So you want to know how to make money in the stock market. The first step in knowing how to make money in the stock market is knowing how not to lose it all.
If you ignore this one rule, you’ll lose all your money in the stock market and become one of those bitter skeptics that complains that the stock market is “rigged”.
Go for small daily and weekly gains, not big gains.
I’ve never met any successful trader who was a speculator in the markets. By speculator I mean someone who goes into a trade expecting to hit a home run and make a lot of money off a single trade.
This is what pink sheet and OTCBB traders do. This is why the pink sheets and the OTCBB market has killed more investors than all other markets combined.
You should never buy a stock because you think it is going to be a HUGE winner.
Rookies focus on how much money they can make. Professionals focus on how to limit losses.
Don’t get me wrong. I have hit a home run. It was more luck than skill. My goal was to hit a small winner, but then an external event exploded the stock upward. I had accidentally hit a huge winner. At the time I bragged to family and friends of my stock picking skill. But deep down I secretly knew the truth, I got lucky.
I’ve gotten lucky once in the last 10 years.
When I was young and dumb, I lost $10,000 in the pink sheet markets. I lost another $5,000 in the OTCBB market trying to play jumpers (stocks that uplist from the OTCBB to a major exchange).
I was young enough to come back. I’ll never do that again. Even years later, I still get a pain in my chest and an uneasy feeling in my stomach just thinking about it.
It is amazing how quickly your trading account will build up over time just by making a little bit every week.
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