You’ll notice over on the right of this page there are translation buttons to assist people in making an easier job of understanding what is written here. Click, English to German, Spanish or whatever.
That got me thinking the other day about how easy it appears trading is to beginners versus the reality of it’s possibly the hardest endeavour that you will ever decide to try to learn and become successful at.
“Buy low and sell high right”? That’s the joke you get when people discover what you do for a living. Usually the 2nd statement from people is “how do you know a stock is going to go up after you buy it?” When I tell them I don’t need to know what a stock will do, they always have a puzzled look on their faces.
Until you immerse yourself in the nuances of the markets movements you can’t really appreciate the amount of knowledge a successful trader needs to absorb to know what’s going on. Then in my view after you learn some things about the market it’s best to not let those thoughts turn into expectations of market movements. For you will be destroyed by your ego when you are constantly wrong in a contest with the market which is never wrong. It just exists and displays information.
So is there an easy way to translate the way the market moves into easy one size fits all definitive trading program? No, because every trader has a different personal constitution, objectives and ideas about what they want out of trading.
Momentum day trading works for me because I have the time to spend actively watching the markets and I want to get the most bang from my buck in the shortest time period. Swing and position trading require another set of beliefs that I don’t have. This has come about because I have narrowed my focus to become a momentum specialist. I’d be fighting against myself if I try to change my trading time frames.
Whatever style of trading you are involved with, it is necessary to be able to read the market and digest that information and then use it to put on a successful trade. While it appears simple on the surface, it is the absorption of numerous small details of market movements that give the clue to the next movement. The real time interpretation and recalculating of odds are what separate the winning trades from the losers. This can only come from experience which is gained from direct psychic injection.
If you think you are lucky to put on a winner or unlucky with a loser, it really has nothing to do with it. You were in the right place at the right time. It takes no skill to put on a single winning trade. You only have to guess buy it or short it. The skill comes on being right over an extended period of time, being a consistent trader and having more winners than losers. The skill comes in conquering your emotions so that you are not affected by the uncertainty of all things market related. The skill comes in managing risk, profit taking, cutting losers so that you can maintain confidence in your system/edge.
I wrote several months ago about how I believe fundamental analysis is useless and the waning usefulness of technical analysis. This is because the information displayed has come from the past and its relevance to the now moment diminishes rapidly due to ever changing world and thus market conditions.
Reading the tape, gathering all the different factors involved in the dynamic market, calculating the probability and correctly acting on those will provide you with a successful translation of market language…profits and knowledge that you have a edge.
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