Learn from Millionaires and Others -- Don't Trade Frequently

On my post titled Become a Millionaire by Trading Sparingly and Investing for the Long Haul. I had a couple of good comments worth sharing with all of you. The first reinforced the idea that it's wise to trade sparingly and invest for the long haul:

That makes perfect sense; I think the people who call their brokers each morning to find out how London did are either afraid of the internet or have so much money that they're investing all over the globe that they need to call their broker to find out what's going on. In which case they're probably good friends with their broker.

Over time I've come to realize that the long haul is what's important.

Yep, me too. I focus on good, simple, easy-to-manage investments. That's why I like index funds.

The second person validates the suggestions through practical experience. Here's his comment:

I use to do a lot of trading. I was even into options trading, selling covered calls, and a lot of day trading. You can win big and then you get really confident and you start to trade bigger positions of stock and then you get a major down day or down week. So the ups are great and the downs can be really bad. I also ran out of time, my job has become more and more demanding and I travel about 25% of the time. Therefore, you end up not having enough time to watch the investments. I have since switched to using a financial planner. I figure if I would have earned 5 to 6% on my investments over the last 5 years I would have been way ahead. Instead I am still writing off my capital loses from times when I made large bets and things went wrong.

I must admit that I learned through the school of hard knocks myself -- though not to this extent. I traded stocks regularly for years, thinking I always knew better than anyone else how a company was going to perform. Needless to say, I lost a fair amount of money. But I then discovered index funds, dollar-coat averaging, and automating my investments and it's been all good since then.

Comments

[fin_indie]

Yep, I think you'd be hard pressed to find a frequent trader from the dot-bomb timeframe who has already written off all of their capital loses, since you can only write off $3000 per year.

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