Instead of a structured post each week, going over different areas on what you can do to improve and how to do so. I would like to start a new type of blog post that is going to simply be my thoughts on trading related events,news,life style and much more. The information in these blogs is strictly my opinion and will not always be based on facts or the popular opinion of others.
Money
Money is the elephant in the room for all traders, it can be a good thing or a bad thing. I also think money can turn into a bit of a evil for traders who can begin to start seeing success with there trading.
Trading is unlike any other business, there is no limit on how much you can make. With more money come more responsibility. For many who read this you might be thinking " how can money be a good thing and a bad thing", let me explain.
When traders start to make more money they often start to spend more money, this can come in the forum of cars, houses, clothes, gifts and the list could go on and on. The reason this happens is because what use to take you a few hours or a week to make can now me made in a matter of a few seconds. $100 before use to take you 8 hours to make but now it takes you 30 seconds, so when you are out shopping you no longer look for the deals or look to buy smart.
It is now all about fulfilling dreams and doing what every you want. Don't let me stop you from following your dreams, I am simply saying don't blow your money because you want to show off on Instagram.
Not only that but with trading the tides can easily turn on you, going from make $10,000 a month to losing $20,000 a month is not unrealistic. This is where your smart money habits come into play and make sure you don't have to go back to a 9-5.
One of my rules is to always have a minimum of one years expenses in the bank in liquid cash. This means if you go and buy a new Corvette then you need to add those expenses to your nest egg.
As I have said many times before trading is all about capital preservation and that also applies to your spending habits. If you have a bad month of trading you don't want to have to return that brand new C8 Corvette because you don't have a nest egg.
In summary, be sure to always protect your capital and protect your future. The goal for all traders should be to be rich not to look rich. Just because you can buy something doesn't mean you should. The market can turn on you in a heartbeat and take everything you have worked hard to gain, be sure to prepare for the worst possible outcomes.
Comment down below if you agree or not!
Wise words. I'm looking forward to reading your posts.