreciates Petra’s focus on medium and large-cap stocks as well as her avoidance of the “pump and dump” type schemes that can be so damaging to penny stock traders.
"I've tried all the other services. I lost money with them. Petra's system is the easiest to follow. She's into mid and big caps. When she buys or sells a stock, it doesn't move the price. Most important of all, her picks don't go bankrupt."
How To Trade Like a Business Owner
It’s important to point out that no matter how much faith you may have in a mentor, relying solely on his or her judgment is to become a gambler once again.
Of course, like all business owners, traders can and should take advice before making any crucial decisions. But as the owner of a stock trading business, you and you alone are responsible for your choices and their outcomes.
So, although it’s great, and probably indispensable, to have a trusted mentor by your side as you learn how to trade, you should never enter a suggested trade unless you understand and agree with the reasons for making that play.
This pragmatic, no-nonsense attitude now underpins Ling Thompson’s whole trading philosophy. “My attitude towards trading has completely changed,” she says, “I will never blindly follow other people's picks, not even Petra's. I will only enter a trade if I can articulate why and if I have a clear trading plan.”
Ling is well aware that she is still a beginner, but this new systematic approach has already begun to pay off for her.
On April 9th, I entered APC at 46.47. I'm happy or ashamed to say that this was the first time I entered a trade with a crystal clear idea of why. When APC was up above 47, I wasn't tempted to sell at all. Imagine my surprise this morning when I saw the buyout news premarket! 30+% gain in 3 days!"
Scoring a 30% Win in Just 3 Days
One of Ling’s first trades after joining Petra Picks was the Anadarko Petroleum Corporation (APC) which turned a cool 30% profit in just three days.
But more important than the immediate financial return is Ling’s understanding of why that trade worked, the preparations she made before pulling the trigger and the self-awareness she now has regarding her previous trading mistakes.
As she recalls, “I entered APC at 46.47. I'm happy or ashamed to say that this was the first time I entered a trade with a crystal clear idea of why.”
“It was also the first time I started on my trading journal. I wrote down my profit target and stop-loss price. When APC was up above 47, I wasn't tempted to sell at all. That was my sin in the past, taking tiny profits while holding big losses. I wasn't stressed when it fell below 46 briefly,” explains Ling.
Looking Forward to a Prosperous Future as a Pro Trader
With this kind of professionalism and discipline, Ling has every prospect of rapidly recouping the losses which blighted her earlier trading experience. Although she’s looking forward to a long and prosperous career in the markets, she's taking nothing for granted.
For the immediate future, she’s content to take all the time needed to prove to herself that her system works and to become confident and consistent in her trading.
Then, she says, “I will continue trading and use the profits to remedy past losses I suffered. I do believe it's a snowball effect. I'll start by making $100, $1,000, $10,000 and more. I can, and will make it happen.”