Advice for Beginners, Domaining Mistakes October 1st, 2007
Whether you’re buying and selling stocks, options, futures or domain names, the biggest mistake is to make decisions based on greed and fear.
Several years ago, before I became interested in domain names, I bought and sold stocks and options. Options in particular fascinated me. Because of their volatility the profit potential is incredible. I remember one trade where I bought $4,000 in CISCO calls and sold them a few days later for $12,000. Another where I bought an Intel straddle (puts and calls on the same stock) on expiration day! – confident that the price swing would make me money either way, and indeed, at the end of the day I was thousands of dollars ahead.
Where else can you (legally) make so much money so fast? It was elating. With profits like that, going back to a job with an hourly wage seemed unthinkable.
That’s where the danger lies. That elation is addictive. I had developed certain systems for spotting good options opportunities, and my systems worked well. There were times when I would plan a trade carefully, waiting many days for the right set up. I had rules for when to buy and when to sell. So I’d follow my rules, take my time and make a highly profitable trade, and do you know what I’d do then? I’d be so excited at the money I’d made, at how easy it was, that I would jump right back in and buy something that looked good to me at that moment, confident that I would repeat my previous success.
In other words, I’d ignore my system and trade based on sheer joy and greed. I had visions dancing in my head of what I would do with the millions I would reap. And also fear: fear that by not jumping right back in, I was missing opportunities and thereby “losing money.” So what would happen? I would lose, of course. I ended up losing my entire bankroll. That was a difficult time for me, but I learned valuable lessons in the process.
I’ve read that many professional traders – the guys with seats on the floor – make the same mistakes. They buy and sell based on the thrill of victory and the fear of being left out. And they lose. Greed and fear strip of them their rationality and, inevitably, their cash.
The traders who succeed over the long term, who make money year in and year out, are the ones who develop time-tested systems based on rigorous rules, and follow those systems no matter what. Of course the system can be adjusted and evolve, but they still stick to the system. They are not ruled by greed and fear.
I believe the same is true for successful domainers. They develop systems, and stick to them. For example, you don’t buy a domain unless it meets certain criteria, which might be based on OVT score, Alexa ranking, type-in traffic, brandability, or whatever. Then the domain must be profitable on PPC, highly developable or clearly brandable, or you sell it. If you’re selling a quality domain, you determine in advance how much you want for it, and if you get that offer you take it. You adhere to your system.
What you don’t do is think, “Oh no, people are making a fortune in domain names! If I don’t cash in my stocks and buy $200,000 worth of domain names right now, I’ll miss the boat.” You don’t make choices based on panic (fear) or on fantasies of getting rich overnight (greed).
If you’re a beginner, read the experts’ blogs. Join forums like NamePros and DNForum and look for the sticky threads that are chock-full of valuable tips from experienced domainers. Use these to develop your own system that works for you. Not just a system you think will work, but one that succeeds for you repeatedly! Then stick to your system and repeat times ten, one hundred, or whatever works with your time and budget.