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Dear Daily Crux reader, For the first time since 1994, a unique story is being aired – for which I’m proud to say we’ve tracked down the exclusive details. Normally, we don’t get this excited about a single story… But what you’re about to see contains information that’s already proven hugely valuable and has shown a 1,032% gain over time, enough to make you 10 times your money. In fact, since the story first take place, the details have been eagerly sought byFortune… The Wall Street Journal… Chicago Tribune… Financial Times… NY Daily News… Even CNBC and FOX News, we’ve learned. We’re proud to be sharing this story from outside our own business. Click here for the full details. Sincerely, Justin Brill Managing Editor, The Daily Crux Dear Daily Crux reader,  Most investors are making a big mistake. So says our colleague, Jeff Clark, editor of the S&A Short Report. Many folks open brokerage accounts with dreams of becoming the next Warren Buffett… or of discovering the next Apple and making 10,000% returns. But the reality is that few people succeed at even beating the market… and most have a hard time making any money at all.  Why is that?  Jeff believes it has to do with a common misunderstanding about the difference between investing and trading. As a successful professional trader, investor, and former money manager, Jeff is an expert on this subject. To learn why this mistake is so common – and how you can be sure to avoid it – read on… Regards,  Justin Brill  Managing Editor, The Daily Crux  www.thedailycrux.com  –––––––––––––––––––––––––––––––––––––––––– The Daily Crux Sunday Interview  Why most investors lose money in stocks… The Daily Crux: Jeff, what is it about investing and trading that most people don't understand?  Jeff Clark: Most people think the difference between an investor and a trader is a function oftime… Investors have long-term time frames and traders operate in the short term. But actually, the difference is a function of purpose. Investors – REAL investors – are owners of a business. They buy stock in a company because they understand the business, believe they're buying in at a reasonable price, look forward to participating in the profits of the company, and intend on holding the shares for years… maybe even forever. Everyone else is a trader. Traders profit off the emotion in the marketplace. They buy and sell stocks because fear and greed create opportunities – often short-term opportunities – to profit off extreme moves. They don't buy a stock because the underlying business is attractive. They buy because they expect to sell it later at a higher price. And as harsh as this may sound, traders look to profit off other people's mistakes. ----------Advertisement--------- What's worse than Obama's recent election?  Most conservatives would agree that Obama's presidency (and his recent re-election) is the worst thing that has ever happened to America… But Obama's SECOND TERM isn't the worst thing that could ever happen to America. What's far more threatening to your life, liberty, and family is an event that will occur in 2015. These plans are already set in motion… already approved in D.C… they are already underway right now… To learn all of the details of this event, click here. --------------------------------- Crux: Why is this distinction important?  Clark: It's important because most people like to think of themselves as investors – which is probably why most people have a tough time making money in the stock market. The fact is, most people are traders… and they get into trouble when they don't recognize it.  If you've ever bought or sold a stock based on emotion, you're a trader. If you check the value of your holdings every day, every week, or every month, you're a trader. If you're worried about how the "fiscal cliff" or next month's employment report will affect stock prices, you're a trader. If you believe in the "Santa Claus" rally, or that you should "sell in May and go away," you're a trader.  We all like to think that we're smart, and that we can make rational, logical decisions unaffected by emotion. Those are the characteristics of a good investor – but they apply to very few of us. In reality, most folks who think they're investors will buy into a stock based on logic and sound reasoning. But then they'll succumb to the emotions of fear and greed and end up suffering a loss on the position. Or they'll get a solid gain on a position, but will refuse to take profits… even if it has already met its original objective. They'll find new reasons to hold on for fear they'll sell too early and leave potential gains on the table. So you can see the sort of disastrous effects the emotions of fear and greed can have on the average investor's returns. So whether they admit it or not, most people are traders. A good trader knows that emotion often overrides logic. He can spot emotional extremes in the market and capitalize on them. More important… he recognizes his own emotions and can act counter to them. Crux: OK, so most folks in the market are actually traders. But not everyone can spend all day, every day watching the stock market. Doesn't that give professional traders like you an edge over the non-professional traders?  Clark: Actually, it may be the non-professionals that have the edge. You see, trading is how I earn my living. So I get up every morning, stare at the computer screen all day, and look for potentially profitable opportunities. I'm often compelled to take trades that are less-than-perfect setups because I have to do something to try to make a buck.  Non-professionals don't have to trade every day. They have the luxury of being able to wait for the perfect setup before putting money to work. Non-professional traders can wait for the trades with the ridiculously high probability for success. Professional traders are going to be a little less selective. Crux: What do you mean by "ridiculously high probability for success?"  