Newcomers to trading our beloved/cursed stock market, especially day trading, arrive at their casino of instant riches with differing amounts of money, but all come with copious amounts of expectation, adrenalin induced excitement, and hope.
As with any gambler, they truly believe they will win otherwise they wouldn’t be playing the game. It doesn’t matter that the odds are against them. All that matters is the chance.
I’m reminded of the line Jim Carrey’s aptly named character uses in the movie, Dumb and Dumber, when hitting on the object of his affection:
Lloyd Christmas: What are my chances?
Mary Swanson: Not good.
Lloyd Christmas: You mean, not good like one out of a hundred?
Mary Swanson: I’d say more like one out of a million.
Lloyd Christmas: So you’re telling me there’s a chance… YEAH!
The wannabe players create a hope, albeit a false one, praying for the potential that a long shot will get riches. Experience traders call it a “lotto trade,” aptly named since the odds of success are essentially the same as a lotto win and they know it.
This is very different from trading with confidence, or flirting for that matter. Whereas confidence stems from knowledge, skill, and experience, anyone who’s traded, or trolled the singles bar scene for a while, can attest to the fact that hope, the feeling or belief that something you want to happen is likely to happen, is not a strategy.
(You do realize I speak from experience in both realms, the market and the singles scene, right?)
Some traders on Twitter routinely and religiously posts the following daily at precisely 9:30 am ET: “the casino is open.” At 4:00 pm ET, it’s: “no more bets,” followed by, “the casino is closed.” They know the game and respect the analogy of trading and gambling.
However, this is not true for our new wannabe traders without the skills, knowledge, or experience to help them. They actually see and feel trading the stock market as a gambler would… place the bet, get excited, feel the heart rate accelerating, tense up, always hopeful, visualize spending the winnings as they await the open, and never once consider the consequences of a loss.
There’s no question that one has to have at least the spirit of a gambler when trading, after all, it is a risk game. No one would argue that point. But there’s a distinction between professional gamblers, who have learned that money management is the secret to consistent winnings vs. the ignorance of a mindset that says, “I got a feeling about that one,” as though they’ve been touched by some unseen, unknown benefactor. They feel lucky, hopeful… they believe they have a chance… the food of the perpetual loser in trading.
Oh, you lost it all on that trade? You blew up your trading account? Really? Gee, what were the odds, considering you didn’t take more than twenty seconds to pick this trade?
Learn what you’re doing or pay the market its membership fee.
Get a stock market trading coach.