How I Trade Stocks For a Living -- [Chapter 9]

CHAPTER 9:  PITFALLS TO AVOID
 
The Beanieville System keeps you from getting into trading things that are
generally very detrimental to your account.  By necessity, it keeps you away
from risky trading vehicles like penny stocks, futures, forex and stock
options.  None of those things have much long term value.  Penny stocks,
besides being trashy that they are, tend to lose trading volume so quickly
that it is impractical to apply The Beanieville System.  Penny stocks are also
not scalable -- meaning once your account grows big, whatever you're doing
will no longer work.  The reason we participate in the stock market is
because we want to make big money in the long run, right?  So penny stock
trading will not help you to that end.  But I'm sure it won't keep some of you
folks from trying.  You will be at a significant disadvantage, though, because
the best way to trade penny stocks is to short them.  You short trash.
 
Stock options, futures and the forex have either too much leverage or time
constraints.  Remember, The Beanieville System's major aim is to help you
build long term businesses from which you can extract income for many
years to come.  I recommend you stick with regular stocks and not get
involved with money sucking vehicles.
 
The Beanieville System also keeps you from jumping from one stock to the
next and to the next.  It keeps you focused on stocks that you already own. 
That way, you know your stock’s behavior much better than you would if you
play musical chairs.  When you flip stocks, you generally end up losing
money.  Has the following ever happened to you?  You did your analysis and
buy stock A, it goes up and you sell it.  You move onto stock B, it goes up
and you sell it.  But when you go back and look at stock A, you find it
actually gained more than stock B.  The reason could be that stock A was a
stronger stock and that a rising market lifts most boats.  You then move to
stock C and it drops.  You go look at stock A and B and they're both kept on
going higher, with stock A being the strongest gainer.  You feel totally
frustrated and don't know what to do.  Stock C just lost all your profits you
made from stock A and stock B.  You sell stock C for a loss and you get back
in stock A, and then stock A drops.  You're frustrated and you got no plan. 
Even when you knew how to get out with a stop loss, you still bleed money. 
Had you just picked one stock and applied The Beanieville System for a
length of time, you would probably end up in the green.      
 
There is one thing, though, that The Beanieville System can't protect you
from, and that is: margin usage.  If you don't exercise extreme caution
when using margin to trade stocks, all the amazing businesses that The
Beanieville System helped you build throughout the years can easily
evaporate in a short period of time.  No system can help you when you can't
control yourself and your usage of margin.  A severe lengthy bear market
can eventually kill your account as everything goes doubly red.  An
overnight market crash can wipe you out even before you wake up the next
morning.  Know what you're doing, before it's too late.
 
The Beanieville System is a simple yet powerful blueprint you can use to
approach the stock market.  But that doesn't mean you're going to become
an instant millionaire, although I think my way is the best way and in the
quickest amount of time.  You need to learn to read basic charts so you
know when a stock is likely going to go down so you can take advantage of
it and create $BVI.  If you want to trade everyday, then you need to learn
some day trading techniques.  The beauty of The Beanieville System is that
it allows you to plug in virtually any trading technique you want into the
system.  You might need to make some small adjustments within the
context of The Beanieville System, but generally you can plug in any trading
technique you're accustomed to using.  It could be "fading the gap",
"overnite daytrades", Fibonnacci Retracements, Elliott Wave, "trade around a
core position", MACD signals, candlesticks, etc.  The The Beanieville System
Blueprint is the same, but the techniques you plug in can vary
tremendously.  The better a trader you are, the more powerful results you
get.  Note that being a better trader doesn't mean you need to know more
techniques than your peers.  I only use only a few techniques myself:  MACD
signal, Moving Averages, simple Candlesticks, some overnite day trades,
fundamentals.  Just simple stuff.  Most important is knowing when to cut
your loss (by either covering your shorts and/or buying back the stock)
when you know the stock is going higher.  (Remember that The Beanieville
System is essentially about selling higher and then buying back lower.)  Be
sure to try to improve your trading skills if they're not that good to begin
with.  You now have a very powerful game plan (The Beanieville System as a
foundation backed by a powerful finance principle called compounding) that
will prevent you from getting lost.  This takes you much closer to being able
to trade for a living and to build great long term wealth. 
 
Take a few moments to really think about the awesomeness in what you're
doing when you trade my way.  You see, bears usually have to wait (the act
of waiting has an opportunity cost) for a market to go back up before a good
entry at shorting, but not you!  You get to ride it back up while waiting for
the moment to short.  Bulls usually have to wait until the market goes down
before buying, but not you!  You get to sell your stocks (and generate
$BVIs) and wait until re-entry at any point lower you want and still "make a
profit".  When you trade with The Beanieville System, you also get all the
benefits of long term investing.  Anyone who tells you there is nothing
special about long term investing is either lying or is totally clueless and
should not be taken seriously. With everything else being equal, there is no
way any short term trader can beat a trader who uses The Beanieville
System.  We are using the law of compounding to the max, more so than
anyone else.  It works and it works very well.  That's why I love the stock
market so much.  We are generating cash flow and building a mega portfolio
at the same time! 
 
“The advice 'you never go broke taking a profit' is foolish.”
- Warren E. Buffett
 
This statement seems to be an insult to all short term traders.  But who's to
argue with Buffett, the richest man in the world?  I know exactly what he is
talking about.  Basically, he's saying that when you take short term profits
(that most short term traders do), you don't really understand the law of
compounding that can work dramatically for you over time.  Face it, he is
absolutely correct.  That's why there are no billionaire day traders or short
term traders.  That's why 80-90% of all traders will eventually fail, because
they never get the effects of compounding to really explode their accounts
over time and they also have to compete with the institutional sharks to
make whatever little amount they make.  But with The Beanieville System
you can now make short term trades and get investment compounding to
work for your account as well.  Remember that the stock market goes up
over 70% of the times, based on nearly 100 years of history.  A permabear
has worser odds than someone playing blackjack, the best casino game
against the house.  Blackjack players have a 1-3% disadvantage against the
house and most, even the best players, end up losing their shirts if they play
the game long enough.  There is virtually no hope of success for permabears
against the bulls in the stock market.  You have to be invested and bullish at most times.  ​A lot of the bull market gains is from the morning gap ups that continue running into the close​.  So strict daytraders aren't going to make the big money. 
But you will, because you're both invested and you trade The Beanieville System! This is why I'm so excited and why I believe The Beanieville System is the most powerful stock market system ever.


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