Who do You think you are?

One of the lessons in our course is about identifying whether you are a trader or an investor. A simple concept seemingly, and in theory, too basic to actually spend a whole video on it perhaps.

However, when you have been around the stock exchange block for a while, you will know that if you are unsure of who you are in the financial market, your identity crisis will eat your account before you can say “shares”.

Indeed, when starting out as an investor, one of the best things that can happen to you, is a losing trade.

What? Yes, you read correctly.

Why? So you can learn. And quickly. How to determine the correct position size. How everything you touch doesn’t turn to gold in the financial market. How to keep your boat afloat in stormy waters, as the markets roll and fluctuate all the time.

If this sounds like a metaphor for life, it is. I have learnt so much about life from being a trader.

I have seen time and time again, how excited traders are when they start, particularly when the first 5 trades are successful; they think trading is easy and then they make their position sizes bigger than what their risk profile allows. Obviously that trade is then the one that burns them purple, leaving them anxious to make up the loss by trading bigger. This just adds fuel to the fire and they experience a Hiroshima bomb before their trading journal has 50 entries in it.

They close their account and never want to hear about the financial market again. “Stock markets suck,” they cry out, head in their hands.

The solution? Make wise choices early and avoid the cycle. I am going to share my own life/trading lessons that helped me identify who I am as a person and as a trader.

	FOR THE TRADER	FOR THE INVESTOR

1. Take inventory of your strengths and weaknesses
Patience	Don’t want to spend a long time on a share	Prepared to spend more than 6 months on one share
Understanding CFD’s/Futures	Understand good risk/reward ratios, know how to determine your position size	Don’t want to take leverage on a share, happy to pay the full price
Discipline	Critical ingredient to be successful, once you have a model that works stick to it	Critical ingredient to be successful, once you have a model that works stick to it
Time	Can spend time on graphs on a daily basis	Can spend time on graphs once a week
Knowledge	Keen to read and be open to learn on a daily basis	Keen to read and be open to learn on a weekly basis

2. Keep a journal	This will highlight your errors and successes so you can learn from them and keep track of how you grow	This will highlight your errors and successes so you can learn from them and keep track of how you grow

3. Let go of perfection	Make peace with the fact that you can't always win all the profit	Make peace with the fact that you can't always win all the profit
	If you try to eat a whole cake every day, you’ll benefit from getting “fat” but you will also get sick, on a slice a day you’ll still put on a lot but without the downside	If you try to eat a whole cake every day, you’ll benefit from getting “fat” but you will also get sick, on a slice or two a couple of times a month you’ll still put on some weight but without the downside
	Accept that over 3 year period your Billiton trades did not give you a return of 300%	Accept the fact that you couldn’t enjoy the 15% spike in one day on Impala Platinum and that you have to wait for a weekly close

4. Don’t compare yourself to others	Don't listen to your trader buddy who brags about his/her wins, unless they show you a 2 year account statement don't believe them	Don't listen to the young financial advisor who has never seen a bear market and tells you that shares can only go up and that you cannot lose all your assets, trust me you can!

5. Get your priorities right	Trading is about doing it right not about being right, don’t walk away to make tea before your stop loss is secure in the system	Don’t put all your eggs in one share/ETF or sector no matter how positive the news are around them

6. Take responsibility	The market is ALWAYS right, if you are not on the right side you are wrong	The market is ALWAYS right, if you are not on the right side you are wrong

7. Stop trying to be like someone else	Your model and decision making process will look different than other people's, stop trying to make money, follow the model, be disciplined, and money will follow you	Your model and decision making process will look different than other people's, stop trying to make money, follow the model, be disciplined, and money will follow you

8. Celebrate your successes	Take profit, do what is easy, don't change into a long term investor when you are in a short term trade, CFD interest is a reality	Take profit, you should only have one spouse so don’t get married to your shares

9. Life is never perfect so deal with it	There is no perfect trading model, deal with the imperfections and limitations and learn to manage your trades around them, markets change all the time	There is no perfect investors model or perfect sector, deal with the imperfections, learn to manage them and avoid being over exposed to one share or sector, markets change all the time

10. Enjoy the ride	If you are not making enough profit trade smaller not bigger	If your shares are not performing as planned, re-evaluate
10. Enjoy the ride	First get your model right, trade the system and not the share	are you out of sync with the market or is it just the wave you are in, if so, be happy to wait for the next better wave despite the flat tide you might be in

So who are you? Are you the short term trader who wants to look at graphs on a daily basis and trade in-and-out based on a proper strategy? Or are you the person who wants to invest in the stock market, but is happy to nibble at a good company, get your dividends and sell it when the time is right even if it is months or years from now.

I am an investor and I love it. As a passionate runner I prefer the slow endurance races over hills and through beautiful valleys rather than the fast pace of the sprinter in the 200m blocks.

Who are you? Or are you still trying to figure that out.

Whoever you are, we can help you: as an investor, for R200 per month you can learn about investing in the stock market, see www.chris-tell.com for more details or if you want more trading ideas, subscribe to our Candle of the Day for R370 per month, see www.fransdeklerk.com for more information.

Who do You think you are?

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