Learning to Trade is a Professional Skill

Well, I missed one. I recommended and bought calls too early and did not anticipate the downside to under 8000. It's part of why one must project Dows by the hour at this point. Citi's bad news, and Apple's CEO's health issues, led more decline. Fear permeates our lives. I still see upside. Guess I was just early.

Last evening trader MP wrote me a bit surprised on my dialogue in the alert about having 35% to 40% returns. He was surprised that the returns were "low." His initial goal was to take $30k, double it, and then double the 60K.

Several things are wrong with this thinking:

1. It takes much training and practice paper trading first to learn to trade. It is very hard for any trader to have 100% returns, as the risk/reward ratio is much much higher holding for higher profits.

2. There is no such thing as a free lunch. 100% returns increase the risk to trade, and require total control of emotions, not getting out too early, etc.

3. The way to make money is to save money. When one trades successfully, it's prudent to take 15% of the profits and invest it outside of the option market, to control your risk.

4. The amount of money that can be made is directly proportionate to the amount of money in a trading account. Traders with smaller "banks" have greater risk emotionally, as fear can set in on losses, which will occur.

If I could teach one thing to all traders that subscribe to my services it would be this: Learning to Trade is a professional skill. It is much like becoming a surgeon. It takes study, education and practice.

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January expiration the Dow was down 9 of the last 10 years, all with big losses.

The 14 trillion U.S. economy still accounts for 25% of global economic output, despite massive growth in China and India in recent years, so the underlying strength or weakness of the American economy in 2009 will play a key role in determining the growth of the world economy, as well as the critical value of the dollar.

If anything is to fail us as Obama's New Deal comes into place it will be the vastly conservative Bushian Supreme Court. This happened to FDR with a full Democratic legislature and forced some changes to the New Deal.

But, we have never experienced an economy structured on credit, and then had credit disappear for two months. We don not know how far the $14 trillion economy will shrink. We believe the Obama administration is up to the task, and that the American people may finally be beginning to understand the doctrine of supply side economics is faulty. My favorite line is "conservatives" don't like Obama, yet Bush was so frightening in his liberal spend it approach we have nothing to work from.

Our primary goal as a nation must be to stop the Bushian led "red vs. blue" thinking, and think as a country, trying to help our own lot.

And Obama is actually right to side with fascist Cheney right now that "deficits do not matter", the famed Cheney line. Sadly, he's right for the moment as the only way out of what we have done is to increase our deficit, and act as a democracy, which we have not been doing this past 8 years. Note who has gotten rich, and that's proof enough.

A Floydian Comment: We as Americans are waking up to the fact that our houses are too big, our bellies are too big, our debt is too big, and we're going to have to go on a diet.

Please make note: the stock market is closed next Monday for Martin Luther King Day.

The next alert will be sent on Monday, for Tuesday trading.