VOLATILITY AND VOLUME
Brian S. Sashuk
Re-published January 5th, 2012
This is a huge topic and a concern for all investors. I consider it to be a "gazillion dollar" concept because it deals head on with one of the TWO biggest issues that all investors face in the market .... that one major issue is the issue of FEAR... I call this basic idea that I am about to share with you the fear tamer ....
the other issue of course is greed, that has to do with personal individual issues so we will not deal with it here
This is a topic that will empower you in "the Market" for the rest of your life. You see most of us have always listened to the media and all of the external stimulus in order to get motivated to take action. Anyway I do not know why but it is just human nature to be motivated by fear. I personally do not believe that it is an emotion that serves my basic objective of making money in the market and it probably does not serve your needs effectively either, because the message we generally get is that the market is dangerous and that we should be full of fear because we will lose all of our money.
So I am going to do everyone a favor today and try to eliminate or at least lesson the effect of FEAR which I believe hampers the ability to function at our peak performance in the market.
I have noticed in my country CANADA, everyone would always listen to their financial advisors being BANKERS, LIFE INSURANCE PLANNERS, ESTATE PLANNERS and LAWYERS when seeking advice about the STOCK MARKET. In my opinion, public service advice is just that, each service business has their own mandate and must provide service according to that mandate or they will quickly find themselves out of business.
So as a consumer we must recognize the proper public service provider for the TASK at hand. When it comes to the STOCK MARKET most public service providers by their nature will cause us to FEEL fear about the STOCK MARKET after consulting with them. This is natural and probably a good thing in a lot of cases because it prevents many people from getting hurt financially.
A typical classic statement in Canada when it comes to the market from most classic service providers is "The market is much too VOLATILE to participate" in. Implying that VOLATILITY is a bad thing.
Ok lets now ZIG when everyone else is ZAGGING sort of speak. I like analogies so lets start with a "Cowboy" analogy. You are going to get a lot of those from me since I am from Alberta and probably will always be an Albertan at least in my heart anyway.
So do you think those cowboys that ride those BULLS in the Calgary Stampede are full of FEAR when they get on those crazy wild BULLS. Well I am sure they have their adrenalin flowing but if they did not address the FEAR issue there is no way they would even be on the BULL in the first place. Now the irony here is that these COWBOYS are actually trying to DRAW the wildest beast they can when they pick the name out of the hat, because the wilder the Beast the more points they can make when they are in the competition.
So for us seasoned option TRADERS it is exactly the same. We are trying to find the wildest, craziest beast in existence because that is where we make the most POINTS, in our case the most MONEY. Do you think the average Canadian banker who is trained as a service provider that requires a personal GUARANTEE for everything is going to recommend to one of his clients to get on one of those wild rides. I do not think so. He is most likely going to bet that you are going to break a limb or hurt yourself really bad. These service companies are not trained to deal with this kind of risk and therefore all they can say is that it is very very dangerous. As a result most people do not go near it. Just like I have no desire to be a Cowboy in the Calgary stampede it does not mean however that some guys are not doing very well in that environment, simply because they LOVE what they are doing, are really not afraid of doing what they do and have discovered they have a talent for it. Therefore are successful.
So I am sure everyone has figured out by now that the way we ELIMINATE fear is simply by becoming knowledgeable about how a certain task is done and then DOING it. We learn how to sky dive from Pro's, we learn how to drive cars from pro's, we learn how to fly airplanes from Pro's, we learn how to become Brain surgeon's from pro's and the list goes on and on and on.
The process of learning and doing is how we become what we want to become. I do not believe that process ever ends until we are no longer on this earth, and even that is a debatable issue.
Some of my clients have already voiced the importance of "Paper Trading" before using real money in the market place, in the discussions this week. This is a very intelligent thing to do. Just like the pro Cowboy. He certainly did not get to professional status without practice in "safe" environments. PAPER TRADING is in fact the FEAR TAMER and I provide a way for you to accelerate your learning by supporting and facilitating your learning in that "safe" environment. By creating the safe environment I have discovered as a coach that people are capable of doing miraculous things that they would have never thought possible other wise.
So folks you are about to get on the wildest rides on the market and instead of being fearful you are going to discover JOY in it because you will be in a totally safe environment while you are discovering that you are totally capable of doing what traditionally only the "WALL STREET" PRO's could do. So you see by managing the fear with a little bit of good old fashioned "KNOW HOW" the fear subsides and in some cases goes away totally.
The "GAZILLION DOLLAR" concept is to pick the stocks with the most VOLATILITY and the most VOLUME... then effectively manage your position by leveraging and compounding your existing available cash in these traditionally dangerous but extremely profitable environments.
There you have it, from the mouth of the Alberta Stock Market Cowboy.
Brian S. Sashuk
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