It is interesting to see that at a time like this, at a time of economic concern, at a time of confusion, many people (including traders) are trapped in information that does not serve them in any useful way. What do I mean by this? Well, if you look at most of the financial news networks or most of the financial news services out there, how often do they serve us with information that helps in any way to trade us? I listen and talk to traders every day and it amazes me how much economic information they know. However, when I asked them how to serve their trade, I never seemed to get a clear answer.
I was fortunate enough to talk with some of the most successful legendary traders out there and really choose their brains to see what they thought. If you have had the opportunity to read Market Wizards and New Market Wizards, there are some real wisdoms in those books that most people don’t seem to like. In the New Market Wizards, Jack Shwager interviewed a very successful trader. During the interview he asked him: “Can you tell who will become a successful trader and who will not?”
The response of traders is very interesting. He goes on to say: “Yes, on tin This is something I have come to observe as well within most traders. When I try to understand why this is happening it seems that it’s the same reason each time.
As traders learn more and more about different indicators and patterns in the market, they become more and more desperate to find this “holy grail” system that will produce some astronomical winning results. Not only that, but they continuously jump from doing one thing to another. One day they’re trading moving averages, the next day they’re trading a bear wedge pattern, the next day a double top; they’re just all over the place. Why is this? It goes back to the quote up top. Instead of focusing on ONE methodology and mastering it, what happens is as soon as a losing streak comes along or a trade doesn’t work out the way they would have liked, they begin to think that something is wrong with the system, when in fact the real problem is the trader himself.
I often talk about how trading is a business and how it needs to …