Stock Market Investments

Investing & Online Stock Trading - The Most Expensive Education Possible

Executive Summary About Stock Market Investments By John Atkinson

To date, in our newsletter we have mainly concentrated on trading stocks and Exchange Traded Funds. We understand that some of our members also trade derivatives such as options, warrants and CFD’s.

We consider these to be the domain of experienced traders only, particularly as they are leveraged products which work both ways – they have the potential to magnify losses as well as gains.

We suggest that traders should learn how to successfully trade stocks profitably for a few years first – to master their skills in analysis, money and risk management – before you consider trading leveraged products.

It was with great concern that we received the following from one CFD trader this week:

“Hi,

I have decided to stop trading for 6 months due to "blowing out" my CFD trading account through some poor position sizing and risk management. Nothing I couldn't afford to lose, but I can't afford to lose any more.

As such - I wish to remove all possible trading distractions and hence I request to cancel my subscription as per your one month notice policy. I liked the newsletter and was considering signing up for Boot Camp, but I am afraid I no longer have the funds to trade and really need to reset.

I can see now why CFD's are not much better than poker machines for those people who understand the odds against putting hundreds of dollars into a poker machine and don't play them. (Like myself)

CFD's seemed like a good way to trade on a small account ($5K), but the ease of trading, the commissions on trades (I spent $1000 on commissions when I totalled it all up last week - 20% of my account), the large share parcels on small stop/losses, slippage from gaps all contributed.

The major factor though was some false confidence that I thought I knew what the market was going to do next and so what I thought was trading was probably more punting. In addition, some seminars, trading books, newsletters and software packages added another $5K to the losing experience.

I have decided to step away from trading for 6 months (I have to – my wife won't give me any more of our holiday savings at the moment) - save some capital and re-launch with some education... I will keep an eye out on your web site for the next Boot Camp later in the year.

I will contact you in the future and perhaps re-launch my trading with one of your Camps.

Thanks and regards

John M

PS Thanks again for your interest which I do appreciate - you are no doubt extremely busy… to take the time to personally respond for a $30/mth subscription cancellation email has been one of the positives in my current trading career to date. I look forward to joining you again in the future.

PPS There may be an idea there for an article for your newsletter about the challenges for new traders, psychology and CFD's....

The stock market can provide the most expensive education possible.

Its times like these that traders have to make the decision to quit and walk away completely …….. or pull themselves away from physically trading, consider what they did, what lessons they learnt, then very importantly seek out the education to put themselves back on track .

As we have shown in our newsletter, through the work of Dr Brett Steenbarger, Brian McAboy and Catherine Taylor, the subject of trading psychology is a cornerstone to trading and investing success. Over the past year we have particularly come to appreciate the coaching work of Catherine in helping traders around the world understand themselves better, set goals and strive to achieve more.