Rule #1: Making Money Wins the Game
Trading Rules Series
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The goal and objective of these posts are to provide some insights into my beliefs about trading and life. These should give you insight into my thoughts; some might make you chuckle.
Rule #1: Making Money Wins the Game
Most of the time, Rule #1 of trading or investing is “Don’t lose money.” Well, I’m sorry to say you’re going to lose money. We all have lost trade for months and years. What is important is knowing you have an edge. The edge doesn’t have to be significant; it doesn’t have to be fancy, but you need an edge. So you need to find a way to make money!
Most get caught up in metrics that don’t matter, like Sharpe or Sortino ratios. I want you to focus on making money. Your objective is to grow your AUM.
For those making money already, you’re doing a great job!
For those who are losing money. Maybe you are trading for a few other reasons:
Excitement
To Gamble
Validation
To Be Right
To Lose money (perhaps you feel like you don’t deserve it)
This game is straightforward once you allow yourself to pursue a singular focus. Make Money!
So now you have to ask yourself. If I worked 10% harder at my job, would that make me more money than trading? If yes, make that trade! I lose money in stocks, but I own rental units that pay 6% Cap Rates. Buy more real estate!
My Grandma bought annuities her whole life… relatively not an excellent investment, may be on the verge of awful. But my Grandpa owned his own structural engineering business. They made a lot of money, and those annuities are too shabby.
To win the game, have the most money in your bank account you can. The key word is you! We all need to take our own path, and just because someone is making more money or less money than you doing XYZ doesn’t mean you have to do it or avoid it.
Go out and find a way to make money. It should the method should be for you!