Podcast
Questions and Answers
What combination of factors usually results in a plane crash, according to the text?
What combination of factors usually results in a plane crash, according to the text?
What aspect of a stock should you understand before trading it?
What aspect of a stock should you understand before trading it?
What should you focus on when a stock moves against you?
What should you focus on when a stock moves against you?
What is the purpose of setting a stop when trading stocks?
What is the purpose of setting a stop when trading stocks?
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What is the role of ego in trading stocks, according to the text?
What is the role of ego in trading stocks, according to the text?
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Which aspect should New Trader focus on to avoid further losses after a stock moves against them?
Which aspect should New Trader focus on to avoid further losses after a stock moves against them?
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What should be the primary goal when trading stocks over the long-term?
What should be the primary goal when trading stocks over the long-term?
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What is the main challenge that New Trader faces when trading stocks, according to Rich Trader?
What is the main challenge that New Trader faces when trading stocks, according to Rich Trader?
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What does Rich Trader believe is essential for a trader to do regardless of their feelings?
What does Rich Trader believe is essential for a trader to do regardless of their feelings?
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What does Rich Trader suggest are the two main roles of a trader?
What does Rich Trader suggest are the two main roles of a trader?
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Why did New Trader feel surprised by the temptations he experienced while trading?
Why did New Trader feel surprised by the temptations he experienced while trading?
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What realization did New Trader have about Rich Trader's trading habits when he visited him?
What realization did New Trader have about Rich Trader's trading habits when he visited him?
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What advice does Rich Trader give New Trader regarding the psychological aspect of trading?
What advice does Rich Trader give New Trader regarding the psychological aspect of trading?
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'I am surprised at the temptations I feel when I trade,' indicates that New Trader is struggling with:
'I am surprised at the temptations I feel when I trade,' indicates that New Trader is struggling with:
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'It would be foolish to buy a stock with no plan.' This statement emphasizes the importance of:
'It would be foolish to buy a stock with no plan.' This statement emphasizes the importance of:
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'Stocks were going up.' What illusion did this statement create for New Trader?
'Stocks were going up.' What illusion did this statement create for New Trader?
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Why did New Trader decide he needed to get away from the computer and temptation to trade?
Why did New Trader decide he needed to get away from the computer and temptation to trade?
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Study Notes
- Holding a stock through earnings exposes one to earnings risk, where a sharp move post-announcement can impact the account.
- Political risk can affect investments if a company is located in an unstable country or does business there, as seen in Cuba in 1960.
- Trading options comes with time decay risk, as the time value decreases daily until it equals the intrinsic value based on the strike price.
- Technology risk is frustrating for traders due to potential internet connection issues or platform malfunctions during trades.
- Overtrading or spontaneous trading can lead to bad decisions driven by emotions like greed, which may result in losses.
- Rich Trader emphasizes the importance of understanding stock volatility, earnings reports, and economic factors before trading.
- Trading rules and discipline are crucial for success, including following a trading plan, cutting losses, and avoiding overtrading.
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Description
Test your knowledge on various risks that investors may face, such as earnings risk and political risk. Learn how different factors can impact your investments and strategies to mitigate these risks.
