The title of this post suggests that a person's driving habits mirror their trading habits. I wrote about this topic on my latest blog and would love your opinions. I am very new to trading and this is just an observation I made. Please tell me if you agree or disagree or give me your thoughts. I would love the feedback.
You can read the blog here and post comments or you can reply on this thread. Below is what I wrote:
I have been known to say that I do not like the idea of investing in the stock market for people who do not know what they’re doing. I certainly do not know what I am doing and yet I am going to plunge right into the deep end and attempt day trading. The reason is because I have someone who has been doing it for a long time with some success willing to show me the ropes. I wouldn’t think of starting it otherwise.
It will be interesting to see if my hypothesis changes once I delve more deeply into it but upon my initial observations I would say that you can tell how someone plays the stock market by the way they drive. A person’s driving style really comes into focus in stop-and-go traffic. It’s pretty easy to zoom by everyone at 100 MPH when the traffic is sparse. Just put the pedal to the metal and go for it. Just remember that the police are always watching for speeders just as the SEC is always watching for those who seem to be going too fast too. In stop-an-go traffic you can really see the different styles.
It seems to me that most people just stay in the lane they’re in and go with the flow. They may be unhappy to see people in the next lane whizzing by while they’re stuck but they are convinced that the second they make a lane change it will come to a stop and they’ll wish they stayed put. They constantly live in fear and remember old mistakes. They believe that staying the course will be their best option. These are the people who dump all of their money into a few blue chip stocks and wait. They do not often look at whether they’re up or down because they do not want to know. They believe that in the long run the stocks will end up higher than where they bought and that’s the best they can hope for.
Other people will jump into a lane of traffic the minute it starts moving faster than theirs. They do not care if they made the right choice or not. It seemed right at the time. If that lane comes to an immediate halt they’ll jump back into the previous lane 5 cars behind where they started and repeat the process over and over. They end up losing more ground than the “stay the course†guys but they don’t care. They believe that eventually because of their persistence they will break through and get ahead. These are the people who are always watching the markets. They look for the lows to buy and highs to sell yet they always seem to buy when the stock is high and sell when the stock is low. They believe that one of these days they’ll get it right and make up for all of their losses.
Then you have those that will change lanes as often as they have to but only when they have to. They will watch for patterns and look for their openings. They will make a lane change even from a moving lane into a slow lane because they know that it is their only opportunity to get in. Then they’ll patiently wait as the previous lane comes to a halt and their new lanes picks up speed. They use past knowledge of driving patterns in the area to make better decisions and plan their moves. Occasionally they will make a mistake and shrug it off without getting emotional. They will rest until their clarity has resumed and then get back in the game. If they make repeated mistakes they'll stop trying to get ahead and stay put for the day. They'll try to learn from this and come back tomorrow and try to do it better. As you can guess, these people will play the market the same way. They make moves based on where they think the market is going to be heading rather than where it is currently heading. They plan their moves carefully but are not afraid to move when they think the time is right. They occasionally make mistakes and do not let their emotions get in the way. They know that if they’re having a bad day it is better to cut losses and come back tomorrow than to try to make up for it. In the long run, they win far more often than they lose.
It will be interesting to see if I still feel this way after a few months of trading. I believe I tend to drive as in the third example above. I make wrong choices sometimes but I routinely find myself ahead of everyone else and often “win†the game of driving in traffic. We shall see…
You can read the blog here and post comments or you can reply on this thread. Below is what I wrote:
I have been known to say that I do not like the idea of investing in the stock market for people who do not know what they’re doing. I certainly do not know what I am doing and yet I am going to plunge right into the deep end and attempt day trading. The reason is because I have someone who has been doing it for a long time with some success willing to show me the ropes. I wouldn’t think of starting it otherwise.
It will be interesting to see if my hypothesis changes once I delve more deeply into it but upon my initial observations I would say that you can tell how someone plays the stock market by the way they drive. A person’s driving style really comes into focus in stop-and-go traffic. It’s pretty easy to zoom by everyone at 100 MPH when the traffic is sparse. Just put the pedal to the metal and go for it. Just remember that the police are always watching for speeders just as the SEC is always watching for those who seem to be going too fast too. In stop-an-go traffic you can really see the different styles.
It seems to me that most people just stay in the lane they’re in and go with the flow. They may be unhappy to see people in the next lane whizzing by while they’re stuck but they are convinced that the second they make a lane change it will come to a stop and they’ll wish they stayed put. They constantly live in fear and remember old mistakes. They believe that staying the course will be their best option. These are the people who dump all of their money into a few blue chip stocks and wait. They do not often look at whether they’re up or down because they do not want to know. They believe that in the long run the stocks will end up higher than where they bought and that’s the best they can hope for.
Other people will jump into a lane of traffic the minute it starts moving faster than theirs. They do not care if they made the right choice or not. It seemed right at the time. If that lane comes to an immediate halt they’ll jump back into the previous lane 5 cars behind where they started and repeat the process over and over. They end up losing more ground than the “stay the course†guys but they don’t care. They believe that eventually because of their persistence they will break through and get ahead. These are the people who are always watching the markets. They look for the lows to buy and highs to sell yet they always seem to buy when the stock is high and sell when the stock is low. They believe that one of these days they’ll get it right and make up for all of their losses.
Then you have those that will change lanes as often as they have to but only when they have to. They will watch for patterns and look for their openings. They will make a lane change even from a moving lane into a slow lane because they know that it is their only opportunity to get in. Then they’ll patiently wait as the previous lane comes to a halt and their new lanes picks up speed. They use past knowledge of driving patterns in the area to make better decisions and plan their moves. Occasionally they will make a mistake and shrug it off without getting emotional. They will rest until their clarity has resumed and then get back in the game. If they make repeated mistakes they'll stop trying to get ahead and stay put for the day. They'll try to learn from this and come back tomorrow and try to do it better. As you can guess, these people will play the market the same way. They make moves based on where they think the market is going to be heading rather than where it is currently heading. They plan their moves carefully but are not afraid to move when they think the time is right. They occasionally make mistakes and do not let their emotions get in the way. They know that if they’re having a bad day it is better to cut losses and come back tomorrow than to try to make up for it. In the long run, they win far more often than they lose.
It will be interesting to see if I still feel this way after a few months of trading. I believe I tend to drive as in the third example above. I make wrong choices sometimes but I routinely find myself ahead of everyone else and often “win†the game of driving in traffic. We shall see…
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