Statistics + Trade

Two fascinating worlds finally meet (and make for a beautiful offspring)

Responsible Trading

Our Robot-Analysts share their Insights with our community. Even though these insights are sometimes stated for clarity as a sentiment on some stock or company, they are “merely” analysis results. The experienced researchers and investors among our readers may use this data to leverage their trading decisions, but nonetheless are well aware to the fact, that even our most arrogant robot can’t actually predict the future. See also our terms.

This page is dedicated to readers of a different type. Of the dangerous type that always look for a quick profit. Gamblers who tend to lose a lot of their hard-earned money in the stock market. That’s a shame.

Here are a few basic rules when it comes to trading with real money, as a reminder to all of us.

100 dollar bills

If you get a thrill out of gambling, please leave the stock market to professionals and go to a casino instead. The stock market is vicious. It will take away your hard-earned money in a matter of hours. Please satisfy your gambling thrill somewhere else. Playing a social poker with friends is way better than losing some $10,000 in a miscalculated action, wouldn’t you agree?

If you still wish to gamble in stocks, limit your risk: Invest only the money you can lose. It’s a free country. Do what you want with your money. Our only advice to you would be to pay extra care to your behavior: Do you refresh the page every 5 seconds to monitor the stock price? Do you find yourself agitated and nervous when even the tiny change in your stock price leads to a significant gain or loss? If the answers are affirmative, your stake is clearly too high and the risk is irrational. Sell some stocks and limit your exposure immediately!

If you are in the stock market because you believe you can get rich quickly this way, forget it! This is of course related to the former issues. And you know what? This is not just about getting rich quickly. You’re probably getting an extra thrill of the gambling itself. Stop it. See previous questions.

Do your research. Don’t invest in some company just because you heard some rumors about its potential. After all, it’s your hard-earned money, so it’s your responsibility to learn as much as you can before you jeopardize it. You owe it to yourself and to your family.

Do your homework. If you’ve just bought some stocks of a company and you don’t understand its main business, it means you haven’t done your homework. And here’s an easier question: How high are the commissions you’re paying to your banker/broker per each trading action? If you’re not sure, this again means you haven’t done your homework…

Trade virtually before risking any real money. Especially if you have no experience in trading with real money, please consider some “virtual trading” before risking your real money. And there’s no need to download any fancy application for that. For example, instead of buying Google’s shares at some price, keep a note to yourself like “Dear myself, I wanted to buy GOOG today (8/1/2010) at $520.3. Let’s suppose I just did, and time will tell whether it could have been a good or bad decision.” then check your note in the future. You could use such notes to measure your potential (virtual) gain/loss over time. This is a very simple exercise to nurture your discipline. Here a simple Excel file to give you some ideas to such notes-keeping.
By the way, you can use such methods to evaluate ‘s analysis results in our Free Newsletter!

Epilogue

Many readers will not trade responsibly. Their decisions will not be based on any research or analysis, not even other people’s research or analysis. We know that. We know that because those readers, who are intelligent enough to understand completely all the warnings above but lack the experience to follow them, will lose their money to someone in the market. We at StatsTrade are sometimes that someone.