Making money in the stock market?  Could it be a bad system?  Yes and no.  Let me explain.

It took me over 10 years to discover this…at the cost of tens of thousands of dollars.  So, listen up and save yourself unrecoverable  time and $1,000’s.

If you’ve read about investing in the stock market, you’ve probably heard about the buy and hold strategy.  It’s simple.  You just keep adding money whether the stock market goes up or down.  If you added equal dollar amounts it was called dollar cost averaging.  Now, this strategy sounds good and logical and will work, and so will 20 other strategies.  However, you MUST figure out one critical component before you go any further, and, BE HONEST WITH YOURSELF.

In “Trading Rules That Work: The 28 Lessons Every Trader Must Master,” there is one rule (Rule #4) that I didn’t heed and it cost me.

Here’s what it said:

You have to figure out your innate time frame!  Without figuring out this part, no stock trading plan will work for you and you will have a very difficult time following the rules.

For example:

Are you comfortable making quick decisions based on a few bits of information?  Do you think market moves are completely random?  Will you get bored waiting for things to play out to see if you’re right or wrong?  Then a shorter time frame is probably right for YOU.  Are you more comfortable considering factors from all angles before  making a decision?  Do you believe the fundamentals of supply and demand will eventually move the market in your direction?  Will you get discouraged at taking quick losses?  Then a longer time frame is probably right for YOU.

When do you feel the pressure to act (to buy or sell)?  Really pay attention to your urge to do something (or do nothing) and you will likely pick out a system that’s more in sync with your natural time frame.

Personally, I do not have the confidence to hold when the stock tumbles and the patience to wait for the intrinsic value to play out.  In other words, I cannot trade like Warren Buffet, who made BILLIONS with his trading system.  It makes absolute sense and we KNOW it works, but why can’t I make millions?  You know why.

Currently I am trading a system that gets me in when the market stops me in so that my waiting period is cut down.  Plus, I like to take my time and analyze the market before jumping in, therefore, placing a buy stop order overnight works for ME.

I have learned that just having reference books can do only so much.  Having a real human that can answer any questions during your “tenure” will help you make progress a LOT faster.  They will act as reassurance that you are executing the system correctly, even though you suffer a loss.  It really does help your confidence to see a professional lose money because if he loses money, then you are reassured that it is just part of the trading business (and not that you’re doing anything wrong).

I doubt his membership site (which is a few hundred dollars a year) is open but he has written a book (“Strategic Stock Trading“) so you can see his trading style without paying $600 or so a year.  But remember, you will not have that valuable interaction with just the book.

Do whatever it takes to get started because the real emotions will only be revealed when you put real dollars on the line.

Again, a big part of making money in the stock market is finding a system that is in line with YOUR time frame.  Good luck with your trading!

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