How can reams of data showing most traders go broke or stop trading because of losses --- most of them within the first 3 months -------------------- be 'simplistic'.
they are just fact.
Stock traders have always lost their pot.
But, there certainly is more to it than that nowdays.
Most people still come into the market exactly the same way that people came into the market in the 20,s, 30's - 50's, 70's 80's all the way up until now.
Right now - today - we have young people - and some not so young - who try and 'trade the market', 'play the stock market', etc. etc. -- exactly the same way we did back in the 70's ---------
but, what the vast majority don't realise is that markets are a living thing - they are dynamic.
Trying to trade the 'market' now is trying to play with a completely different animal that was decades ago - to what is now.
People seem to be oblivious to the very obvious fact that they are betting against machines -------------- not people.
If it isn't bad enough that we have HFT and bots ------------- now the latest kid on the block is AI (artificial intelligence) - in investment funds -
now - can someone please tell me - how an emotionally charged human is going to go in the heat of the kitchen against a completely emotionless robot?
But, still - to this very day - we have newbies coming in thinking they will become stock market (or similar) traders - sitting on the beach with a laptop - soaking up the sun and soaking up millions of dollars - or at least a solid income.
Just how delusional can one actually get before someone puts us in a tight white uniform in a soft-walled room?
People need to wake up - unless they actually have some hard facts that they are indeed better than about 98% of the humans who surround them. And, if they were that good - they would already, in this day and age be fabulously wealthy - and, hence, could sit on the beach - without the laptop.
IMO -- 'trading' is a dead horse - never was a good horse - and, no amount of flogging will ever make it run for the 'vast' majority of people.
Now - does that mean that one cannot make large amounts of money in stocks?
No - it does not.
What it does mean is that one needs to look at a market ------------------- any market - in the present time AND place - and look how one can use that market to one's advantage.
Well before that - it would be wise to work out one's physiological profile to see how one 'ticks' - eg. is a person comfortable with risk - and to what degree. Is one patient - and, can one's patience last over years --- or are we talking about minutes?
Is one prepared to weather the storms -- ride the ups and downs - or will one cave in to emotional pressure - and begin to question one's own judgement when the 'price' of something goes south - even though one's judgement on the asset is still strongly positive?
Once one gets through that lot - one can then study - HOW a market works - to see if one can profit from the 'personality' of the market ---------------- at THAT time in history.
Not 1930 - not 1970 ------------------ NOW.
to me - all IMO - the market right now - with all it's HFT, robots, triggers, AI, TAX laws, access to information, also LACK of access to certain information (which tells us a lot) - and god knows what else -
I believe that the current conditions make INVESTING - easier than it has ever been in the last century - but,
precisely NOT in the way that most people think (ie. playing the stock market etc.).
First research ----- go and research the 'beliefs of trading or investing' -------------- those unquestioned beliefs that are sprouted by all and sundry as being ------------------------- 'wisdom' - or 'good practice'.
Start with learning about - 'diversification' - and perhaps 'stop losses'.
Learn the history - and, look at who mainly sprouts these 'wise practices' - and, then, question - why?
Eventually - one will get to the actual mechanisms of the modern markets - not so much what they are - ie. HFT and the like ------- but, HOW they effect the markets.
Eg. - you have heard all the spiel ------------ HFT and bots -------------- 'provide liquidity' and also 'provide price discovery' -
now - if you read about this sort of thing for a few days ----------- AND you study the 'pricing' performance and trading track record of companies ----------- you just might form the opinion that that is the biggest load of bollocks one has read in a while.
But, when you study those price movements - and compare them with 'value' - you MAY find that our - beautiful 'price discovery' and 'liquidity providers' do a couple of things -
1. they make it that there are a LOT more transactions -------- you might want to think about who would benefit from that and
2. You might find that many stock prices are now far more volatile than in the past.
Now - volatility ----------- this is a magic word to traders - they LOVE volatility.
this, they believe, gives them great and wonderful trading opportunities ------------ and, yes - in 'theory' that is correct -
but, those opportunities give as many opportunities to LOSE as well as GAIN.
Now - a very simple test here on mathematics ------
when one walks into a Casino ------------- does one have a greater chance of losing money - if one has fewer bets or more bets?
Answer that one correctly - and you get the correct answer for traders trading more opportunities - the maths is the same - even though the mechanisms are different.
Now ----------------- if you toss out the trading idea - and replace it with the 'buying a piece of a business' or 'investing in a business' idea --
what have you got?
You have a stock market - which is a market place where you can buy a percentage ownership in a choice of companies -
and, the mechanisms of that market today - make the PRICE of that ownership much more volatile -
which means that sometimes the PRICE is far more higher than it is at other times - and far more LOWER than it is at other times.
Now ----------------- is there an opportunity there to acquire good solid businesses at a cheap price?
Clearly - yes, there is - but, the first trick is to work out what exactly is a good solid business - and, then - what is that business worth - to you.
The price will move around all the time - in gyrations that will scare the pants off you ----------------- BUT, the value won't - unless the business is dying rapidly - or growing rapidly.
The 'trick' today - is to watch the business --------------- not the market.
Once one has a solid business target - one sets a TARGET price - and then, one lets the MARKET bring the price to you. No need for chasing.
