Traders
who are unsuccessful in the markets do not understand their roles in
relation to the market's perspective. Traders are small players in
the context of the market's overall existence. Not only must they
recognize this fact, but they also must never think otherwise. No matter
how much money the trader has to invest in the market, the market is
the market. Which aspects of investing and speculating do the
trader control, and what does he have no say in? When does a trader
switch from a leader to a follower? How important is it to a trader's
success to knowing when and how
to
follow or lead?
The
following are items that the trader can, and
must, control:
- The amount of money put into the markets.
- The number of markets to follow.
- When to enter a trade.
- How to enter a trade.
- When to exit a trade.
- How to exit a trade.
- How to spend one's time.
There
is no need to determine probabilities that a trader has a certain
amount of capital to put into the market or when he enters into a
trade. There is 100% certainty that the trader can put X amount into
the markets and can put in a trade on, say, Monday morning 5 minutes
and 30 seconds after the first trade in soybeans. The following are
items over which the trader has absolutely no control:
•
The direction markets will move.
•
The duration of the markets' movements.
Failure
to recognize these aspects of the markets early will result in
failure at trading. And the irony is that a trader will end his
career without knowing why he failed. Problems occur, and failures
materialize when the trader starts to believe that the power which
comes with controlling what he can control can be exercised in
situations over which he has no control. The market moves whenever
and however it wants to. If the trader believes he can dictate to the
market when and how he wants it to move, surprises occur. The mere
act of buying or selling a futures contract or a stock implies that
you want that particular instrument to move up or down. When you buy,
you want it to go up. When you sell, you want it to go down. What is
mistaken is the fact that when you buy and it goes up, you are really
buying something that is already strong. Your buying does not make it
stronger. One act of buying or selling has no extended impact on the
market. Except for the extreme case where individual buying or
selling can actually move the market. when others follow in concerted
action, it is impossible to buy and have the market go up immediately
afterward,
or
sell and have the market go down immediately. You were there at the
right time and the right place. In the worst scenario of timing, you
merely followed the market, and in the best scenario, you anticipated
the market's move. In either case, you had no control over it. If you
weren't the one who bought the lows or sold the highs, it would have
been some other person. And if the market didn't move after you
bought or sold, it would have eventually, independent of your
actions.
What
You Can, Manage What You Cannot
Traders
who are unsuccessful in the markets do not understand their roles in
relation to the market's perspective. Traders are small players in
the context of the market's overall existence. Not only must they
recognize this fact, but they also must never think otherwise. No matter
how much money the trader has to invest in the market, the market is
the market. Which aspects of investing and speculating do the
trader control, and what does he have no say in? When does a trader
switch from a leader to a follower? How important is it to a trader's
success to knowing when and how
to
follow or lead?
The
following are items that the trader can, and must, control:
- The amount of money put into the markets.
- The number of markets to follow.
- When to enter a trade.
- How to enter a trade.
- When to exit a trade.
- How to exit a trade.
- How to spend one's time.
There
is no need to determine probabilities that a trader has a certain
amount of capital to put into the market or when he enters into a
trade. There is 100% certainty that the trader can put X amount into
the markets and can put in a trade on, say, Monday morning 5 minutes
and 30 seconds after the first trade in soybeans. The following are
items over which the trader has absolutely no control:
•
The direction markets will move.
•
The duration of the markets' movements.
Failure
to recognize these aspects of the markets early will result in
failure at trading. And the irony is that a trader will end his
career without knowing why he failed. Problems occur, and failures
materialize when the trader starts to believe that the power which
comes with controlling what he can control can be exercised in
situations over which he has no control. The market moves whenever
and however it wants to. If the trader believes he can dictate to the
market when and how he wants it to move, surprises occur. The mere
act of buying or selling a futures contract or a stock implies that
you want that particular instrument to move up or down. When you buy,
you want it to go up. When you sell, you want it to go down. What is
mistaken is the fact that when you buy and it goes up, you are really
buying something that is already strong. Your buying does not make it
stronger. One act of buying or selling has no extended impact on the
market. Except for the extreme case where individual buying or
selling can actually move the market. when others follow in concerted
action, it is impossible to buy and have the market go up immediately
afterward, or
sell and have the market go down immediately. You were there at the
right time and the right place. In the worst scenario of timing, you
merely followed the market, and in the best scenario, you anticipated
the market's move. In either case, you had no control over it. If you
weren't the one who bought the lows or sold the highs, it would have
been some other person. And if the market didn't move after you
bought or sold, it would have eventually, independent of your
actions.
