It is not about the size…of the trade

Traders get so caught up in how many shares they are able to purchase of a stock, as if it actually leads to making more money.

FOLKS!!!! Don’t buy into that myth. When you think that, you are making an emotional decision when it comes to your trading, and that is the feeling you are able to get when you buy 1,000 shares or even 10,000 shares of a stock at $1.00 rather trading a much better setup in a stock that is say, $225 per share and as a result, you can only buy 44 shares of that stock. 

But here is the cold, hard truth….

A 10% gain in a $1.00 stock is the same amount in profits as 10% in gains in a $225 stock.The number of shares you have does not matter. There is no greater probability for success if you trade with more shares than there is if you trade with less. 

It is almost like traders feel like they are some kind of big time trader when they can tell others, “I bought 1,000 shares of that” or “I backed up the truck and purchased a 5,000 share lot of ABC stock.”

Traders are more caught up in shares than profits

I get these emails from traders all the time, and often times they are critical of me for trading stocks that are often times over $50 or $100 because they think for some reason they can’t trade them. But let me be frank, stocks that trade at those levels tend to be better performing stocks, and better with technical analysis then the trash that is found under $3.00. 

Those who buy these low-dollar stocks as trades end up as long-term bag-holders, because the price movements catch them off guard far more quicker and as a result, they make excuses for the trade and decide to hold on for months on end holding out hope that the stock will go in their favor…one day. 

I will also say that most traders who feel the need to only trade crap stocks with low floats, high spreads, and extreme volatility are those that are trying to take shortcuts in their trading education, believing that somehow, they can cut out a chunk of time in their development as a trader and that they will be better off for it. 

So to sum it up… don’t be a tool, and think that you some how need to trade Wall Street’s trash simply because you can buy more shares of the stock. I used to think that way myself, a long time ago, and it cost me a lot of capital in the process before I finally learned my lesson. 

PHEW!!!

I needed to get that off my chest…