{"id":9901,"date":"2018-05-28T07:30:15","date_gmt":"2018-05-28T11:30:15","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=9901"},"modified":"2018-05-28T07:30:15","modified_gmt":"2018-05-28T11:30:15","slug":"how-to-consistently-win-in-the-stock-market","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/how-to-consistently-win-in-the-stock-market\/","title":{"rendered":"How to Consistently Win in the Stock Market"},"content":{"rendered":"

Editor’s note:<\/strong> The markets are closed today in observance of Memorial Day. But even when the trading action takes a day off, we don’t.<\/p>\n

That’s because we’re always looking for ways to help you become a better trader. And today’s essay – offering a unique trading approach you might not have considered – shows a way to do just that…<\/p>\n

\n

Imagine you’re a contestant on the game show Let’s Make a Deal<\/em>.<\/p>\n

Monty Hall pulls you out of the audience. He waves $2,000 in your face and says, “This is your money. You can take it and keep it right now, or you can trade it for what’s behind the curtain.”<\/p>\n

Of course, you know from a lifetime of watching daytime television that there’s a 50% chance that what’s behind the curtain is an all-expenses-paid trip to Mazatlán – valued at $5,000 – and a 50% chance that it’s something virtually worthless, like a farm animal.<\/p>\n

What do you do?<\/p>\n

If it’s me… I’m taking the cash.<\/p>\n

I’m thinking, “I came here with nothing. There’s a 100% chance I’ll leave here better off if I take the money. There’s only a 50% chance I’ll leave here happy if I take what’s behind the curtain. Either way… my life isn’t going to change dramatically. So I’ll take the $2,000 and be happy no matter what.”<\/p>\n

Here’s another line of thought…<\/p>\n

“I came here with nothing. The worst case is I’ll leave here with nothing. But there’s a 50% chance to increase the return on my prize by 150%. The odds justify that trade. So I’ll pick what’s behind the curtain.”<\/p>\n

Here’s the thing… there’s nothing wrong with either decision. All that matters is how you view the consequences of the trade. Let me explain…<\/p>\n

I’m going to be happy if I get a $2,000 windfall profit. I might be slightly more ecstatic if I win a trip valued at $5,000. But I’ll feel like an idiot if I give up the $2,000 and go home with a goat.<\/p>\n

So I’ll pass on “ecstatic.” I’ll take “happy.”<\/p>\n

Not everyone thinks that way – which is why we love watching game shows.<\/p>\n

Let’s apply this thought process to the stock market…<\/p>\n

Every time I close a trade, in the back of my mind, a little voice asks, “What happens if it moves even higher?”<\/p>\n

This is the equivalent of Monty Hall asking if I want to keep the $2,000 or trade it for what’s behind the curtain.<\/p>\n

I know for sure that I’m happy if I close the trade right now. I don’t know if I’ll be happier or feel like an idiot later.<\/p>\n

So I almost always choose to err on the side of happiness.<\/p>\n

Now… if this is your only time on a game show… if it’s your only chance to make a trade in front of Monty Hall, it’s understandable if you choose what’s behind the curtain.<\/p>\n

After all, it’s your only shot to maximize your gains.<\/p>\n

I get it.<\/p>\n

But the stock market isn’t a game show. We have trading opportunities almost every single day. The secret to longevity as a trader is to consistently take the money when it’s flashed in front of you.<\/p>\n

You might feel a tinge of disappointment if a trip to Mazatlán is behind the curtain. But you’re still heading home with more money than you had before.<\/p>\n

Be happy. At least you’re not going home with a goat.<\/p>\n

Best regards and good trading,<\/p>\n

<\/p>\n

Jeff Clark<\/p>\n","protected":false},"excerpt":{"rendered":"

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