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I know the current global financial crisis hit hard when some of my
friends either got layoff or struggle with cash flow problem came to me
for trading advice. I never initiate the stock investment subject unless
I am asked. This is a money business. We can win big but we can also lose
big if we do not how to trade, especially in this highly volatile market.
I want them to be aware of this point and I let them think first before
going further into the subject of stock investment.
One of my friends came over and asked me to show him the trading
software. He looked interested at first but after finding out the time
and money involved in the learning process, he was not so sure if he
wanted to go further. Another friend wanted me to give him tips for hot
stock so he can make quick money. When he knew I didn’t have any tip for
him, he asked me to teach him how to trade. After I told him for his best
interest, he has to learn from the professional education company, he backed
out because of high tuition. A part time stock trader once told me he is
willing to travel to Los Angeles
so he can learn how to trade option from me.
I am honored by the trust my friends have in me, but I politely
decline their request not because I don’t want to help, but because they
all miss a very important point in this business. If we look at my
friends’ cases carefully, we will notice a common point: They all want to
learn but they don’t want to pay for it. This is a money business. From
my experience, most, if not all, traders lose money first before they can
make consistent money in this business. By refusing to pay for their
education, my friends do not want to spend, they only want to earn. To
me, this is a very dangerous and unhealthy thought from a financial point
of view. If we don’t prepare ourselves for loss in this business, we will
be very frustrated when the market doesn’t go our way. We will lose our
focus and our loss will likely widen. If we don’t pay for our investment
education, a loss will discourage us from trading. Fear factor kicks in
and we will be out of the game. Since we paid nothing from the beginning,
it is very easy to quit. I had
seen numerous cases like this at the turn of this century. Most stock
traders made money in the “golden era” of the stock market in the 90’s
but when the market crashed in the year of 2000, most of them were out
because they had no clue how to handle the hostile market environment. On
the other hand, if we pay for our education, we will be well prepared for
the market condition. A loss will probably frustrate us a bit, but we
will likely be in the game because we already spent money in our
education. If we quit, we will lose our tuition for sure. We all don’t
want to lose our money for nothing so we will likely stay in the trading
business to improve our trading skills. As I mention in my “Learn”
article, option trading is complex and I don’t think I am qualified to
teach option at this moment. Option trading has different strategies for
different traders at different levels. Only the traders themselves can
figure out which strategy is best for them base on their trading
philosophy, risk tolerance and capital.
Judith, my trading partner, is a good example of a trader who
understands the trading business before she enters it. I never told her
what I did for a living. She initiated the subject so I told her about
the nature of this business. She made up her mind to learn how to trade
the market. She spent sizable tuition for her investment education and
traveling expenses in a 2-year time frame from late 2005 to 2007. During
that time frame, she studied hard, traveled a lot to different cities for
live workshops. She also spent time in coaching sessions, trading room,
investor talk to improve her trading skills. She told me she expected to
lose first before she can earn. She lost money at first but she also
learned a lot from it. After trading part time for almost 3 years, she
finally decided to be a full time trader in September this year. With what
she has learned from her formal education sessions and real money trading
experience, she has no problem handling the current financial crisis. Had
she not paid for her education, I am pretty sure she could easily quit
after her initial loss and she won’t be a trader that she is today. We
co-found our investor group called “Wall Street Sweepers”. We meet on the
first Sunday every month to discuss our trading experiences and exchange
the news in the stock market. Joining our group are other traders from different
cities in Los Angeles
area. We got the name of our investor group from my “Investment Thought”
article I wrote in October 2006.
On the other hand, I also witnessed several opposite examples.
Silvia is my other trading partner in Sacramento. We know each other when we
attended live seminars in San Diego, Anaheim, San Francisco,
Sacramento and Las Vegas. When I attended live seminar
in San Francisco,
Silvia brought her sister along as a guest. Silvia told me her sister was
interested in trading. Thanks to Silvia’s contract with Investools, she
can sign up her sister as a guest so she can learn the trading for free.
All she needs to do is studying. The next time I met Silvia, I did not
see her sister any more. Silvia told me her sister was too busy with her
job and her family so she decided to quit. Needless to say, Silvia went
on to finish her education and she is still trading the market right now.
Mr. Mark Broberg is an Investools instructor. When I attended his
live workshops in San Diego and San Francisco, he
told us his story how he became a trader and eventually an instructor.
Mark used to be a police officer in Saltlake
City, Utah.
When he first found out about investment education, he saw an opportunity
to make money in the stock market. He was so excited that he came back to
his police station and told his fellow policemen he had found a “gold
mine”. He was willing to show them how to trade for free because they are
good buddies. Those who intended to learn for free eventually dropped out
because they were not prepared for the market volatility and with no
money down, it was very easy to quit. Those who paid for their education
hung on and are still trading the market. They are now working side by
side with Mark in his investment education company.
Money well spent today will be money well earned tomorrow.
Dennis
Phan 潘家墉
Khai Minh, UCLA
and Investools Alumni
Los Angeles, California,
U.S.A., 8 December
2008
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