As a market manueverer, I take calculated risks, not gambles. Although, many people consider the stock market one big casino. This is false in my opinion, and I’ll tell you why.
In Vegas, one simply puts their money on red, or a number, or in a machine, etc. Then the wheel is spun, or the dice rolled, or the handle pulled. When that happens, the gambler holds their breath and hopes for the best.
That is not what true investors and traders do. Not even by a long shot. Not the experienced ones anyway.
It’s true, the stock market, futures market or any other market, is not for the faint of heart. And it’s certainly not for those willing to lose money from time to time. These markets are for those who take the time, have the dedication, and are willing to learn to play their game.
So who is “their” that I speak of? Smart money, that’s who! But who is smart money? They’re the big money players with all the money in the world as it would seem: hedge funds, banks, investment firms, etc etc… They’re the ones with the resources and means to make tons and tons of money in any financial market, leaving you feeling like you got robbed.
There’s a saying as old as the market itself – FOLLOW THE SMART MONEY! This, without question, is a saying that i live by in my trading life. I don’t have enough money to move the price of anything, but they do. So why would I assume I need to do anything other than follow them? I wouldn’t.
You see, it takes large amounts of money to move a price of any stock, in either direction. For example:
Let’s say I’m looking to buy AAPL (Apple), and I have $100,000 I want to spend on it. That’s a lot of money, right! Sure it is… but it’s absolutely nothing when buying that stock.
As of writing this blog post, Apple has a market cap of $1.9 trillion. That’s TRILLION with a ‘T’. So ask yourself, what is my measly $100,000 gonna do to the price of their stock?
So who’s got the money to move Apple’s share price? Collectively, we all do; every investor and trader playing the stock at any given time. But who decides where the price goes? Smart money only.
Hedge funds don’t enter a position with a measly $100,000. No no! Not the big firms anyway. Hedge funds enter positions that
worth millions. They’re not looking to make pennies (which is what they’d get, relatively speaking, if they were to trade with just $100K), they’re looking to make hundreds of thousands, if not millions of dollars on every trade.
My point is this: I do not enter my positions with the assumption that it’s going to move my direction because my money will create the mojo needed to move the price. Nope! Instead, I enter my trades with the assumption that I am trading the same direction as smart money.
In order to make calculated risks, and not gambles, you have to learn what you’re doing. Whether it be fundamnetal analysis or technical analysis, makes no difference. You have to pick your trades wisely, and not blindly. If you choose your positions based on what your neighbor said, you are just asking for trouble.
When I first got involved with the stock market, I randomly picked my trades. I was pretty much throwing darts at a dart board that had company names on it. Wherever the dart stuck, is where I put my money. As you can imagine, I blew through account balances very quickly.
But, what I found was, I had a passion for this stuff. I truly enjoyed the business and finance world. I had no idea what I was doing, but I enjoyed it. And thus, I began a long journey that has lasted to this day.
I have spent a crazy amount of time researching, learning and charting. I read business news, financial statements, and I watch business news instead of Netflix. I backtest my personal strategy (and other strategies) on charts all the time. I’m always doing something market related, and it has paid off 10 fold for me. I am a profitable trader and investor.
Smart money leaves clues on a chart, and company financial statements leave clues in their filings. The key is to understand how to spot those clues. And this is what takes time and dedication.
Would you buy a house without seeing it first or knowing what kind of neighborhood it is in? Probably not. So why would you buy stock in a company you know absolutely nothing about?
The ones who fail in this business don’t fail because the market is a casino and Wall Street has it rigged. They fail because they don’t have what it takes to succeed. They don’t have the dedication and passion to put in the work.
Unfortunately, many look to get rich quick, and when they empty their first account within weeks or months, they throw their hands in the air and say, “See! It’s rigged. Nothing but a casino.” No no no! They just treated it like a casino. They simply put their money on red and watched the wheel spin, hoping they’d hit the jackpot.
That’s just not how this works. You will most likely NOT get rich overnight. It’s a marathon, not a sprint. It takes time, effort amd dedication to truly understand what’s going on. But once you figure it out, life will never be the same in a positive way.
So next time you hear someone say, “the market is just a casino”, simply giggle on the inside and think to yourself, “well, this person must have gambled.”
This post is just my opinion. You should definitely seek professional financial/investing advice before doing anything.
WARNING/DISCLAIMER: Investing and trading carry significant financial risks. I am not a licensed financial or investment adviser. Nothing on dumbmoneytrader.com should be considered financial or investment advice. Everything on dumbmoneytrader.com is for educational purposes only, and should NOT be considered advice. Consult a professional financial or investment adviser before making any financial decision. Never enter any investment or trade without consulting a professional and licensed financial or investment adviser. Never enter any investment or trade based on anything you read or see here on dumbmoneytrader.com.