Do you Think You are A Good Trader?
This is a question I ask myself all the time. I have been trading a long time and in the past have done well. I also have done very poorly at times too. This is an honest assessment of my own abilities.
It would seem when one glances at my blog that I make very few mistakes and usually get the trend right in most markets. While I think that this is, for the most part, true it does not always paint the full picture. I make some glaringly bad mistakes when my brain is not fully engaged and without distractions. This has happened at times in my life when I least wanted it to happen to me. It was a constant reminder of how little I knew about human nature. How little I knew about liquidity and how little I knew about price action.
It all served to humble me.
Now I believe I know nothing even when it seems like I do. I believe the only entity that knows the market is the market. It versus me is always right. It is why I always use stops and why I never average down into a trade. It is why I never use too much leverage. You might sit back after a good days trading and think that you are incredible as you made hundreds or thousands of dollars trading short term action.
It is important to remember that short term price movement is nothing more than the execution of liquidity by the people who will eventually take your money from you. In short, you are trading nothing but market noise. If there is a bigger sucker on the other side of the trade that you are on where the market makers can make more money running their stops then that is how the market will move. It moves in the direction where the most profit can be made and NO it is anything but random.
If it were random then you would be easily able to replicate your demo trades. Of course, we all know that real trading is far different than the demo trading which is controlled by the broker software. The software by itself is designed over time to drain your account into the brokerage account. Much like casinos who know that over time everyone loses so too do these shady characters who make their living off of suckers.
I think that it remains to be said that you never know which way the market is going to move even if you supposedly see executed orders in the market (like in your futures account) that signifies which way the market is supposed to go. You have to remember who controls the liquidity and you simply can't see that on your order flow graph. These likable fellows can add or subtract order behind the scenes that don't show up on your order flow data gage. Why is it that so many brokers provide the liquidity to their traders?
Do you think that they do it because they like to assume the risk and want to be helpful to the traders? If you do you are a fool. They do it because they know that they can not only make money on the spread or commission but also on the order if they are on the opposite side of the trade.
If the game sounds highly stacked against you, it is. If you enter into this arena thinking that you have a 50-50 chance then you are doomed to experience a rude awakening. Your chances of success are much lower than that. If you could move the market well that would be a different story but of course, you can't and they can. That by itself gives them a huge advantage over you. Now couple this to all the advances in algo's and artificial intelligence which can execute in milliseconds and you have a real problem.
In thinking that you are a good trader what should jump out at you the most is how little you know and how much of a disadvantage you are at compared to others.
Carpe Diem.
It would seem when one glances at my blog that I make very few mistakes and usually get the trend right in most markets. While I think that this is, for the most part, true it does not always paint the full picture. I make some glaringly bad mistakes when my brain is not fully engaged and without distractions. This has happened at times in my life when I least wanted it to happen to me. It was a constant reminder of how little I knew about human nature. How little I knew about liquidity and how little I knew about price action.
It all served to humble me.
Now I believe I know nothing even when it seems like I do. I believe the only entity that knows the market is the market. It versus me is always right. It is why I always use stops and why I never average down into a trade. It is why I never use too much leverage. You might sit back after a good days trading and think that you are incredible as you made hundreds or thousands of dollars trading short term action.
It is important to remember that short term price movement is nothing more than the execution of liquidity by the people who will eventually take your money from you. In short, you are trading nothing but market noise. If there is a bigger sucker on the other side of the trade that you are on where the market makers can make more money running their stops then that is how the market will move. It moves in the direction where the most profit can be made and NO it is anything but random.
If it were random then you would be easily able to replicate your demo trades. Of course, we all know that real trading is far different than the demo trading which is controlled by the broker software. The software by itself is designed over time to drain your account into the brokerage account. Much like casinos who know that over time everyone loses so too do these shady characters who make their living off of suckers.
I think that it remains to be said that you never know which way the market is going to move even if you supposedly see executed orders in the market (like in your futures account) that signifies which way the market is supposed to go. You have to remember who controls the liquidity and you simply can't see that on your order flow graph. These likable fellows can add or subtract order behind the scenes that don't show up on your order flow data gage. Why is it that so many brokers provide the liquidity to their traders?
Do you think that they do it because they like to assume the risk and want to be helpful to the traders? If you do you are a fool. They do it because they know that they can not only make money on the spread or commission but also on the order if they are on the opposite side of the trade.
If the game sounds highly stacked against you, it is. If you enter into this arena thinking that you have a 50-50 chance then you are doomed to experience a rude awakening. Your chances of success are much lower than that. If you could move the market well that would be a different story but of course, you can't and they can. That by itself gives them a huge advantage over you. Now couple this to all the advances in algo's and artificial intelligence which can execute in milliseconds and you have a real problem.
In thinking that you are a good trader what should jump out at you the most is how little you know and how much of a disadvantage you are at compared to others.
Carpe Diem.
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