Risk or Reward? Pleasure or Pain? Excitement or Disaster?
Rules of the Road for Riding a Motorcycle and Trading the Stock Market
When I was in high school in 1969, one of our Social Studies Classes was The Stock Market 101. For two hours a week, we would read the Financial Pages of the newspaper pretending to understand Price-to-Earnings, Bid vs Ask, Market Caps, and the movement of the ridiculous prices set in eighths of a dollar.
We weren’t old enough to open a brokerage account and even if we were, we couldn’t afford to buy 100 shares of anything and also pay the commission. The class really only showed us how to read the Ticker Symbols and follow the ups and downs of their prices. Since none of those prices ever turned into a get-rich-quick play, we simply were not interested. There was no pain but there was also no pleasure. No risk and no reward. Exciting? Hardly.
We were teenagers. We wanted sex and drugs, rock and roll, speed and excitement. Something that muscle cars and motorcycles could provide. From the moment we turned on the ignition, we were excited. The roar of the engine, the squeal of burning rubber, FM Radio with stereo speakers, and of course the back seat. Driving a car put us in control of our destinations.
But for some of us that still wasn’t enough and the idea of balancing on two wheels while hurtling down the highway was even more exciting, more challenging. The thrill of the wind blowing our hair and the vibration stirring our bones was true freedom. Riding a motorcycle was synonymous with being a rebel and we were living in one of the most rebellious times in American History.
Fast forward to 1995 and the meteoric rise of the stock market during the Dot-Com Bubble when we finally got a chance to make use of that high school class. Internet millionaires were being created out of ordinary people and just like that, playing the stock market was exciting.
I remember the first trade I made in the futures market and how scared but excited I was. I placed my trade in the hopes that the market would go up. Pressing that buy button was as scary as my first motorcycle ride. Thousands of dollars were at stake. My dollars! I watched the price on the chart as it started moving down — the wrong way — and I had to force myself to breathe. I thought, “What if it keeps falling? What if I lose all my money?”
I took several deep breaths and waited. One minute, still going down. Two minutes. Jesus, stop already! After three minutes, it finally did, I felt my shoulders relax as the price started going back up. It was like taking the first corner without crashing. I let out a huge sigh of relief.
But then, before it fully recovered, the price stopped moving and hovered for what seemed like an hour. A little up, a little down, never moving up enough to close my trade and get out. My heart was beating so fast, my left pec was bouncing. Still the price didn’t move. I was leaning forward in my chair, my eyes glued to the screen, not blinking as if staring at it would make it move. My right hand was on the mouse trembling, the cursor poised over the sell button.
Watching the screen was just like watching the speedometer as it crept up over 100 miles per hour — terrifying and exhilarating all at once. Closing a winning trade and pulling over after a high-speed run both leave you full of endorphins and shouting, “Wow! What a ride!”
Trading stocks and riding motorcycles is exciting! Until it’s not.
“Bikers and Traders both start life with a full pot of luck and an empty pot of experience. Their goal is to fill the pot of experience before they empty the pot of luck.”
Most motorcycle problems are caused by the nut that connects the handlebars to the seat. In the world of stock trading, it’s the nut that connects the keyboard to the desk chair. You may experience power-outages, severe weather, a slow internet, flat tires, platform freeze-ups, a wasp in your helmet, exchange issues, and a host of other mechanical problems, but they will pale compared to the problems you cause yourself.
Follow these rules and you may be able to avoid most, if not all of them.
1. Don’t be afraid to slow down. Problems with the road, the bike, the weather, whatever, are only exacerbated with speed. The same logic applies to over-trading, revenge trading, FOMO trading (fear-of-missing-out), anxious trading, or distracted trading — the results are the same — you need to slow down.
2. The Two-Lane Blacktop isn’t a highway — it’s an attitude. The market, like the freeway, is full of all sorts of drivers. Some are better than you, some are worse. Sometimes the only difference is your attitude. Never get cocky. Never get angry. Never get lazy. And never take your eyes off the road.
3. Keep your bike in good repair. This goes for your computer and any peripheral equipment you use for trading. Do not use the same computer to trade stocks that you use to play games, download porn, or watch Tik Tok videos. Check that the battery on your phone is fully charged and within reach. Enter your broker’s phone number and your trading account number in a speed dial. Keep your kids and your cats away from your keyboard and use a cup with a lid to prevent spilling after you jump up and celebrate a win or smack the desktop when you lose.
4. A good mechanic will let you watch. If you join a chatroom, a trading group, or enroll in a class, get in writing that the instructor, leader, trainer, will put on live trades in full view of the whole group. If they tell you what they would do but don’t do it, unsubscribe. If they show you winning trades from last week or last month, run away. If they only trade on a simulator, leave quickly. Live trading in live markets using real money is the only way to see how it really feels. Like riding a motorcycle in a virtual reality headset is not the same as physically flying down the freeway, feeling every bump in the road and hearing the wind race past your ears!
5. Riders are like their motorcycles; each one is customized differently. You need your own trading style. Stop looking for another stock chart with the next great trendline or the latest lagging indicator. There are no miracle-performing Holy Grails in the stock market. Buy low and sell high. Find what works for you and stick with it. Don’t be a sheep, be unique. If the rest of the pack is riding too fast or too slow, too afraid or too bold, ride alone.
