So you’d like to be a fabulously profitable trader?
Take this 30-second quiz to find out if you’ll cut it in the lucrative, yet sometimes hostile financial markets.
Scenario 1: A contact tells you that if you invest $10,000 in their trading system,
you’ll get a return of $50,000 in your first month. Do you:
Tell your spouse excitedly that you’re going to do it.
Hand over the $10K because they look trustworthy.
Walk away from the unrealistic promises.
Consider whether this fits in with your risk management plan, and then decide.
Scenario 2: You’re so excited. There’s a rumour that a share you own is going to double in price. ‘A Current Affair’ is covering the story at 7pm. Do you:
Buy more. You should always buy on rumor and sell on fact.
If it’s within your trading plan’s parameters – buy more.
Research the fundamentals, and make an objective analytical decision.
Sell it because the market would have already factored in this news.
Scenario 3: You’re in 5 positions that show a profit. Overnight, your positions lose 15%. Do you:
Close out everything. 15% is too much to lose in one hit.
Sell the positions if the newsletter you follow tells you to.
Buy more because they’re a bargain now, and sell the ones going up.
Sell any that have hit your stop loss, hold onto any that haven’t.
Scenario 4: Your portfolio has spiked by 30% in the last week. Do you:
Sell the ones going up and buy new ones ‘that still have some uptrend left’.
Look at your trading plan. Hang onto the ones in your portfolio that are going up.
Consult your trading newsletter for advice.
Sell out everything. Prices like this can’t last forever.
CONGRATULATIONS! Your trading diagnosis is nearly ready
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