Anyone interested in discussing the following further with me?
Iâm a strong believer that the premier traders of the future will be the âResearcher Tradersâ, those who devote as much time to research as actual trading. Research can take many forms, but I would class it as the exploration into all forms of trade application, concentrating on your method and the implementation of that method, within the changing markets of today and tomorrow.
But you have to start with a solid method. And a solid method must first deal with the fundamental understanding of how markets work and trade, and also how the market participants view this price action. Whether you use technicals to trade or some other method, Iâd argue that without this full understanding of how markets work youâre generally fighting an up-hill battle. A good example of this would be to look at the price action that is the foundation of any technical indicator. One may be an expert on the indicator but might not have taken the time or effort to fully understand the underlying price action behind it. Therefore in my opinion, the true value of the indicator is diluted. In the recent thread on âSimplicityâ Girlpower seems to be getting good results by firstly understanding the market and then using technicals as a by-product to her trading process, not the other way around. Doing it the other way around is the trap that most people fall into, myself included when I first became interested in trading.
One must surely be able to argue that with the advent of the pc-trader/system trader, the actual market price for many has become an almost secondary concern to the indictors which are ultimately derived from it. Is it possible to build any good business without firm foundations? Unlikely.
If you could take a poll of the traders on this board that are trading professionally (whether for themselves or companies), and who have been making solid returns for a number of years, Iâd say that they would all have two common traits. Firstly this understanding of how markets trade and function and secondly â they have learnt to view the markets not just in their eyes, but also in the eyes of the general market participants. Itâs not really important initially whether theyâre long or short but whether the market is long/short, and then capitalising on this fact with their individual trading methods. This again is something very subtle and very very easy to miss. A good analogy of this would be if you were betting on Miss World. You may think that Miss X is the most beautiful creature that youâve ever seen, and is sure to win. But before you place you money on her, perhaps itâs better to consider how the audience or judges are viewing the girls? In light of this analysis perhaps a safer bet may be on a different girl.
Research into market and trading application will play an even bigger roll in the future as the world and the global trading stage gets smaller and smaller. More information, more markets, more news, more ideas, more profits? (And before somebody posts a smart remark, yes more losses as well) Potentially legendary profits await those who plan for the future. Markets may well change and come and go, but the market participants views and psychology are unlikely to change that much.
As mentioned before, research into actual trading and methods is just one aspect that should be rigorously undertaken. An example of other good research areas would be to look at the world and how money can be made off events. A good place to start would be China and the effect that a bust out in that country would have on the financial world. If you listen to the media, then as they put it, all youâd have to do is place your bets on that country, and get rich within 5-20 years. Personally I doubt it will be that simple. What happens if China becomes a global Enron? Who really understands whatâs going there? You want to trust what big business, the investment bankers, the National Peopleâs Congress, or the majority of the media tell you? Iâd place some good money on the fact that the Govt is using the citizens money in some form (most likely via their bank deposits) to prop up the state banks/industries. Day traders go on about the âfeelâ of the market, and thatâs crucial to their success. But what about getting the longer term âfeelâ on the global markets? Imagine the advantage that youâd have over your competitors, even if you never wanted to trade on markets outside your own region. One day, even half a day can make all the difference in this game and therefore solid and logical research will likely hold the key to unlocking some of these legendary profits. Iâd much rather trade from my view, via my research on the underlying events than some CNBC anchor or other commentator.
.
Does this general research that Iâm referring to mean that youâd have to spend ½ your day on the net or reading to be able to piece the jigsaw? Of course not. Incidentally, deciphering information is actually very hard because you have to learn to do it with a totally objectivity, concentrating on not believing what you want, and writing off other areas that donât agree with you at that time. Trying not to get swayed by this person or that opinion is similar in many ways to reading and understanding the market action. Work like this doesnât have to be hard, youâve just got to be logical and be there following events over time, ready to piece them together. Some people might argue that itâs better to sit back and let the news find you, but again you have to train yourself to receive it because the news and information will come in many forms and guises, not all of it through the normal channels.
Charts will often do the talking for you, and again it goes back to having the understanding of how markets work and function. I know itâs always easy after the fact but look at some of the FX charts in the weeks and months preceding the Asian crisis of 1998. I wasnât viewing trading like I am now so I wasnât paying attention either, but chances are the first you heard of the crisis was when it hit the financial pages. But as ever, the real money was made in the weeks and months before this time. This is what I mean by getting the longer term feel for the markets by watching the charts and having some sort of idea about how things work. Good professionals often practice whatâs called âscenario planningâ and they talk about this in âLiarâs Pokerâ. Basically imagining a load of âwhat-ifsâ on a myriad of possible events both large and small. If one of your ideas does plan out then youâll likely to be fully prepared to take full advantage of it.
Now to my main point. I want to create a small organisation that can accomplish what Iâve been writing about. In my view the main roadblock to this would be that within any group of traders or analysts, the styles of trading or analysing would likely be very different. But what if the group could be taught a method or a market language so that they all look at the foundations of trading from the same view point. But then each adds their own input and style. Similar to everyone speaking English but with different accents. Different people would have different jobs but serving the group as a whole. To me the benefit of this could be outstanding, especially if you look at it from the discipline angle.
I have the tools to try and accomplish this goal.
Iâm not selling anything, no systems software or any of that crap, and I only have time to talk with people who are generally interested in what Iâve said and want to accomplish. Think about the future, and what can be created by a super professional organisation that has confidence in their abilities, methods, risk control and view of events .
