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Josh, out of all our videos, every video we post that talks about the NASDAQ, it’s always the most popular videos on our channel. Why are all our viewers or why is everyone so obsessed or fine-tuned with the NASDAQ?
Why is it so popular?
Well, I think, accessibility. You can pretty much trade NASDAQ, almost any exchange. If you trade Forex, they normally let you trade NASDAQ on Forex. If you trade crypto, sometimes they have a NASDAQ on crypto. You trade stocks, options, futures, so and so. It’s pretty much on everything. So it’s accessible, right? Some things are just not on all the platforms and NASDAQ appears to be on a lot of platforms. The other thing too is, NASDAQ moves. Man, that thing moves a lot and that can move thousands and thousands of ticks a day in big percentage points. So, normally what ends up happening is that fast movement is that’s a lot of opportunity and normally new people, they tend to focus in on the bigger movers. Why? Because normally the new people focus in on only the upside and not the downside.
That’s not a ding on anyone who’s new. It’s just how it works. In my opinion, the difference between an experienced investor or trader versus inexperience is when there’s an inexperienced investor says they see the market, you move in and they jump right in, right? They just get in and they’re like, man, this is so cool. I’m in, I’m in the trade. And they’re like, oh shoot where do I put my stop now? How do I get out if this thing turns against me? Where do I get out to make profits? They’re just so excited because they see so much movement. They’re in it. They don’t really worry about the risk too much. Where an experience investor, they worried about the risk a lot. They go, okay, what’s the risk involved. Normally, an experience a trader investor will say, okay, what’s the risk involved.
If I were to lose this trade, how much would I lose? If I did lose this trade, what do I need to do to make my money back? Okay. If I make all this money, what’s the tax consequences. Do I need to hold a trade for a year? So I get the tax benefit. Do I hold it under a year? Is it worth holding under year? Do I do that? If I win this trade is going to push me up into another tax bracket. I don’t know. These are the things that short-term gains is a big deal. And then they go, what’s the profit opportunity, right? So normally experienced traders, they focus on profit last. They focus in on risks first, they focus on if they lose the trade. What do they got to do to make their money back?
They focused on taxes and then last is profit. Inexperienced people, they normally will look at the profit first and they don’t even care about taxes. They’re like, I want to make the money and then when taxes are due, I’ll make that money then, I’ll pay it then. They don’t worry about stuff like that. That’s kind of a bad side or a downside of it, in my humble opinion. Anyway, so, why do I think NASDAQ is very popular? I think it’s accessibility, number one, I think it was a big mover, number two and realistically that thing is a gainer, and since 2009, that things have been going up and up and up and up and up and up and up. You pretty much throw a buy at that thing right now, and you’re making money. If you sell it, you’re losing money. But if you buy it, you’re making money. Even us, look at us, Josh, we’re saying NASDAQ is going to go up another 15% and we’ve been rocking the house on that one. All we got to do is just keep on buying, we’re geniuses.
That’s why I think it is. But I say these things, because if you are new, you really should get into the mindset of focusing on risk first. Hey, if I were to trade this, how much would I lose? And if I am to lose it, what do I need to do to make my money back? And if I do make money, what the tax consequence, and after all that’s done, what do I get to keep after I pay my taxes? What do I get to keep? And is it worth it? Only you can answer that. We’re not CTA’s, we’re not money managers, but only you can answer that. Well, those are good questions to ask and that really puts you into more of an experienced trader, because those are tough questions where realistically the answer to all of them, those questions is strategy, right?
What’s the risk? Why do you care about that, because risk management is part of your strategy. Success over time, you can only risk so much money per trade. Otherwise, it will derail your success over time. Number two, if you are to lose, what do you need to do to make your money back? So if you invest a thousand dollars, how much of that would you lose? What would you be left with and what do you need to do to make their money back that you just lost, plus your profit, right? Then, Am I holding this trade for a year? Am I holding it for a hundred a year? If I trade futures, is it a 60/40 split, for taxes? If I trade stocks, is it short term capital gains? Is a long-term capital gains? Now, you’re thinking a little bit more as a professional.
You’re looking at it more as a business. Then you go, okay, what do I get to keep after all said and done, what do I get to keep? And then you can say, if this is what I’m left with, after all said and done, and this reward is worth all of this risk, then let’s go for it. There’s nothing worse than entering into a trade and not making any money and then if you make any money, the money that you actually make you don’t even get to keep it because it’s going to fees and they’re go into taxes. So, it may not even been worth all the risk. So that would be my kind of advice for anyone who’s new. Try to think a little bit more strategic and trying to think a little more strategy, longer term success over time and you’d be surprised by what you can do. Joshua Martinez.
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