Clark: Two or three times every year, the market gives us truly excellent, low-risk, opportunities to trade. I'm talking about setups that are so easy to make money, that traders can earn a year of returns in just a few weeks. Let me give you an example…  Back in May of this year, gold stocks were getting absolutely smashed. You had big-name mining companies like Newmont, Iamgold, and Goldcorp trading with single-digit price-to-earnings ratios, paying 2% dividends and higher, and trading at historically low book value multiples. The market just hated gold stocks. But there were plenty of reasons to be bullish on the sector. The price of gold was rising. The stocks were trading at historically low valuations. We were getting buy signals from a number of technical indicators. And it looked like a nearly perfect contrarian play. For traders, it was a terrific time to get aggressively bullish on the gold sector. In fact, in both of my newsletters, I called it a "shout it from the rooftop moment" for gold stocks. In the S&A Short Report, we loaded up on several gold-stock option trades and closed out many of them for triple-digit gains within just a few weeks. So, like I said, you get this sort of opportunity maybe two or three times each year. And it's not like you have to be lightning-quick to act on it. We bought the options in the S&A Short Reportover a span of a few weeks. Non-professional traders can do very well by catching just a couple of these trends each year. Crux: You said non-professional traders can make a year of returns in just a handful of trades a year… What kind of returns should a conservative trader expect to make?  Clark: I think, at a minimum, traders should expect to make at least 10%-15% on invested capital every year. I know that may sound high – especially since the average mutual fund, hedge fund, and pension plans can't make those returns. But think of it this way… If you were running this as your own business, what's the minimum return you'd expect to make? Frankly, if you can't make 10%-15% on invested capital in your own business, you should probably be doing something different. You don't have to sit in front of a computer terminal all day long to make those kinds of returns. But you do need to take an active role in your trading. For example, there's really no reason for anyone not to implement some sort of covered-call-writing strategy or uncovered-put-selling strategy. Yes, you have to learn how to do it. And yes, you need to spend a few minutes each week reviewing your positions. But the gains on conservatively invested capital can be upwards of 20% or more – for just a little extra effort, regardless of what the overall stock market does.  If you have 80% or so of your portfolio set up this way, even the non-professional can do well. You can take the other 10%-20% of your account and use it for speculation – to try to juice the returns even higher. This is how I trade my own money. Most of my "investment" portfolio is used for selling covered calls and uncovered puts, and my "trading" account is the money I use to earn my living. Personally, if I don't make at least 40% on my trading account, I consider it a bad year. A good year is 100% or more. Crux: If you can earn 40%-100% on your trading account every year, why not trade all your money that way?  Clark: That's a question I get all the time. The answer goes back to what we talked about earlier. Good traders have to be unemotional about their positions. I can't have so much money invested in a trade that I start reacting emotionally to it – watching every uptick and downtick – and second-guessing every little move in the market. I have to limit the size of my trading account to an amount that I can be unemotional about. If I'm trading with 100% of my liquid net worth, I'm going to be nervous. I'm going to react emotionally, and it's going to affect the outcome of my trades to the point where my returns would suffer. Crux: For those readers you've convinced today, what's your best advice for former "investors" to take their trading – and returns – to the next level?  Clark: First off, as I just mentioned, I'd recommend learning how to use options the right way – as a way to reduce risk. Options are a tremendously wonderful tool for improving investment performance… but most people are scared of them, or aren't willing to take the time to learn to use them properly.  Second, you have to get rid of the fear of selling a position. I've seen this fear paralyze traders, and it's one of the biggest mistakes you can make. As I mentioned earlier, it happens all the time… a trader has a solid profit on a position, it's hit his target, but he's afraid to take the gain because he thinks it might run even higher. Ultimately, he ends up holding on too long and giving back most, if not all, of his profit. Or the trader is losing money on a trade but doesn't want to take the loss because he's afraid that once he sells, the stock will then start moving higher again. So he holds the position and ends up with a far bigger loss than he was prepared for. Good traders consistently take profits on their positions, and they stop out of trades quickly when they're going the wrong way.  Finally, you have to be patient and wait for the right setup before getting aggressive on any particular trade. Proper timing is critical for a trader.  I mean, imagine the difference between buying into the gold sector back in May – when the proverbial rubber band was stretched about as far as possible to the downside – and buying in September, after the Fed announced more quantitative easing and the gold stocks rocketed higher.  Crux: Any parting thoughts for our readers?  Clark: Well, I don't want this to sound all Dr. Phil-ish or anything, but I cannot overstate the importance of learning to keep your emotions in check. After all, we're dealing with money here – which is a very emotional subject for most people. The reason most people have a tough time making money in the stock market is because they allow their emotions to cloud their judgment. Acknowledging your emotions is an important first step. But if you can learn to take the emotions out of the equation, you can become a very successful trader – or investor – no matter how you define it. Crux: As always Jeff, thanks for talking with us. Clark: You're welcome. Editor's Note: If you're not a subscriber to Jeff's S&A Short Report, there's never been a better time to try it. Jeff believes one of those rare, low-risk trading opportunities – that happen just once or twice each year – is setting up right now. To access the next issue of the S&A Short Report (due out this Tuesday) and learn Jeff's favorite ways to profit, click here.