Ever seen the movies The Big Short and the box-office hit Wolf of Wall Street? Yes, they’re both about trading stocks. If you haven’t yet, I highly recommend you to watch those after reading this article.
Phones ringing off the hook, papers rustling, people in suits and corporate attires anxiously monitoring the ticks and upticks of numbers from a big screen. Just another day trading stocks.
I could still remember the first time I went inside the Philippine Stock Exchange for an educational tour. Back then, I was clueless about all the fuss and why they’re all moving quickly off the mark.
Three years later, I found myself working for a firm to do technical analysis of market trends and trading movements. I have always been the numbers guy because they’re absolute. They never lie to you. They tell you bluntly whether you’re in the good or the bad.
“Numbers are absolute. They never lie to you. They tell you bluntly whether you’re in the good or the bad.”
Now, we’re not going to be talking about the technicalities of trading stocks here. There are already hundreds of thousands of articles about it on the web. I want to talk about actual life experiences and sentiments on how the principles of stock trading apply to real-life situations.
Doing theoretical research to predict movements and future outcomes excites me in ways I can’t fully express. Working in the stock brokerage industry taught me strategy and life skills I may not find elsewhere. When you understand the data presented, it gives you an edge in formulating solutions – eventually recommending steps to get a better outcome.
High risk, high Reward. This is probably the most crucial lesson my work taught me. It may mean that when you render so much time and effort to do something, the outcome is almost always favorable. Almost – because this entails understanding the probability that things may go haywire, yet choosing to go for it anyway.
“…this entails understanding the probability that things may go haywire, yet choosing to go for it anyway.”
In trading stocks, when you go for a less conservative approach or move to play instruments with a go-hard, go-home mantra, you enter into a dimension that equals your losses and your gains to unlimited. But you see, even before pulling the trigger, this entails a lot of work – and I mean, A LOT.
There is a lot of research about the move you’re going to take—a lot of research about the instrument and the stock you’d like to place your bet on. This principle applies to life situations too. Most of life’s big decisions are associated with risks and complications.
Buy low, sell high. This is arguably an oversimplification of what trading means because, honestly, a lot more needs to be done before you could even buy and eventually sell. The main point is no one buys anything more than it’s worth, and nobody sells anything less than its intended value. If you managed to fight off the urge to sell your stocks whenever you see movements in the market and wait for the most suitable time to execute a trade, you would break even or gain some as a reward for holding your shares.
“The main point is no one buys anything more than it’s worth, and nobody sells anything less than its intended value.”
Bid and Ask. Arguably the most looked at figures in trading stocks. When you are scrolling through a long list of stocks in the market to purchase, you will look at the Bid. If you’re planning to sell the shares you have or have been holding, you look at the Ask.
I love relating this whole principle to getting employment. Let’s say the job that you are applying for is the stock you wish to purchase. The employer would then give you a set list of requirements and what they’re looking after. With this in mind, you then offer your credentials to match their needs. You agree with compensation. The difference between your expected salary (ask price) and their offer (bid price) is called “Spread” in the trading world. The smaller the spread, the higher the likelihood of getting a deal. The employer gets what they want; you get an offer.
“Trading stocks and the whole concept of brokerage is somewhat intimidating to some of us. But isn’t everything that teaches us life lessons are?”
In almost a decade of working in the industry, it didn’t just offer me the highs and lows of doing the work; it also taught me life lessons that, to this day, I am still using and would highly likely use whenever the situation calls for it.
In life, we take risks for the things we would want to have and keep. We look at situations by knowing the odds and probabilities. We gamble for the things we find worthy, and we let go of things that no longer serve us. While we may not completely eliminate risks, we manage them. We make sound decisions and find ways to move to greater heights. Like everything else, life is a continuous journey of bidding and asking- no free lunches. Every move, whether we take them or not, has consequences.