6. It’s the twisty roads, not the interstates, which separate the bikers from the squids. Any rider can go straight down the freeway, but good riders can navigate mountain roads, parking lots, or San Francisco hills. Just like any fool can make money in a bull market when the stock is always moving up. You need to be able hold your own, or simply hold back, to survive the twists and turns and obstacles. Learn the difference early on, slow down for the curves, trade the road, not your emotions. Don’t trade beyond your skill level but do practice getting more skills.
7. Catching a wasp in your shirt at 70 mph can double or triple your vocabulary. This is the equivalent of taking a trade just before an important number comes out — without knowing it’s coming. Earnings reports, Fed announcements, First-Friday Jobs report, oil reserves and crop reports, will all move the Market and move it fast. If you place a trade and it goes like a rocket the wrong way, you will learn to swear like a sailor with Tourette’s.
8. Never be ashamed to unlearn an old (bad) habit. The absolute worst bad habit is buying high when everyone else does and selling low when everyone gets scared. Trading without stops or targets, or without any plan at all, is like riding in flipflops instead of boots — you are going to get hurt.
9. If you ride like there’s no tomorrow, there won’t be. The stock market has been around for hundreds of years, it’s not going anywhere, despite what a handful of left-wing reset radicals may wish. Investing in commerce is as old as discovering America. So, if you miss a trade, if the market isn’t moving, if you reach your daily loss limit, if you have a doctor’s appointment or your kid’s recital or soccer game, whatever, there is always tomorrow. Take a break. Enjoy the ride. Stop and enjoy the scenery. The Market will still be there when you come back.
10. Patience is the ability to let your motor idle and not rev the engine. Sometimes, not trading is the best choice. Unless and until everything is right, like waiting for the light to turn green, relax, let it idle, don’t waste your fuel. Or your money.
11. Ride as if your life depended on it. Some of you may trade for kicks or as a hobby. Maybe you’re rich enough to not care. But most of us need to keep our capital and still earn a living. The learning curve for trading stocks and riding a motorcycle can be very steep and very expensive. Protect your ass and your assets. Using stops and targets is like wearing protective gear — they protect you from normal riding mishaps. They also help prevent deadly crashes.
“It feels good to have an end to a journey, but it is the journey that matters in the end.”
12. If you don’t ride in the rain, you are not a biker. This one is a myth. While I have ridden in rain, snow, hail, hurricanes, tornadoes, dust storms, blazing heat, freezing cold, and clouds of bugs, I don’t suggest you do it unless absolutely necessary. I do, however, advise you to be prepared for it because it will happen. The market trends up or down only 25% of the time. The other 75% is like watching snails race. But once it does move, it can be destructively quick like a Texas summer thunderstorm, or a mountain snowstorm in July. Be prepared with a plan before it starts to rain. Always pack a jacket or rain suit. Have your trading levels pre-picked and ready to trade.
13. Only a biker knows why a dog sticks his head out the window. This one is more for your wife, your friends, and your family. They will wonder why you do it, why you spend all day staring at stock charts or dreaming of going for a ride. Just remember, there are two types of people in this world, those who ride and those who wish they could.
“Luck equals Skills plus Timing.”
14. Gray-haired bikers don’t get that way from pure luck. Beginner’s luck, blind luck, dumb luck, it’s all just luck. You need skill. And patience. And talent. Be prepared with a plan, wait for the right opportunity, know that you have the skills to survive and thrive.
“Everyone crashes. Some get back on. Some don’t. Some can’t.”
I bought my first 100 shares of Bank America stock in 1987. I read Wade Cook’s “Wall Street Money Machine” and bought my first call option shortly after. But it was day-trading S&P futures that got me hooked. Trading futures instead of stocks is like riding a 135-cubic-inch Harley Davidson compared to a Honda Rebel.
I have traded with A.G. Edwards, OptionsXpress, TC2000, TradeStation, Infinity, Ninja, Think or Swim, Merrill Lynch, and Charles Schwab. I’ve blown through three trading accounts using my IRA, my 401k, and two insurance policies totaling hundreds of thousands of hard-earned cash dollars. I invested tens of thousands of dollars on books, seminars, webinars, and classes. I spent tens of thousands more on commissions before they became free.
I’ve owned a custom motorcycle shop, eight motorcycles, and have well over 100,000 miles experience. I started riding when I was 13 years old — 57 years ago. I’ve been in eight accidents — none of them fatal.
I currently ride a Harley-Davidson Geezer Glide which I bought brand new off the showroom floor in Dallas and rode 2400 miles back home to Reno. I took the long way home — Dallas to San Antonio to El Paso to Tuscon to Tijuana to Malibu to San Simeon to San Francisco and over to Reno through Lake Tahoe.
“You don’t quit riding when you get old. You get old when you quit riding.”
15. If you can get the kickstand up, you can keep riding. Skills are not lessened with age, just physical stamina and strength. Stay healthy, workout regularly, keep riding and keep trading.
Book Alert! If you own or manage a business, you may be interested in my new book, “What Would the Boss Do?”
You can get a copy at JerryRoth.com
