trading--Gamble or Serious Job

Originally posted by SteveD
When a BD comes out with a "strong buy" rating on a stock all of the brokers pick up the phone and start "selling" that stock to their various clients, both retail and institutions. The analyst will accompany the brokers to call on big clients in an attempt to sell them the stock and win their business if they are not a client.

On the NYSE floor when you see the specialist trying to find buyers or sellers for a particular stock that has not opened because of "order imbalance" he is shopping it around trying to find the price that the stock will trade.

The famous "road show" of a potential IPO is a prime example of stock being shopped "on sale". There is a limited supply and you, Mister Mutual Fund Mgr, have the opportunity to get 20,000 shares before they are all gone. There are plenty of small BD that take stocks on a "road show" and there are no buyers and therefore the company never goes public.

A stock does not have to trade at its posted price. A company could sell a very large block at a agreeable price to another fund but below the posted price.

For every buyer there is a seller and vice versus
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Yeah, yeah, yeah. You can provide all sorts of "evidence" to show that, yes, trading really is like any other business. The point is, are YOU, the at-home or office trader, taking IPOs on roadshows, handing out buy/sell ratings, addressing order imbalances? NO.
 
Thanks for you guys' idea. To tell the truth, now I believe more and more that the trading is a mental game. Maybe most of the guys lost, but it doesnot mean that the trading is same as gamble. Since the winner can always be the winner, but the only changes are the loser position.

There is technique in trading. Winner is able to get enough information to make his decision (or maybe some bet), but the beauty of the trading is the stop-loss, which is the biggest difference between trading and gamble. Do you agree? But is it easy to do that? no, it is very hard. that is why more than 90% or traders lose.

So before I go to this industry, I want to know myself as much as I can. If I can do this, this industry will be a heaven to me, otherwise, it is like hell.

Now the most concern to me is that I dont' have enough living expense for me to live up to 8 months. If I have, I am more williing to try. I am trying to save as much as money I can in these months. I really want to taste the flavor of trading.

I want to commit my life here.

Roumeo
 
well, if you're gonna commit your life, don't be in a hurry to jump in. also, that's the sort of commitment it will take to make it. but keep it in perspective. ms. market aint God.
 
-Trading is UNLIKE any other business, to the point where it's misleading to even call trading a business.
You seem to suggest that a business trying to sell its stock to customers does it by passively sitting and around offering to sell and waiting for an interested buyer to rock up. If you know anything at all about running a business you'd realise how absurd this is. -


I know a lot about running a business, but anyway we are just voicing opinions here. My opinion is that trading is more like a business than it is like gambling because of the fundamental roots of what you are buying and selling.
I'm not suggesting that a company sits around passivley offering stock but as someone else said there are drivers on a stock price that do not exist in gambling. I just got back from a Telecom conference in Milan and let me assure you, the effort that goes into promoting a business is mammouth.
It is no accident that a company who spent $100M's on R+D comes out with a new product or whatever and big buyers stampede after the stock. That drives prices up. Or the other way around etc.
Whether you are scalping or long term you are interacting with buyers and sellers and by definition become one even if you do not not feel like it, but your decision to buy or sell is based on something as it relates to your view of that stock in that sector at that time in the market.
I know it goes against the grain but I do not believe that trading is a zero sum game either. In a microcosm it might be but in the aggregate it cannot be unless the underlying never changes in value. Over time markets rise because of earnings, new companies etc. To be a zero sum game the market would always have to revert to the mean and that would be the same value that they started out at. It is like trading a pot of gold that fluctuates in value but overall is worth 50 times more than it was when we started.

I think people confuse the management of probabilities as being the whole of trading. It is crucially important in trading as it is in any other business, farming, construction, airlines etc but if it is the only aspect then IMO you are not exposed to the full potential of all the forces that drive prices up and down.

Final point: if you really believe that someone is a misguided fool who is bound to lose and you believe it is all just a zero sum game, then be nice to them, they pay your wages.

Enjoy your trading however you view it.

Ciao:D
 
risk.

securities markets are a means of measuring and offsetting business risk.

it's all business. it all deals with risk. the business of trading IS risk. what's the problem?
 
Originally posted by roumeo
Thanks for you guys' idea. To tell the truth, now I believe more and more that the trading is a mental game. Maybe most of the guys lost, but it doesnot mean that the trading is same as gamble. Since the winner can always be the winner, but the only changes are the loser position.

There is technique in trading....

So before I go to this industry, I want to know myself as much as I can.
Roumeo
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Trading really is a gamble - a calculated one. You will lose and win on trades. Win more often than you lose and you are in business.

You are very astute when you say that trading is a mental game: it is. A good trader is very tough mentally and is very good at managing capital and position - on a busy day you need to keep a lot in your head: even with the advent of modern electronic trading systems there still is a lot of concentration required and electronic trading is far different than trading on the floor.

IMHO the best thing you can do - if you have the luxury - is to learn everything you can before starting out. However dont over study. There is a core kernel of information you need. I learned trading by working on the floor of the CME. I learned by watching (firsthand) some of the legends of the game: people like Leo Malamed, Larry Rosenberg, and Richard Dennis. Most people dont have my very fortunate experience. IMHO a good book to read which will help you get an accurate flavor of trading is "The Day Traders Advantage" by Howard Abell. Dont take everything said in the book as gospel but the emphasis on the mental part of the game is accurate.

The best information is had by talking to as many people as possible: try to concentrate on finding and talkign directly to successful traders. Expect to start off slow - there is a significant learning curve - and remember that the market today is closer to "normal" than it has been in recent years ....be critical of people stating very high performance over the last few years (not typical).

...vj
 
Thank you so much for sharing your experience here. I love that. Yeah, I don't want to just do something I am not familiar with. So I chose to do some research first after I got offer from Generic. Generic is a great firm in my mind at least. They won't need my money and won't need me to pay for the loss. A lot of person here said that contributing money will help persons to study more. NO! I totally agree. Contributing money will let person not very easy to focus on trading, especially whenthe person are in loss. But I am not that kind person who are not responsible for the money, that is why I want to know whether I am good and whether I can afford the loss and whether I have 6 month to 8 month living expense before I go.

Trading is tough, but it is fun. Few occupations are like that. I like challenge at least now. I want to compete with persons who are smarter than me, tougher than me, since I believe in that I will learn more and perform better especially in these competitions.

Now the sorry thing for me si that I dont' have a mentor. I will try to find one if I can. It is important to a new guy. To tell the truth, after doing research in this industry and the market, I am confident that I am able to enter it, but it doesnot mean that I can win, however, at least, I won't be regretful in the future.

Roumeo
 
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