Let’s pretend that you have a million dollars lying around and wanted to invest it in the stock market. Also, let’s pretend you decide you want to be a day trader and manage your own portfolio.
If you were a day trader how close would you watch the market? How hard would you study the various stocks to determine the ones you wanted to risk all or part of your million dollars on?
The odds are pretty good it would be minute by minute. I’m also thinking you would unload those stocks that appeared to be heading south with no real chance of making you any money.
It would stand to reason you would cut out those stocks that are losers, study the market really hard to find the winners, and invest your money in stocks that gave you the greatest edge toward making a profit.
Being a day trader requires that you have access to multiple real-time news sources and can make split second decisions. News and rumors can provide large amounts of volatility and high emotion creating great opportunities if traded properly.
To be really successful as a day trader probably will get down to how hard you are willing to study the market and to what degree you will exercise strong discipline.
Let’s say you have a stock heading south and all the research says the company’s earnings are not going to get any better. Why would you keep it? The only reason to keep it would be somewhere back there in the deepest, darkest corner of your brain something keeps telling you, "Hang on to it, don’t you remember 10 years ago, you had that one stock that you kept against your better judgment and it bounced back and made you money." You still believe in miracles.
Day trading can be extremely profitable. The downside is that if done incorrectly, it can also be extremely unprofitable. Due to the high volatility of day trading, some people have labeled Day Traders as gamblers or adrenaline junkies.
It’s probably simpler than you might think. If you buy smart, unload the losers as quickly as possible and reinvest that money into stocks that give you the greatest chance of making a return on your money, then the million dollars you started out with can grow substantially.
Since most of you reading this are in the car business you have probably figured out where this is going.
It is not uncommon at all for dealers to have over a million dollars tied up in their used car inventory. If that’s you, then you must take the same approach with your used car inventory as you would take if you were a day trader.
It’s not about losing money at 60 days. It’s all about turning the right inventory (stocks) as fast as possible. Finding a retail buyer early in the "Life Cycle" is what creates a high return on your investment. A low return on your investment automatically occurs when you hold a car for 60 days.
It’s not called a "60 Day Trader." It’s called a Day Trader for good reason. That’s all I’m gonna say. Tommy Gibbs