An art dealer is very different from an art collector. The art dealer will not buy famous paintings and store them in the safe for decades, hoping their value will rise. The art dealer buys a painting only if he or she estimates there is a certain range of profit in a short-term sale. Like all of us, the art dealer needs to pay a mortgage and cover food and other living expenses.
The stock trader is just like the art dealer: both buy and sell in order to create the profit that provides for their livelihood. Professional traders buy stocks at a price they know is too low, with the intent of selling at a price they know is too high. Stock traders also make mistakes. But a stock trader who succeeds more often than errs can make a living from the profession.
In contrast to the trader, investors do not try to earn their living from the market. Investors turn their funds over to the management of others, or manage their funds by themselves in the hope of positive yields. Investors may improve or worsen their long-term financial status, but cannot assure payment of their credit card bill at the end of each month. A trader plans in advance how much money to risk with each transaction, whereas the investor might, during tough times, discover that most of his or her money has evaporated. Traders sleep peacefully knowing that most of their money is in cash, whereas the investor is exposed to market fluctuations.
Fast Money vs. Slow Money
Traders use “fast money.” Investors use “slow money.” Can $100 in the hands of a trader be the same as $100 in the hands of the investor? Not at all. When the stock exchange ends the year with increases at 6%, the investor’s funds have followed all trends over the year, and therefore these funds are called “slow money.” By contrast, traders enter and exit on each day of trade. An overall yearly change of 6% comprises hundreds of trade days and tens of weeks during which the market rises or drops several percentage points. Traders follow these ups and downs, and unlike the investor, traders use that same $100 many times, sometimes thousands of times over. The trader’s money is “fast,” as it enters and exits the market incessantly. We could say that a trader’s money works harder. The investor’s money is “slow.” The trader’s “fast money” piggybacks on the “slow money.”
Trading is my profession. Investment is not. I don’t negate the validity of investment, especially if you're good at it. But I do know that investments will never lead to a monthly salary from the market. I do believe that most of your free money should be invested, if not in the stock exchange, perhaps in real estate. But that’s not my field of expertise...I'm a day trader
The Art of the Day Trade
Day trading is an art integrated with precision knowledge. The rules for the precision knowledge can be learned, but the art needs to be developed.
Day trading lies partway between relying on precise knowledge and being an art. Day traders will never be successful if they focus on technical control alone. If technical control is all that's needed, it would be accounting. A winning trader succeeds in merging knowledge and artistry.
To begin your own journey toward financial independence, visit Meir Barak's site Tradenet and check out his book "The Market Whisperer".
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