Five sure-fire ways to lose lots of money in the stock market.

How to Lose in the Stock Market

This might seem a strange title for me to use in a newsletter. However, it is often just as instructive to look at why people lose, as it is to identify the traits of winners. I have found that if you control losses when trading, the profits will tend to look after themselves. In a similar way, it seems to me that if I could only tell beginners what the destructive behaviours are before they start, they might be spared much financial pain. Here is a list of ways people set about losing money in the stock market:

1. Buy a Computerised Trading System

The more expensive it is, the better it will be. Quality costs in this area as in any other. Be impressed with the simulated profit results, which the promoter will assure you are a far better guide to future results than actual audited trading results. Why spend time developing yourself as a trader if you can just buy all the experience on a CD and run it on your computer? Continue to be amazed that professional fund managers don’t use these systems when the simulated results give results ten times better than mutual fund returns. When you say your prayers, don’t forget to give thanks to the generosity of the system promoter in giving you the tools to become rich quickly without risk or hard work.

2. Do It Now! Don’t Waste Time Developing a Plan of Action

After all, everyone knows that he who hesitates is lost. If only you had bought Cochlear, Flight Centre, Westfield Holdings and CSL when they listed you would be very rich now. Anyone can look at these charts and see how easy it was. The problem with most people is that they know too much about it and confuse themselves. Yes, you know that most small businesses fail and that the key reason is the lack of a sound business plan. And yes, most traders fail for the same reason – lack of a sound trading plan. But you are not like those people, you are special and would not make those silly mistakes. Plans only inhibit you. It is better for an intelligent person like you to form your plans as you go along.

3. Learn to Pick the Tops and Bottoms

Trading with the trend is for wimps. No wonder they don’t become rich, they leave too much on the table. You can capture it all – buy the low of the trend and sell the high. Look at the charts they show you at the expensive seminars run by trading gurus. Yes, buying a new low is trading against the trend, but you know when the trend is going to change – it always worked in the seminar examples. So, give thanks in your prayers for the guru who took time out from spending his or her fabulous wealth gained from trading to tell you the secret.

4. Take Profits quickly and hold on to the Losers

It is no wonder traders lose. They keep leaving their winnings on the table where the market can grab them back. They are just greedy. Better to take them straight away. Little fish are sweet and you can always catch lots more. But not the losers - after all, a loss is not real until you sell. Besides, the experts tell you stocks always go higher after a fall. Of course, you would not be silly enough to buy HIH, One.Tel or Harris Scarfe.

5. Look to Trading to Provide the Action you Crave

The trouble with most jobs and occupations is that they are boring. Bosses and clients keep wanting to impose discipline on you. But discipline breeds mediocrity. To succeed, you only need get free of all those irksome restrictions. Who needs plans? Who needs to study and learn dreary details? Who needs to have to keep good records – make money and it looks after itself. No, the market is a way to get free of all the things that have always held you back. Go for it and the devil take the hindmost.


So, there you have it – five sure-fire ways to lose lots of money in the stock market.

http://www.bwts.com.au/download/redir/015-229cbe1fa45d50d9186c7357e9edddc4.pdf