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401(k) Day Trading by Richard Schmitt

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CHAPTER 9

Postgame Press Conference

Moving Forward

For every action, there is an equal and opposite reaction.

–Sir Isaac Newton, Third Law of Motion

She was last in line to take her penalty kick with the score tied. The goalkeeper was the only obstacle between her and the game-winning goal. As everyone but her closed their eyes, she gritted her teeth and let loose the most blistering cannon shot a 12-year-old could muster. It headed toward the lower left-hand corner of the net. Her shot caromed off the sprawling goalkeeper's right forearm, causing the soccer ball to bounce up and down, but the ball was spinning—just before trickling across the goal line. That day she was the hero. She jumped for joy as she and her teammates celebrated their triumph. The goalkeeper slunk back to her fallen team on the other side of the field.

The winners’ elation was matched by the losers’ dejection. This type of equal but opposite reaction happens every day to some extent in stock market trades, but perhaps in more muted tones as consequences are not as immediately apparent. Although each party may feel pretty good at the time of a transaction, every financial transaction has an eventual winner and loser. If the market goes up, a buyer's hope to turn a profit becomes reality at the expense of the profit a seller forgoes. In a market headed down, a seller's hunch to avoid a loss turns into relief at the expense of the buyer getting stuck with the loss.

Day trading does not occur in a vacuum, but ...

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