T
canov11@dbzmail.com
Iâm a strong believer that the premier traders of the future will be the âResearcher Tradersâ, those who devote as much time to research as actual trading. Research can take many forms, but I would class it as the exploration into all forms of trade application, concentrating on your method and the implementation of that method, within the changing markets of today and tomorrow.
But you have to start with a solid method. And a solid method must first deal with the fundamental understanding of how markets work and trade, and also how the market participants view this price action. Whether you use technicals to trade or some other method, Iâd argue that without this full understanding of how markets work youâre generally fighting an up-hill battle. A good example of this would be to look at the price action that is the foundation of any technical indicator. One may be an expert on the indicator but might not have taken the time or effort to fully understand the underlying price action behind it. Therefore in my opinion, the true value of the indicator is diluted. In the recent thread on âSimplicityâ Girlpower seems to be getting good results by firstly understanding the market and then using technicals as a by-product to her trading process, not the other way around. Doing it the other way around is the trap that most people fall into, myself included when I first became interested in trading.
One must surely be able to argue that with the advent of the pc-trader/system trader, the actual market price for many has become an almost secondary concern to the indictors which are ultimately derived from it. Is it possible to build any good business without firm foundations? Unlikely.
If you could take a poll of the traders on this board that are trading professionally (whether for themselves or companies), and who have been making solid returns for a number of years, Iâd say that they would all have two common traits. Firstly this understanding of how markets trade and function and secondly â they have learnt to view the markets not just in their eyes, but also in the eyes of the general market participants. Itâs not really important initially whether theyâre long or short but whether the market is long/short, and then capitalising on this fact with their individual trading methods. This again is something very subtle and very very easy to miss. A good analogy of this would be if you were betting on Miss World. You may think that Miss X is the most beautiful creature that youâve ever seen, and is sure to win. But before you place you money on her, perhaps itâs better to consider how the audience or judges are viewing the girls? In light of this analysis perhaps a safer bet may be on a different girl.
Research into market and trading application will play an even bigger roll in the future as the world and the global trading stage gets smaller and smaller. More information, more markets, more news, more ideas, more profits? (And before somebody posts a smart remark, yes more losses as well) Potentially legendary profits await those who plan for the future. Markets may well change and come and go, but the market participants views and psychology are unlikely to change that much.
As mentioned before, research into actual trading and methods is just one aspect that should be rigorously undertaken. An example of other good research areas would be to look at the world and how money can be made off events. A good place to start would be China and the effect that a bust out in that country would have on the financial world. If you listen to the media, then as they put it, all youâd have to do is place your bets on that country, and get rich within 5-20 years. Personally I doubt it will be that simple. What happens if China becomes a global Enron? Who really understands whatâs going there? You want to trust what big business, the investment bankers, the National Peopleâs Congress, or the majority of the media tell you? Iâd place some good money on the fact that the Govt is using the citizens money in some form (most likely via their bank deposits) to prop up the state banks/industries. Day traders go on about the âfeelâ of the market, and thatâs crucial to their success. But what about getting the longer term âfeelâ on the global markets? Imagine the advantage that youâd have over your competitors, even if you never wanted to trade on markets outside your own region. One day, even half a day can make all the difference in this game and therefore solid and logical research will likely hold the key to unlocking some of these legendary profits. Iâd much rather trade from my view, via my research on the underlying events than some CNBC anchor or other commentator.
.
Does this general research that Iâm referring to mean that youâd have to spend ½ your day on the net or reading to be able to piece the jigsaw? Of course not. Incidentally, deciphering information is actually very hard because you have to learn to do it with a totally objectivity, concentrating on not believing what you want, and writing off other areas that donât agree with you at that time. Trying not to get swayed by this person or that opinion is similar in many ways to reading and understanding the market action. Work like this doesnât have to be hard, youâve just got to be logical and be there following events over time, ready to piece them together. Some people might argue that itâs better to sit back and let the news find you, but again you have to train yourself to receive it because the news and information will come in many forms and guises, not all of it through the normal channels.
Charts will often do the talking for you, and again it goes back to having the understanding of how markets work and function. I know itâs always easy after the fact but look at some of the FX charts in the weeks and months preceding the Asian crisis of 1998. I wasnât viewing trading like I am now so I wasnât paying attention either, but chances are the first you heard of the crisis was when it hit the financial pages. But as ever, the real money was made in the weeks and months before this time. This is what I mean by getting the longer term feel for the markets by watching the charts and having some sort of idea about how things work. Good professionals often practice whatâs called âscenario planningâ and they talk about this in âLiarâs Pokerâ. Basically imagining a load of âwhat-ifsâ on a myriad of possible events both large and small. If one of your ideas does plan out then youâll likely to be fully prepared to take full advantage of it.
Now to my main point. I want to create a small organisation that can accomplish what Iâve been writing about. In my view the main roadblock to this would be that within any group of traders or analysts, the styles of trading or analysing would likely be very different. But what if the group could be taught a method or a market language so that they all look at the foundations of trading from the same view point. But then each adds their own input and style. Similar to everyone speaking English but with different accents. Different people would have different jobs but serving the group as a whole. To me the benefit of this could be outstanding, especially if you look at it from the discipline angle.
I have the tools to try and accomplish this goal.
Iâm not selling anything, no systems software or any of that crap, and I only have time to talk with people who are generally interested in what Iâve said and want to accomplish. Think about the future, and what can be created by a super professional organisation that has confidence in their abilities, methods, risk control and view of events .
T
canov11@dbzmail.com
