A Tale of Two Traders
Trader B: So how did you do during the 500 point market drop a few weeks ago?
Trader A: I was only down $6,000.
A: Yes, I was fully invested and on margin, so I thought I would be down more.
B: $6,000! If I had lost that much in one day, I would have thrown in the towel, and probably never traded again. How can you deal with the stress of trading like that?
A: It wasn't so bad. I was able to make it all back within a few days. Why, how much did you lose?
B: I didn't lose anything. I was flat that day. [flat means being in all cash].
A: So how do you do your trading?
B: I never 'go home' with any open positions overnight. ['go home' means ending the trading day, even if you trade out of your home.] Sometimes I won't do any trades for a week. If I'm down more that $200, I close out my position.
A: Well, are you able to make much?
B: On average, I make about $500 to $1000 per day, and I'm happy with that.
A: So how do you do that?
B: When I think a stock is going to rise, I basically invest my entire account in that one stock.
A: You put all your money in one stock? How can you possibly deal with the stress of trading like that?
It's all a matter of perspective.