“It is a riddle, wrapped in a mystery, inside an enigma; but perhaps there is a key. “ This famous quote by Winston Churchill sums up the market and the performance of many traders. They can’t figure it out. They can’t find the key, to the door, that’s wide open.
But by coming to some realizations that trusting in probabilities, accepting that the market is best not to be predicted, truly accepting risk, developing an edge and finally implementing a regimen to take advantage of the endless opportunities, only in this way can you become a consistently successful trader.
That’s a lot of stages and that’s only touching on the broad brush strokes. There are many, many steps involved in each one of those stages. Know that it is going to take time before you can approach trading with an adequate arsenal of weapons and tactics, fully prepared for any happenstance. Thinking that you’ll have this trading thing wired after a few weeks or months is naïve.
I’ve been doing this for 7 years and always strive to learn more about the markets and myself. What I thought I knew 3, 4, 6 years ago was nothing. Nothing.
One thing that is difficult to grasp is that although moments and movements look very similar, they are all unique to themselves and so the results will always be different from what happened before. Being set in your ways or having an expectation will kill your account and your confidence. Trading is an art and not a science. Formulas and rules are great to have and trade by. They are also great to break as the situation dictates. I’m talking about ignoring rules here, not changing your trading plan on a whim. What to do at any time depends on the situation at hand. Doing it right at the right time separates the great traders from the pack.
The key for me simplicity. Simplicity in my indicators, simplicity in my plan. Simplicity helps me take action on the opportunities that present themselves. I am not bogged down by complicated signals that confirm what the markets are doing. I can already see what the markets are doing. Green candles mean it’s rising, red means it’s falling. Why make it more complicated than that? Waiting for confirmation is a waste of time. My view is that if you wait too long you’ll be getting in exactly when profit taking is about to drive it down again.And confirmation? Of what? Just because a stock is rising or falling doesn’t mean it will continue in a linear fashion. As new information of any sort gets known, buy or sell pressures increase to change the trend.
I suppose it helps that I didn’t go beyond a high school education. Although I have respect for people who have devoted many years to being stuck in classrooms, I’ll bet you that the smarter you are or think you are the more you’ll try and out think the market. Instead of doing that, I like to be an observer of human behaviour. This is the meat and potatoes of the market. Trading based on the probable outcome of a given pattern or momentum driven by human emotion. Observing human behaviour starts with looking at yourself.
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3 comments:
As always, Scott, I tune in to what you write here and the charts you post. And I appreciate your efforts. I find here my inspiration to keep on with my studies of the stock market.
You must admit that to the practiced, the most intensely complex activites are easy... and I say that out of respect.
You are an example that it takes years to become adept at this art.
The reality is that so few master it because it requires more than focus and concentration, more than confidence, more than accepting the risk. It requires time.
Time, the most valuable of commodities. Everything is measured in time because it is finite for us all. Would anyone really wear a wristwatch if we could live forever? What would be the point, really.
There's no denying that lack of time is a common reason why those who try this do not continue to a successful conclusion.
And that is at the heart of it all.
Lucky for me then I stopped wearing a watch/having a cell phone about 8 years ago.
You earned your time to learn it by the sale of your business. You are being modest if you say you were lucky. I'm certain that effort was mostly responsible.
What business were you in, if you don't mind me asking?
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