I think the books are useful - Ive learned alot from them in the past few months --- but you still have to apply it to your own real money in real life -- the book can't tell you how to do that
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Is trading that hard? Or are people that stupid?
- Thread starter CaptnDustball
- Start date
I think the books are useful - Ive learned alot from them in the past few months --- but you still have to apply it to your own real money in real life -- the book can't tell you how to do that
Quote from illiquid:
I agree on both points, the latter especially.
You can take the attitude that the market is always right; or, you can assume the market is the biggest "crowd" in the world, always right during the middle of the moves, and wrong at the turns. Maximizing profits is all about identifying when to fade and when to go with.
I've never really understood why people say "the market is always right"..thats like saying "people are always right"..sinse thats what the market is made up of. If the market is always right, then why do we seperate the market into the two terms "dumb money", and "smart money"?
The market is made up of people who make smart choices and stupid choices...both cant be right at the same time.
Quote from cashmoney69:
I've never really understood why people say "the market is always right"..thats like saying "people are always right"..sinse thats what the market is made up of. If the market is always right, then why do we seperate the market into the two terms "dumb money", and "smart money"?
The market is made up of people who make smart choices and stupid choices...both cant be right at the same time.
This type of debate is a only a matter of terms, phrases, and semantics. Stock is only worth as much as somebody is willing to pay or it, thatâs the only truth, any other value assessed is an illusion. If you think your stock is worth more than it is currently selling for in the market, go ahead and ask that price, you just might get it, but only once the market finally agrees you. Thatâs what is meant by the market is always right.
I totally understand that there are instances where prices are perhaps too extended to the upside, and doomed to fall. I understand that some would phrase this as the market being wrong⦠but go ahead and short the stock, you wont be able to cover your position at the price you want until the market comes down and agrees with you. Get it?
The actual issue isnât even whatâs being debated here, people are only debating the wording being used to describe it.
Difference is, the dumb money DOESNT move the market in the direction it will go, the smart money does. Just as the world is run by the few, so are the markets.
Quote from cashmoney69:
I've never really understood why people say "the market is always right"..thats like saying "people are always right"..sinse thats what the market is made up of. If the market is always right, then why do we seperate the market into the two terms "dumb money", and "smart money"?
The market is made up of people who make smart choices and stupid choices...both cant be right at the same time.
The bottom line is that trading is the most difficult profession to be profitable in, but if you make it you can make it big. Time and effort does NOT count. All what count is the return.
Now give people some tips to succeed. I will start with this.
p(t) is the price at time t. The right times and prices to trade are only a small proportion. You should be sitting on the side line for the large majority of p(t)s.
If your time increment is small, the number of p(t)s increase linearly with t, and the probability to get the right p(t) to trade at as well as the profit amplitude decrease. But the number of points you should trade at do not increase linearly with t!
If you look at things from a larger time frame, the total number of of p(t)s is smaller, the probability to get a good p(t) to trade at increase, and your profit amplitude is bigger.
Ponder the above, and you may be able to better decide on the time frame for trading. Answer: larger (but not too large) is better.
Now give people some tips to succeed. I will start with this.
p(t) is the price at time t. The right times and prices to trade are only a small proportion. You should be sitting on the side line for the large majority of p(t)s.
If your time increment is small, the number of p(t)s increase linearly with t, and the probability to get the right p(t) to trade at as well as the profit amplitude decrease. But the number of points you should trade at do not increase linearly with t!
If you look at things from a larger time frame, the total number of of p(t)s is smaller, the probability to get a good p(t) to trade at increase, and your profit amplitude is bigger.
Ponder the above, and you may be able to better decide on the time frame for trading. Answer: larger (but not too large) is better.
Quote from CaptnDustball:
jb, I enjoyed reading your post. It is a little confusing. So for these books that successful traders have written (not talking about the pseudo-successful; but real successful), they're all b.s.? Are you saying they don't know what they're talking about or that they're lying to you (maybe to keep their advantage?). If there's nothing to learn from books, where should I learn? I guess from other traders, right?
I will get a chance to watch other traders in action, but not always. In the meantime, how do I keep advancing my knowledge?
CaptnDustBall,
There are countless books and other forms of media published about the subject of trading, and along with such a high volume of information comes a lot of bad information. Sorting the good information from the bad information is one of the first monumental tasks youâre going to undertake as a beginner, and the very fact that you are a beginner is going to make this all the more difficult. The point I was trying to make, however, is that even the bad information is still useful because you still need to be aware of the fact that there are other traders out there who do believe in it, and their actions can effect price.
