Trade The Journey

Trade The Journey

Zero Experience and Commission, No problem!

Greetings to All! I hope this post reaches you in a state of positivity and profitability.

As I reported back to work after a long break, I questioned my commitment to the job.

The coronavirus has been both a terrifying experience and a welcoming break. Most people remained inside to protect themselves and their family members and the numbers went down. Now the numbers are rising again as the country opens back up. Unfortunately, we have to return to work because products and services need to be rendered. The current administrations’ stance reminds me of Drago in Rocky, “If they die. They die.” Of course, that wasn’t the characters’ actual words but it is the same perspective.

Some people will be able to work from home permanently, others have to return to the battlefield. Not only is the government signaling their lack of empathy to the people but their disregard as well. I thought I’d never see the day where endangering the lives of others has become a political statement.

Surprisingly, this same situation occurred over one hundred years ago, where people lined the streets to voice their opinion on the violation of their civil liberties. Around 1912 the Spanish-flu decimated the population. People said that safety measures were a restriction on their freedoms. The government buckled, and the flu returned to continue its silent murder of the American people.

 

In 2020 we find ourselves in the same position.

Sometimes I sit in my room and reflect on the world as we see it today. It’s unbelievable to me that the more things change, they remain the same.

America is losing its competitive edge because of complacency, cheap money, racial divide, and lack of leadership. Before the pandemic, most of the companies enjoyed a balance sheet filled with cheap credit. Last September, the commercial paper market began showing signs of weakness and required federal intervention.

The federal reserve supported this short-term credit market with billions of dollars. Months later, the yield curve inverted. Some sounded the alarms, and others brushed off the silent arm as an anomaly. At this time, the markets were up, unemployment was low, and no foresaw the US economy losing its steam.

I’m sure the current administration saw the months leading up to the election as a smooth ride to another term. However, the fundamental nature of markets and life is uncertainty. No one knows for sure what will happen next.

 

Everything is a theory until it is proved.

Visit some of the previous posts for my reflections on the current state of racial tension in America. The question I have for my readers is this:

Are these current events evidence of our progress or our lack of progress?

During the ESPN highlights, the cameras caught the back of a soccers player’s jersey that read, “Black lives matter.” The empathy being shown all around the world to the plight of black people in America speaks volumes.

It also signals that there’s more work to be done to reach the state of equality.

Every morning I try to wake up as earlier as possible. My goal is to complete the most critical task in the morning, in case a surprise obligation arises later in the day. I struggle to get out of the bed some mornings as I question the validity of my dreams.

 

The Masters of Trade understand that to beat the market; you have to come prepared. No one can predict where the market may go but having a scenario available can improve your chances of adjusting to Market uncertainty.

The Masters also focus on the process, not the result. Doing so allows them to remain as objective as humanly possible. The result is the accomplishment of the dreams; the process is the grind. Getting up early to complete the work of the day is a part of the process. Completing your homework and due diligence for the trading day or week ahead is a part of the process.

 

I think of three scenarios for the next trading day. I journal my experiences each trading day except for Saturday. Throughout the week, I monitor my positions and look for small edges in companies trading below their value.

I like to combine fundamental and technical analysis. Fundamental research provides me with a general idea of the stock’s direction and what news or development might affect the stock price in the short-term. I use technical analysis to assess the market structure, patterns, and emotions in the market.

Now, I can feel the emotion and humanness of the market. It’s a feeling that is hard to describe. I’d say it’s taken me about three years to feel comfortable trading.

When Robinhoods service became available, I thought trading/investing commission-free was normal. My first trade on ThinkorSwim proved otherwise.

Eventually, other platforms followed by offering commission-free trading, and there have been talks of introducing fractional investing in major investment platforms. All of this has led the average person to believe they could make money trading and investing. Of course, you can’t blame the platform for attempting to increase their revenues or the media for promoting the ease of trading.

Robinhood became the first platform to publically experience the first tragedy associated with its platform’s lack of boundaries. A young man committed suicide after seeing an options trade turn against him to the tune of $700,000. The contract had not settled yet, and his losses were on paper, but sure he felt confused and distraught over seeing a number that large.

 

With the Fed’s printing of money, many people have excess capital to experiment with. Trading is a profession that many people take extremely seriously because their livelihood depends on it. Trading is also one of the easiest businesses to enter. With a click of a button, you have become a trader.

I felt saddened that this young trader/investor decided to take his life due to a bad trade. Maybe trading could have been a profession if he had more experience. I suspect a lot of people have entered the market with the hopes of retiring early. I certainly did.

Luckily for me, I had no money to trade seriously, so I decided to learn and practice by completing virtual trades.

Please don’t mistake the current markets rebound as a sign of success and never-ending profits. When the markets move in this type of volatile environment, they move violently and quickly. So be careful and only trade what you can afford to lose.

 


This past week in Review:

I was able to remain focused on the goal of saving money as things start to open back up. I doubt I’ll return to the level of spending as before.

This past week deserves the grade of “C+” for continued improvement.

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