Trading room – Mon 3 Dec 2018
It’s possible for traders to tap into one of three general attitudes when they approach the market. The first attitude is one of pessimism and ignorance, the second is one of randomness and/or neutrality, and the third is one of empowerment.
The first attitude never works, the second attitude seldom brings much success, but the third attitude, when properly done, guarantees success and brings the trading edge over others you will never ever thought possible.
It is common knowledge in the market that only 5%-10% of traders (we call them elite traders) make money in the market while the balance 90% of traders (we call them common traders) lose their money trading the market every time, year-in and year-out.
In other words, probably 5%-10% of the very best elite traders tend to monopolize all the gains in the market.
Most of these elite traders are actually large institutional funds or market makers (whether we call them private funds/hedge funds/proprietary traders/high-net-worth individuals/syndicates/insiders/etc.) and have a large pool of managed or private funds and access to high-technology trading software, research, and information.
These group of traders are very well-informed and tend to “control” the stock direction via large volume, first-hand access and quicker reaction to the news, making their entry and exit faster and earlier and making their profits almost effortlessly.
Most common traders, on the other hand, use simple charting and technical analysis tools, research reports and so-called rumors/tips to trade and tend to enter and exit late and at the wrong time with the wrong exposure, making losses most if not all the time.
For the common traders, their tools and efforts do work some time or another but they all come at a heavy cost of time spent, small wins and poor win ratio, rendering them relying more on luck at the end rather than skill against the elite traders despite their many laborious hours of personal hard work and investment money spent.
Common traders also lack the system and mechanism to track and monitor the factors moving their individual stocks and the market as a whole and are often overworked, misinformed, confused by conflicting research reports and media news and second-guessing their positions most of the time.
Unlike elite traders who are in control of their trading, common traders tend to end up angry, confused, frustrated and dejected at their trades and often quietly exit the market after losing all their capital.
Let’s revisit the first type of traders who dwell on pessimism and ignorance. This group is the weakest group in the market as they seek to rationalize their failures on the market and others.
The most common excuse is that the market condition is not good and even if it is extremely good, they would lose money chasing manipulated stocks and left holding abandoned babies” at the high. They do not have a trading system and likely would blame time and other commitments and tend not to invest in themselves or a trading system, or invest in an automated system without knowing what the system is actually doing (much like looking for a free lunch in the market and we all know such things don’t exist)
Fear and greed are too high in this group and ignorance lead them to be on the losing side of the trades they enter every time. This group tends to float in and out of the market until their capital is decimated and when they bring in new capital to the market, their cycle is repeated again and their pain and misery continue in an endless loop.
This group would always an excuse of not being to succeed in their trades in the market and “rationalizing” failures bring them “comfort” and “talking points” at the expense of their hard-earned capital.
The second type of traders are smarter being those who adopt a sense of randomness and/or neutrality but they camouflage their failure here by inaction and a false sense of pretense. Out of ignorance and wanting to look “smart” to others, they actually have very little confidence on their own and are swayed by constantly changing and conflicting analysts, friends, and media recommendations and headlines.
As a result, they churn a lot of volume for the stockbrokers (and thus are always welcomed to trade) but tend to “buy high and sell low” and are constantly jumping in and out of their trading positions. Their sense of trade timing and selection are atrocious so to say that losing money is almost guaranteed.
When the market is good, they will trade and lose consistently as usual (without a trading edge) to the elite traders and damaged their capital severely and when the market condition turned weak or the other way around, they will disappear from the scene for some time.
This group of traders are smarter than the first group and lose lesser but it’s a false mirage as they are trapped in a sense of insecurity and disinterest as soon as the market or their traders turn sour. They typically have no trading plan as well to cope with changing market conditions.
The third type of traders is one of empowerment, and this is where the elite traders reside. How does a trader feel empowered when trading in the market? At its very core, it’s the feeling of Knowledge and Confidence. With knowledge and confidence, their trades accuracy is very high and this brings trading consistency and success regardless of market conditions.
This group have Faith in themselves when trading and they take Personal Responsibility for their trading actions (instead of blaming the market, others or even the heaven) whether each trade is a gain or loss. When you operate at this level, you are definitely a peak performer.
The key to transforming oneself from a common to an elite trader is to Work On Yourself. Developing a Trading Plan is your first working guide to success in the market. In fact, it’s easier than most people think. Invest in yourself to learn the art and rules of trading or invest in a trading system to start with.
Always connect and network to groups of positive performers in the market to learn their craft and experience and less with negative performers who like to cry and whine and disappear often. Empower yourself by getting positive energies instead of negative energies.
It’s a common trait of human nature of greed and fear that most traders prefer to lose their entire money in the market rather than invest even a small portion in themselves. Most common traders never progress to becoming elite traders as they dream of chasing “jackpot” trades in short moments of market madness and exuberance rather than “consistent winning” traders which will stand them well for years and years in the market.
We say invest and empower yourself as an elite trader by learning and doing proper money management in a rule-based system. Whether your method is relying on fundamentals or simple technical or complex quantitative big data algorithms, invest the time in yourself to learn and master from the best.
If you want to save money and focus on free trading materials, invest your time and effort to learn them. If you want to save precious time and supercharge up your progress and invest in a very reliable and successful trading method and system, do so by all means.
Remove yourself from the first and second group of traders who thrive on pessimism, ignorance, pretense, false sense of security, randomness and/or neutrality. Do not reinvent the wheel as there are already the very best of elite traders in the market who makes money while one lies in slumber and inaction. The choice is always yours to take.
When you feel confident and faith in the market and in your trades, it’s a trading edge you will never lose it again, much like learning a new language or writing. Empower yourself to succeed in the market.