Trading in 2023 - The Best Time To Become a Trader?
Trading in 2023 - The Best Time To Become a Trader?
Contrary to popular belief...
Last year was one of the most grueling and baffling years in stock market history. There will be a generation of investors and traders who will never touch the stock market again because of it. The money made in 2020 and 2021 was all given back, with interest.
If you’re interested in trading, you might feel like waiting it out. Here's what you need to know if you plan on trading in 2023.
It’s the best time to become a trader
This may feel counter-intuitive, but the best time to become a trader is in a bear market. If you’re unsure whether trading is right for you, now is the time to find out. Trading is a difficult endeavor and it’s not meant for everyone. Unfortunately, many learned this the hard way over the past two years.
Some people made fortunes in crypto and stock pumps, and many of them were amateurs who didn't have market experience. They were riding the wave. When the tide turned against them, they had no way of protecting themselves and were washed away.
The most dangerous thing you can do is walk into a casino for the first time and win big. This is because you get blinded by false notions about your skills. We’re all susceptible to feeling overconfident when we’re winning, even if we know it’s dumb luck. It's just a part of human psychology. The only way to control or eliminate this feeling is by having lots of experience. After hundreds or thousands of observations, you’ll become desensitized and won’t be affected by any individual trade.
Over the past two years, it was very easy to get money out of thin air. You clicked a few buttons and made huge sums. For the inexperienced, this was an addictive feeling: money for zero effort.
This will have a huge psychological effect on your relationship with money if you’re not careful. It can kill your hunger to work harder and improve. Once you’ve made money without working, it’s going to be very hard to go back.
It’s a hollow feeling, like winning the lottery. You don’t learn any lessons, you don’t gain any skills. You didn’t earn it, so you don’t know how to keep it or make more.
I call it the death spiral. You’ve become addicted to the feeling of making money from pumps, so instead of doing any real work, you’ll keep looking for the next pump. The more money you lose, the more you need the next pump to work. You’ll dig a hole so deep, it’ll be nearly impossible to climb out. You’ll have thoughts like:
“I was up 500%…”
“I could have been set for life…”
“If I sold at the top… I could have bought [x]”
“Should I buy this penny stock?”
It’s a huge cloud of regret over your head, and every second you spend thinking about it is a second wasted.
To sum up, it was not a good time to become a trader in 2020 and 2021. You learn the hard way that the market isn’t for you, and you may become addicted to finding a way to get rich quickly. It will be difficult to recover.
Starting in 2022 or 2023 - the rough and volatile bear market - is advantageous. You’ll still have a hard time, but it will mold you instead of crushing you.
Learn in the hardest environment
Learning in the easiest environment is never a good idea. It doesn’t prepare you for any harder environments. As an example, let’s take two young men who are nearly identical in every way. One learned to swim in a pool where the water reaches your waist. The other learned to swim by being thrown in a turbulent river.
If the first man is thrown into the river, they'll never want to touch water again.
If the second man is thrown in the pool, they'll swim with no effort. They learned how to swim in the most difficult environment, so they can swim anywhere with ease.
The first person could have been a good swimmer, but now they quit swimming altogether. Their worldview was crushed by a harder environment.
This is the advantage of the bear market. Once you've been through it, there isn't much to be afraid of. You're grounded in reality and your expectations are realistic. Your scars help you rather than hinder you.
Disclaimer: Any content from this newsletter should not be taken as financial or investment advice, but for informational and entertainment purposes only. This newsletter simply shares my personal opinions. Investing in stocks, bonds, futures, options, and other securities carries significant risks. Some or all capital may be lost. With leveraged instruments, losses may exceed initial capital. Past performance of a security does not guarantee future results. Consult with a registered financial/investment professional. This newsletter and its authors are not licensed financial/investment professionals. By reading and using this newsletter, as well as any other publications, you are agreeing to these terms.