Online trading by new and younger traders and investors has exploded this year. This could not be predicted nor expected.
Last week my most wonderful brother called me about investing in silver. He heard it was going up and is concerned about inflation. My neighbors and friends have been texting and calling and asking for trading and investing advice about this or that tip they heard.
Our free online performance assessment has been swamped. Your Personal Trading Compass has seen an increase of over 200% in traders who want to see their strengths and weaknesses.
This trend has raised the eyebrows of us “old” folks in the business. What is fascinating is that this trading and investing activity has increased despite higher anxiety and fear indexes. This breaks all the old rules. This means we are in a brand new context and need to see the market as it is, not through the eyes of old pattern expectations.
The reason for the increased new accounts and volume? Many articles say it is millenials with cash and time along with low or no commissions, easy trading via phone apps and lots of volatility.
When I read this, a bell went off in my head. Not a little tinkle bell, but a deep throated gong that reverberated for some time. It was the dotcom boom in early 2000. People with no trading experience walked into live in person trading rooms (I know, a real anachronism) and started making money right away. As the boom continued, some traders starting with a few thousand ended up with a million and more in account value.
I do not know one person who kept it. That’s right. I am sure there are some who took the chips off of the table, but the typical novice trader did not. The rising profits also stimulated a rising ego, belief in their predictive ability and obtaining a dream that had been previously impossible. All their dreams, all their hopes had been realized. When the market collapsed, very few were able to see the shift in what I call “Market Mood” and kept doing the same thing that made millions. And, they gave it away.
Bitcoin? My neighbors were telling me about how much money they made with Bitcoin. Not a peep after the crash.
When new traders pour into a market there are unusual profits available. It is like a professional poker player playing with newbies. The challenge is your mindset. If you are new to the markets and especially if you are making money right off the bat, realize this is a short term game. Play small, enjoy, learn.
The most dangerous words that my advice seekers use are “going” and “get in.” They will say something like, “I see that silver is ‘going’ up. Is it too late to ‘get in?’” It is safe to say the silver has gone up in the recent past. However, when we apply a word like “going” it is predictive without actually making a prediction. It is like a message to the emotional part of our brain that doesn’t want to miss out.
I meet every Friday morning with a group called “Creativity in Chaos”. We have defined multiple future scenarios, and the impact on all categories of investing. Needless to say, the future has the potential to careen in many directions significantly impacting all investment categories..
So, if you are new to trading, go small, have fun, make mistakes and learn. If you have investment or trading funds at risk, you may want to learn how to expand your mindset and skip the painful learning curve with our Traders Compass course. If you have substantial funds at risk, let’s have a private conversation to see how we can support you personally.
The key for everyone is anticipating the coming shift in the Market Mood. Enjoy the ride as more newbies get in the market, but every day ask yourself, is it over? Has something shifted? Are the game rules changing?
I have made most money in my trading career when the context of the market changes. Most people lose the most money trading and investing by doing the same thing when the game has shifted.
So, enjoy the game, and quit or shift with it when it changes.
A veteran broker and floor trader, Rich went from the "worst trainee trader ever", to building one of the most consistently profitable options trading firms on the Pacific Exchange by training his traders using neuroscience. Rich also holds a Masters Degree in Clinical Psychology, a B.A. in Philosophy, and is a graduate of the Gestalt Institute in San Francisco along with Master’s training in Neuro Linguistic Programming (NLP).
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