Sam Evans, Co-Founder and CEO
Let’s talk about trading and investing education. These days, you can find pretty much anything online. Need instructions on something? Look on YouTube. Want to learn how to trade and invest for yourself? Look online. The internet is filled with people sharing their knowledge on trading for free or at a minimal cost, especially day trading. Sites such as Reddit and groups like WallStreetBets have been in the news recently with GameStop.
Retail trading – people trading for themselves – has gone from between 15-18% to 30%. More and more people are trading thanks to ‘community trading’ and we love that. However, what we care about most is whether they are making progress to their financial goals. Unfortunately, most are not. Trading and investing for yourself is like starting a business. 80% of people quit within the first year as it’s hard.
If we look at GameStop, a lot of people lost money, and some lost badly. You’ve only got to Google GameStop and read the different stories. Stories of people that took out personal loans to participate in the move. Now they are left with their investment down a substantial amount and a loan to pay off, with interest! Unfortunately, that’s what we see time and time again when people get into this with no trading and investing education.
There is a difference between knowledge and skill
For us here at StockAbility™ there is a very big gap between knowledge and skill. You can go to most brokerage sites and soak up the knowledge that their free education offers. You can spend your days on Reddit and listen to the advice and strategies of everyone in there.
However, knowledge is not the same as skill. After all, I can read a book on how to renovate a house. I can find videos online and watch countless tutorials. I can learn how to lay flooring, but can I do it skillfully? The answer is no, of course not. I may be able to do an OK job, and that might be OK, but there are some things that are much more dangerous to try without the necessary skill-set.
For example, I wouldn’t ever attempt to repair my own roof. Around 100 trained and experienced roofers die each year… and they know what they are doing! For us, trading should be approached with the same caution. We aren’t saying don’t do it, but don’t do it unskilled. Even if you are educated, you aren’t guaranteed to be successful. However, at least educated traders know what they are looking for and know how to maximize profits and minimize risk. Risk management is crucial and unfortunately, uneducated traders do not know how to protect themselves.
What is the real cost of trading and investing in the markets with no real education?
One of the things we come across is that someone doesn’t want to spend money learning to trade and invest, especially as they can dapple for free! Time and time again, we have seen this lead to loss of money. More than the cost of education. Then, they don’t want to pay for education because know they have lost money. So the cycle continues until they give up.
This leads on to the second cost and that is the cost of time. The time wasted trying to figure it out o their own. Time wasted following a bunch of people and trying to understand what they are doing. The time jumping in all the forums. The time jumping from strategy to strategy. All this results in not making inroads towards your goals and more time passing by.
For some this leads to giving up. Too much lost money. Too much wasted time. Giving up on something, that if approached like a business, or as something that needs to be learned properly, could provide a new income stream.
Unfortunately there is also an even worse cost. The loss of life. Last year, Alex Kearns took his own life believing he had racked up huge losses trading.With apps making it easier to trade than ever before, we are seeing more and more people jump in without a real understanding of the risks.
Trading and investing education is worth the cost
Even with trading education, there is no guarantee of success. Just because you have a law degree from Harvard doesn’t mean you will walk into a high-paying job. However, you are increasing your chances of doing so.
At StockAbility™, we drill risk management into our students. We also emphasize risk to reward ratios. The whole purpose is to ensure that losses are kept small and wins are bigger.
We also work on mindset. This is something that you are unlikely to find in free online resources. Mindset is crucial to the success of your trading and investing. You can have the best strategy in the world but if you sabotage the execution fo your plan, you will never be successful.
There are so many strategies out there and there is no one-size-fits-all approach. However, at StockAbility™, we teach patent-pending, proven strategies including Location Analysis and the OVERT system.
The right community is vital
The right community is also key. There is a lot to be said for being in a community, but you need to be in a community where everyone is speaking the same language. Take for instance, my wife. She really wanted to lose her ‘baby-weight. So she looked at articles, she tried to copy what others were doing. She asked members Mom’s Club and each of the moms had a different suggestion. She tried different things but struggled. Even though she knew what she should be doing.
She decided to join something called ‘The Flamingo Project.’ A group run by someone she knew who runs a wellness center in the UK. Over nine weeks, she was part of a private Facebook group. They all followed the same diet and exercise plan. They all spoke the same language. After three years of trying she lost ten pounds. Why? Because she was in the right community!
Everyone was being taught the same thing. Everyone was following the same strategy. At StockAbility™, our Live Coaching Community helps our students keep focused. Everyone is following the same strategies. The coaches are in our community, answering questions. Other students are in the community helping each other to succeed.
You have to possess skill as well as knowledge
My colleague, Ryan Watkins uses a hashtag in our community: #drillsforskills. We are literally drilling in the skills our students need to succeed. Knowledge is one thing, but you need the skill to apply it. That’s why we believe in trading and investing education. For us, the cost of no education is just too great.
I hope this helps.