A Trade A Day

Hi all,

Blain over at www.stocktradingtogo.com created a list of 10 Great ways to learn stock trading as a new investor. I would like to be so bold as to suggest one more. When you do start trading, trade small. What do I mean by trading small? How about starting with one share.

I remember when I made my first stock trade. It was for 10,000 shares of International Taurus. This stock was a microcap trading on the Vancouver Stock Exchange. I threw down over $20K to buy this stock and well, let’s just say I bought at the top.

My disastrous start to stock trading was the result of two problems. The first was a lack of a concrete trading plan. The second, and the subject of this article, was I did not trade small.

My logic at the time was that it was a microcap. It wasn’t trading at $2 bucks when I sent my order to my broker, I assure you. But instead of trading 100 or 500 shares, I got greedy and used almost all of my account equity. I didn’t take into account that I had never traded before. I thought it was a good stock based on what I had heard and read. Their investor relations had very positive things to say. I kick myself whenever I think about it.

But I’ve made thousands of more trades since then. I’ve had many winners and losers. But it took trading small. I started trading with one share, then worked to 10, then 50. Once I got to the point where I could make good trading decisions consistently, I started using more sophisticated risk management techniques.

However, I digress. You will never get the chance to experience the winning and losing trades. Your trading career will be over before it started if you don’t give yourself the time to learn by trading small. Resist greed. Enjoy the learning experience. As one of my mentors told me: “If you can’t make money with one share, how are you going to make money with a thousand?”.

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