There is a counterparty to every transaction; a buyer for every seller, and a seller for every buyer. Human nature basically dictates that buyers prefer to buy at the cheapest price possible, while the sellers prefer to sell at the highest price possible. In order for a transaction to occur, one party must typically give in and submit to the terms of the other, and this occurrence, multiplied in sequence, is the basic essence of what creates prices movement within the market. Thereâs much more to it than this of course, but hopefully you get the point...
Nothing is actually real within the market except for the people who make up the market and the decisions that they make, everything else is secondary. Information such as economics, fundamental analysis, news events, and even many aspects of technical analysis can only inspire or influence peopleâs actions, but the information itself has no direct effect on a stockâs price until people actually act upon it. These actions, in the form of actual transactions, are the deepest form of truth within the market, and perhaps the only truth⦠pure price action and volume serve as an audit trail of these transactions, and theyâre the best sources of information that youâll ever encounter.
Its possible to view this information and gather a pretty fair understanding about the positions that other traders are actually taking, and why theyâre taking them, and what their expectations are, and what would confirm those expectations, and what would contradict those expectations, and where theyâve likely placed their stops, and where theyâre likely to take profits, and whether theyâre making money or losing it, and what emotions they are experiencing, and a total onslaught of other information that is too long to list.
The key to trading is to get inside the heads of other traders by observing their actions, and see how events play out, and then put yourself in their place, and determine how you feel if you were them, and what you would do if you were them, and what theyâre likely to do next, and how other people who are watching this are likely to react to it as well, and how this all will effect supply and demand in relation to liquidity, and how you can use all this to your advantage. Stock is just the instrument being traded, your focus should be on the people you are trading with.
No book can teach really you this, but go ahead and read every book you can get your hands on, absorb all the educational material you can. It will help you to familiarize yourself with what other traders are looking for and how they think, at least to an extent. The key is experience though, emotion and psychology play major roles, you need to be able to see yourself in other traders, but youâll never truly understand that until youâve experienced it for yourself.
O
on the money
Listen
1) You can read every trading book that is available at amazon, and most of them are worth nothing more then toilet paper. Since you don't know anything about trading, you have no way to differentiate the good books from the useless ones. To you they will all seem brilliant. So there goes your book theory.
2) SIM results are generally useless. I made like $150k in a week using my system on a sim, but once you have real money on the line, believe me (and others) it changes everything.
3) Trading is not about taking money from others. Sometimes people buy/sell with a profit, you might be taking from them. Also, the moment you personalize trading you lose focus. It is about the trader and the market. A person must be concerned about their own behavior and strategies. If those are in place, then other traders and market activity don't matter.
1) You can read every trading book that is available at amazon, and most of them are worth nothing more then toilet paper. Since you don't know anything about trading, you have no way to differentiate the good books from the useless ones. To you they will all seem brilliant. So there goes your book theory.
2) SIM results are generally useless. I made like $150k in a week using my system on a sim, but once you have real money on the line, believe me (and others) it changes everything.
3) Trading is not about taking money from others. Sometimes people buy/sell with a profit, you might be taking from them. Also, the moment you personalize trading you lose focus. It is about the trader and the market. A person must be concerned about their own behavior and strategies. If those are in place, then other traders and market activity don't matter.
Quote from cashmoney69:
I've never really understood why people say "the market is always right"..thats like saying "people are always right"..sinse thats what the market is made up of. If the market is always right, then why do we seperate the market into the two terms "dumb money", and "smart money"?
The market is made up of people who make smart choices and stupid choices...both cant be right at the same time.
To me "the market is always right" means that if I go with the flow of the market then I am right and will make money. If I go against the markets flow I lose money and I am wrong.
More importantly if a person is not making money or is losing money, then that person is wrong. We cannot force the market to our will, so we must give in to the market and take what it gives us. If a person does not try to fight the market and waits and watches and takes the easy money when the market is giving it out, then they can be very successful.
I also think the phrase "the market is always right" sounds much better than "if you lose money you are wrong"
The smart money/dumb money distinction is way too vague. It means if you make money you are smart, lose it you are dumb. The problem is the so-called smart money can also be the dumb money on many occasions and vice-versa.
Quote from on the money:
A person must be concerned about their own behavior and strategies. If those are in place, then other traders and market activity don't matter.
I totally agree with you on the first half, but the question is, what are those strategies based on? what is truly taking place underneath it all? Other traders are the market, and market activity is the only thing that matters. Without it, youâve basically got a market of stagnant prices that might as well be closed.