Caught Up in GME?
Unless you’ve been hibernating the last couple weeks, you would know that some folks on Reddit chatted about GameStop (GME), creating a buzz that sent this stock on a wild run. This lured in many young adults hoping for a big score, entering the market for the first time. Most lost. Many lost big time. Some bet it all… sold their cars, invested student loans, Christmas gift cash, savings accounts… everything, just to get in on what was perceived as a sure thing. Horror stories abound on what happened. Brokers, such as the famous (infamous?) Robinhood restricted trading and many investors were left ‘holding the bag’ as regulators tried to sort it all out. By the way, the SEC charged Robinhood $65 million for deceiving customers… Google it for details. There’s a reason their commissions are zero, and it is not necessarily good for you, the customer.
I am excited to see so many young people get into the market. If you are one of those baptized by fire, I have the following advice.
~ Cash out what you could and learn from this experience. What you have left, you have left. Take heed, you are on the right track with trading; you just took the wrong train.
~ Do nothing for a while. No more trading until you understand what you are doing.
~ After you lick your wounds, look to learn about markets, strategies, options and trading in general.
~ Find a program that fits your style, temperament, budget and goals.
~ Align yourself with an appropriate coach to guide and protect you.
~ Then proceed cautiously.
I only talked to one trader I know who made money on GME these few days. My friend is a well seasoned trader and did gain on the short side in the last 2 hours of trading one day, but it did not come without substantial risk. His years at the helm paid off, but he strongly advises against trading these fads, especially for newbies. The odds are against you.
Your road to success may lead you (hopefully) to our strategy, where we trade one solid stock, SPY, using our high probability Bread and Butter methodology. We aim for consistent, modest gains, trading frequently. I know of no other way to build an account for longer term growth. And I’ve been at this for years. Take if from someone with experience. We have been through the trenches, including the ‘Game Stops’ along the way.
Pay attention, millennials … you are on to something. Just be patient and fish in the right pond. I would love to introduce ourselves to you… let the others chase the scraps.
~ Hugh Grossman, Head Trader, DayTradeSPY
