Trading vs Investing

Newton’s third law of motion states that for every action, there is an equal but opposite reaction.

This holds true in markets.

The momentum that you leverage on the way up will crush you on the way back down.

The stocks that experience a meteoric rise are often the ones that crash violently back to reality and vice versa.

Tesla is arguably the poster child for this.

From $24 a share to $409 a share from March 2020 to November 2021 before losing 64% of its value in 2022. Madness.

Last week Tesla had its best week since March 2020, up 33%. It’s now up 53% this year alone.

Tesla Stock Price

Source:Tradingview

You see this everywhere. Meta lost over a trillion dollars in market cap last year and is now up over 110% off the lows.

It jumped 23% last Thursday alone.

The list goes on.

The 50 worst-performing stocks of 2022 are up an average of 20.1% so far this year.

These high beta stocks will swing from overbought to oversold, and this creates opportunity. The opportunity for both wealth and destruction.

But these aren’t suddenly fundamental market leaders because they have bounced from oversold positions.

These are trades, not investments. There is a difference.

If you are purchasing these names:

This market moves too fast to be YOLOing on ‘feel’.

Just ask anyone who chanced the ‘wait and see’ approach in 2022.

Which is right for you?

More than anything else, you need to decide which game you want to play.

All trading styles can be define by the amount of time each trade is held.

The more frequent the time schedule, the more time consuming it will be on average.

Whichever one you chose is up to you, but don’t be surprised when somebody playing a different game than you ends up with different results.

Plenty of opportunity out there for each approach, but the volatility will wipe you out if you don’t adhere to rules of the game you’re playing.

Now is the time to take advantage of the current market conditions. To learn how we can help, simply follow the link below.