One Of My Favorite Stock Market Instructors Is Ryan Litchfield*

Category: Finance.

LESSON AVOID THE COMMON THIEF. It s kind of like letting a thief into your home and saying, "please turn out the lights when you leave. " The next morning you wake up and the house is empty, the safe is open, and all your deeds are missing.

I have noticed that some people display a common error in judgment that can be devastating. A few days later you get a call from your pension plan coordinator who bears heart- wrenching news" there is nothing left in you account, do you still plan on using our services? " What is this thief? The answer is: Many people will start out slow and each time they make a mistake they try to solve it with larger amounts of cash. What could people do that would cause them to lose nearly everything before they wake up? Over time they can drain their bank accounts, pension funds, brokerage accounts, and every other source of money. When you decide to invest in the stock market, it s best to use only a portion of your money for" High Risk Investments. " What is a high- risk investment?

Only then do they stop and say, "Oops, I guess my trading methods are not working. " Do you mind if I make a suggestion? Anything that you personally control that can lose value if you make a mistake! That means you would start with$ 3, 00Then you ask yourself a few questions: "Is it OK if I place this money at risk? " "Can I handle the possibility that I may lose this entire amount? " "Can I accept that risk without losing my mind and self? " If you can answer each question with a YES, it is indeed risk money that you will be able to use and you will be able to handle the ups and downs of the market. Let s say you have$ 30, 000 of available funds, don t dive right in with the whole thing, how about starting out with 10% . If the money is too important, you will end up making all the wrong decisions because your choices will be made because of fear and worry, not logic and informed choices. Then, as you experience positive results, you might reconsider. Once you have arrived at the amount you want to work with, use that for a while.

You could add a little, if it fits your plan. STOP. However, if you are having a difficult time and you feel like you need more money to help you" make up" your losses. Don t add another penny. Use hard earned cash to experiment in the market. I have seen so many people who are still confused about things. When they have a few bad plays, they go back to their secure funds and get another cash infusion.

Then they finally decide that they need to go back to the basics and find out what s wrong. They continue doing this until they have nearly exhausted everything. The common thief is thinking that you can solve investment problems by throwing more cash into the system. Don t get me wrong. There is nothing wrong with starting out small and working with that money until it becomes a massive amount. I am not trying to say that most people lose money when they start investing in the market. I have spent many years teaching people how to invest in the market.

That s not realistic, I know people that have done great and others that have not done great. That exposure has given me the opportunity to talk with all kinds of people with just as many different experiences in the market. I have worked with tons of people that started out investing in the market with$ 2, 000 or less which grew to hundreds of thousands of dollars. I realize that using the concepts presented in this series of reports works best when you have a little more than$ 2, 000, but not too much more. How do you avoid the common thief? LESSON IF YOU RE WRONG, EXIT QUICK AT A SMALL LOSS.

Be careful and go back to the basics if things are not working. One of my favorite stock market instructors is Ryan Litchfield* . The same applies to investing in the market- if a play is going bad or if you discover that your investment choice is wrong, get out ASAP. Ryan says something like this" IF YOU NEED TO EAT A TOAD, EAT IT FAST BEFORE IT GETS TOO BIG" . When a play goes bad take your loss immediately before you re small error becomes a big disaster. To your dismay, the stock stops moving down shortly after you get filled on your sell order and then that stock starts moving like a rocket- IN THE WRONG DIRECTION costing you money. Let s say a stock has reached it s resistance and has started falling, you decide to short some stock or sell a call with plans to buy back at a profit when the stock falls far enough.

By the end of the day, the stock price has broken up through resistance. When the market opens the next day, wait a short while( at least until amateur hour is over) then if the stock has not moved back in the right direction- call your broker and close the play! That night when you look at the charts, check the news you realize that the stock may continue to go up a lot, make the decision to get out fast. The problem is people depend on hope too long. If you stay in a losing play too long, you will end up riding that nightmare all the way to the poor farm. The stock shoots in the wrong direction and they keep holding on, hoping and praying for a miracle, until the play gets way out of control and it becomes a substantial loss potential.

If a play moves against you, get out while the cost is small. It is impossible to be 100% correct, all of the time. There is nothing wrong with taking a small loss by closing the play. The stock market has it s own mind and it will act the way it wants, regardless of our desires. For example: A grocer orders 5, 000 boxes of cereal because a major kids fair is coming to town. Rather than looking at losses as a bad thing, think them as the cost of doing business.

The fair is canceled and the grocer is left holding far more cereal than she can handle. Nope, it s never going to enter her mind, she will just look at it as a cost of doing business. She gets out a big sign that says: "Cereal 50% off, hurry in for, while supplies last the big savings. " Will that grocer spend the next three days crying over the cereal disaster? She knows that it is far better to sell the cereal at a small loss, so she can use her money and shelf space for the production of income. She could end up losing customers because they are getting old, spoiled products. If she were to hang on to the cereal, refusing to sell at a loss.

Not to mention, she can t buy other supplies because she has too much money into the cereal. There is nothing wrong with selling groceries at a loss, if that is what it takes to move the product, providing it does not happen too many times. Eventually she could be faced with an even bigger loss when she has to dispose of spoiled products that no one wants to buy. Even if you take a loss, it is better get out. And you can always make a profit by getting back into the stock as it provides you with another window of opportunity. Just like the grocer, you still have your capital left for other products( plays) , which will bring you profits in the future. If you get out of a play because a stock moves the wrong way you will be happy that you got out early when you see that it kept moving the wrong way.

You can take that rescued cash and do other plays without having to watch a loser play get worse day after day. Sure you had to get out at a loss but you rescued some of your money. Believe me- that s no fun! If you win seven out of ten times, you will be ahead of the game at the end of the month. Everyone has a few bad plays, mixed in with their good plays. If you are sure to keep the losses small, your account will go up 7 down 3 up 7 down 3 up 7 down If you are not having enough successful plays, it s time to stop, go back to the basics, go back to class, do more practice trades, and get back on track. In life education always costs us something.

LESSON EVERYONE PAYS FOR EDUCATION. We can learn by attending the school of hard knocks or getting a formal education. The stock market is no different than any other profession or opportunity if you want to make a profit you have to learn how. Either way we will invest time, and energy, money. There are no short cuts or easy tricks, if it was easy then everyone would be millionaires. I teach many online free stock classes each week. I have seen people lose$ 10, 000, $20, 000, $50, 000 and even more before they finally get the message- you have to know the rules before you play the stock market game.

These classes are intended to be introductions to stock market investment concepts. I have scheduled a few two day classes in April. You can get enhanced education by attending one of my live classes. Please look in this newsletter for the dates. I promise to share two information packed days with you and other serious investors. I invite you to come spend two days with me. Many students tell me that if they could start over again, they would have attended my live class when they were first invited, instead of" wasting months wandering in the dark guessing. " When you attend my live workshop you will learn in two days what has taken me many years to discover.

Come join me, it s going to be an exhilarating experience. I am constantly updating the subject material and improving the tools so that I can be sure to teach you everything I can in two action packed days. Darlene Nelson with Better Trades

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