Scared by big numbers?

Question

If you could invest $1 into the market, and double it and you won a million do you think you'd be more objective than if you had a million in the market and you're trying to double it?

The results of which trading do you think you'd be more objective with, the first because of the lack of pressure or the second because of more pressure?

Answer 1

I think the million would force one to be more diligent in choosing investments.  If it were a dollar who would care if they lost it anyway?  I won't even walk to the other end of a store to save a dollar nor would I wait in line at a gas station for the same.  Experience is also a key in managing investments.  Most importantly the ability to take your emotions out of the equation.  Ken Fisher in his book said that studies show that people feel 2.5 times more pain from losing than they do pleasure from winning.  This skews and distorts your thinking and blinds you to whatever the best choice may be.

Answer 2

One of the first things that you learn when you begin to trade/invest is that you never trade/invest on emotions.

You need four basic rules or guidelines to be a successful investor/trader.

1 - A written sound trading/investment plan with rules that will not only help you but more importantly protect you, mostly from yourself.

2 - Sufficient trading/investment capital.  Use your own money, there’s no need to go into debt so that you trade/invest.

3 - A written money management program in place. Remember never invest 100% of your capital into any one security and never have 100% of your capital invested.

4 – A full and complete understanding of the rules & regulations of the industry.

So if someone had a dollar and invested they would violate one the very basic rules of investing.

From an investors/traders point of view, as long as the million was not 100% of your investing capital, it would be better to go with the million

Answer 3

If you have more money you can "afford" to take a little more risk.

Then the higher risk money makes money a little faster over time. Which you can use to take more risk.

More money gives you more options.

That is how money makes money that makes more money.  

On the other hand, I work as hard for earnings on a dollar as I do with a million.

And I think somebody not willing to walk to the other side of the store for a dollar will never be a millionaire. I walk all over the store looking for a bargain.  

It you earn a dollar working and are in a 28% tax bracket you get 72 cents. Then investing that to earn a dollar would take take 15 years at a good return of 10% in the stock market because you have pay tax on your earnings too.

Walking across the store for a dollar is FAR more profitable and faster.  

And then I would invest it. LOLOL