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Motivation -- By: Bill Kraft
Copyright 2009, Cutloss, Inc., All Rights Reserved
Bill Kraft
Editor |
In recent articles, I have touched upon issues relating to the
idea of knowing oneself as a trader; the necessity of careful
self-analysis. One important area I believe many trader gloss over is
the concept of motivation. Obviously, on the most apparent level, we
are all motivated by the desire to make a profit, but I suggest it
might be prudent to dig a little deeper in recognizing additional
factors that may motivate us.
Over the years, particularly in the seminar setting, I have run
across a significant number of people who look upon trading as a get
rich quick endeavor that requires little effort. While I concede that
almost anyone can occasionally land a big return with a lucky play, it
is the trader who treats his efforts as a business that is more likely
to succeed. Let's face it, we all have some level of greed; it is a
part of our humanity. But greed unchecked can be one of the greatest
dangers any trader faces. It encourages us to take foolish risks. I
have often related the story of a seminar student who began trading
very well. He was trading directional options and had several
consecutive winners. Each day he would call me reporting on how much
he had made but then the phone went dead. I thought he might be
vacationing on his profits. After a few weeks I called him only to
find that he had lost it all. Instead of managing his money, he, in
essence, "bet it all on black." He bought short term out of the money
directional options before an earnings announcement and on the
announcement (even though it was positive) the stock gapped down and
with little time remaining to expiration, he was wiped out.
When I tell people that story, the reaction is "how foolish"
that would never happen to me. I'm sure the subject of my anecdote
thought exactly the same thing -- that it could never happen to him,
but it did. He was, and undoubtedly still is, a very bright man whose
greed and impatience sucked him into making one foolish decision with
catastrophic results.
A two major premises of my book, "Trade Your Way to Wealth" , are
the importance of appreciating risk as well as focusing upon reward
and the necessity of treating trading as a business. In my view, many
unsuccessful traders focus only on the positive possibilities when
entering a trade. They fail or refuse to see and understand the risk
until it is too late. I suggest it is better to look at the risk
first and decide how to handle it before ever entering a position.
Sure, losses will be incurred, but we can still be just fine if they
are controlled.
A second element often found in our motivation is impatience.
We are looking for the quick buck. Those kinds of trades definitely
do occur, but I personally prefer the "get rich steady" over the "get
rich quick" approach. Please don't get me wrong, getting rich quickly
is fine, but, in general, that isn't so likely. In my new book,
"Smart Investors Money Machine" , I discuss a variety of ways to
create numerous streams of income. Most of us need income to pay our
bills each month and if we can utilize strategies in addition to a job
to add to our income, it seems we can be better off financially. In
"Smart Investors Money Machine" , I try to show the reader a variety of
ways that can be accomplished using different techniques and differing
investments while pointing out those that require less effort as well
as those that may require a fairly high level of monitoring. These
are ways almost anyone can add income to their lives, but which few
bother to do.
Ultimately it comes down to motivation. What steps are you
willing to take to improve your financial lot?
Good Trading!
Bill Kraft
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Here's a look at a trade Bill is currently working on:
CBS Corporation (CBS)
While there is some overhead resistance around $10, CBS
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Good Trading!
Bill Kraft
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Trend Trader -- by Bill Kraft
Trend trading as we try to practice it is a form of momentum trading. We prefer to try to capture profit out of the middle of the trend rather than try to catch reversal at bottoms and tops.
Here's a look at a trade Bill is currently working on:
CyberSource Corporation (CYBS)
CYBS has been trending up and has recently been dealing
with the trend line. I'm watching for a bounce up off the trend and an
ability to hold above $14.
Good Trading!
Bill Kraft
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$10 Trader -- by Bill Kraft
We really enjoy trading stocks that are $10 and under. Often they provide the chance to enjoy high percentage gains and, of course, at worst, the risk is limited to what we paid for the stock.
Here's a look at a trade Bill is currently working on:
El Paso Corp. (EP)
$10 Trader was able to close another profitable position
this past week enjoying a 13% before commission gain on EP in less
than a month. The stock has since retreated a bit and is approaching
both a price and trend support. A bounce from there could be reason
for a re-entry.
Good Trading!
Bill Kraft
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