Dream Trade

When trading the markets, it's vital to stay grounded in reality. You can't get caught up in dreams. For instance, it may sound "easy" to people outside the profession to make money by trading Google, but there are a couple of real obstacles to taking home huge profits. First, risk should always be considered when making a trade, and while trying to manage risk, some traders would not want to take a certain trade. For example, 100 shares at $270 would cost $27,000. If you followed the guideline of risking only a small amount of capital on a single trade, such as 1-3%, you might want to stand aside on such a trade. The volatility may be too great and create too much risk, unless you have a large account. Other traders see diversification as essential for proper risk management. So even if the trade made a great deal of profit, in all likelihood, other trades in a portfolio may have lost money, creating less of a profit across a series of trades.

Getting caught up thinking about dream trades can be upsetting. At first you may realize that you are engaging in harmless fantasy, but at some point you may start believing that it's possible to make some of these dream trades. The mind has a way of thinking that fantasy is reality, but just because your mind can think the impossible can happen does not mean that dreams can become reality. It's better to realize that winning streaks go in cycles. You may run hot at times, but cold at other times. Occasionally, you may hit upon a big trade that makes up for months of losses, but you should not count on it.

It may be fun to dream of what might have been. If only we had a time machine to go back and make those trades that turned out to be huge winners, or a crystal ball to predict the next big trade, but in reality, trading is about working hard, making a series of trades, and patiently waiting for the profits to roll in. Profits don't always roll in when you expect them, but if you work diligently, they do roll in.