Trading is like business, not math, physics, engineering or science

[stonedinvestor]

I remember a story Dad and Mom tell when they were children but did not really know each other nor that one day they would be married. The story goes that they were both in a crowd of children who were watching a simple-minded boy on a roof top claiming he was going to fly. So all the kids were down below watching with great interest. The boy jumped of the roof flapping his wings Dad said. He promptly crashed into the ground. Years later Dad and Mom spoke of the same event and compared notes and realized they were there at the same event, when they were just small kids. Years later, Dad will be 91 this year and Mom will be 86. That event is still embedded in their minds.


God bless your Mom and dad for living so long. When I went to camp Waganaki many years ago this kid in our bunk was given some fake pot and he smoked it and then he stood on the top step of a six step walk down and said " I can Fly " and jumped off.

So I think a lot of people think they can trade stocks and what does that even mean anyway? I do this every day so I guess I trade stocks. Some LT some ST, some swings, some break outs some rescues,some retraces, some earnings plays-- it's a spin the wheel on tactics.

But take this advice-- psychology is everywhere in the market. The market is a living entity and the sooner you understand what motivates this living, greedy creature and learn to go the other way-- the sooner you will succeed in the trading of stocks, stock investing or whatever you call it.

 

[long]

Trading is a game. You are not producing anything or providing a service. If you are providing liquidity to others, unless you are a market maker capturing the spread, you are what is called in the academic literature a futile trader, which is a nice way of saying you're a loser.

To play the game well, you should be a liquidity taker not a liquidity provider. You take liquidity ahead of the majority who need it and will push price in your favor until you are no longer in the minority at which point you take profit. If you are really skilled, you take liquidity again ahead of the new majority as a reversal.

To reiterate, trading is a game. If you play it well, you can direct the money you extract from the market to productive uses such as supporting a desired lifestyle for yourself and supporting others who need support. If you are business inclined, like I am, you can partner with others who are experts in their field and need capital to run a business that produces products and provides services. Some people buy real property and collect rents. Personally, I do not like being a landlord so I do not buy real property unless I can use it. To each his own.

I’m a futures guy buy I think it’s the same in other markets. The service you are providing is assuming someone else’s risk. When you exit the market someone else is assuming your risk. Assuming another’s risk allows them a degree of certainty in their finances.

 

[murray t turtle]

Trading is a game. You are not producing anything or providing a service. If you are providing liquidity to others, unless you are a market maker capturing the spread, you are what is called in the academic [....LOL my turtle insert] a f.... trader, which is a nice way of saying you're a ..........

To play the game well, you should be a liquidity taker not a liquidity provider. You take liquidity ahead of the majority who need it and will push price in your favor until you are no longer in the minority at which point you take profit. If you are really skilled, you take liquidity again ahead of the new majority as a reversal.

To reiterate, trading is a game. If you play it well, you can direct the money you extract from the market to productive uses such as supporting a desired lifestyle for yourself and supporting others who need support. If you are business inclined, like I am, you can partner with others who are experts in their field and need capital to run a business that produces products and provides services. Some people buy real property and collect rents. Personally, I do not like being a landlord so I do not buy real property unless I can use it. To each his own.

%%
Good points, my comments apply to trading-investing + business+ business games ;
except that's wrong =wrong '' not producing anything or ..service''
Savior ,say you + others mostly profit + cut losses some [exspences].In both of those/ helped brokers, market makers/specialists.......................+ Helped myself profits.
Stocks/ETFs also help raise capital.....................................
Ren Tech= good name , not that'$ not the only way to make money.
Just because i felt better giving a way about a half ton of pears[ about 50lbs per 5 gal bucket if i remember right , ] does not mean pear growers are better than market makers or turtles/ all are needed. Thanks.
The whole town said/
he should have used red/
but it looked good to Charlene \
John Deer Green . \
>17,077,777 video views,JD ,Sony Song....... Not a stock tip or farming tip LOL

 

[ForexCrusader]

I think I agree that trading is more like a business than a science. While those disciplines are structured by fixed principles, trading involves navigating the dynamic and unpredictable nature of financial markets. It demands a blend of strategic thinking, risk management, adaptability, and psychological resilience, like running a business.

 

[Wide Tailz]

Yes, exactly. The market sends money wherever it wants. Whoever has enough money can make any outcome happen, and at the moment it seems all governments except China, Russia and their allies are monetizing their huge deficits and recapitalizing their banks. It's inflation city, all over the western world....

 

[Sergio123]

Whether its inflation, or deflation or a bull market or a bear market you can still make money in trading. Not saying that you will, but you can.

You might be more prone to be a bull or a bear or have a preference for high volatility or low volatility or certain security type but you can flip and change almost instantly if you are psychologically adaptable.

But in a business - if your core product falls out of favor with the market environment then there is not much that you can do in the short term less some cost cutting measures to try to save it and keep going long enough until the environment changes.

 

[murray t turtle]

Interesting point about how physical laws are universally consistent, unlike the competitive and limited nature of business - it's a thought-provoking comparison!

%%
REALLY its more like an art;
even though 2nd law of thermo, hot cools, summer turns in to winter.
J Merriweather did real well Long Term ;
until he hit about 66.6 years old, not an exact age .I could not find out about the books he collects as of today, so just guessed those numbers based off public data .
Did check todays weather forecast

 

[doubledoubledoublecup]

For one main reason: the physical world acts equally instantly and infinitely (within our human limits to measure) on objects with physical laws. F=MA (the acceleration formula) does not have a quantity limit, nor does F=GmM/r^2 (the law of gravity), at least on our human world. You can drop 1 apple or 1000 at a time, they all accelerate the same.

However, there are only so many burger joints that can be profitably run in Mojave, Ca (or other restauraunts, for that matter). The one hobby store in town quickly shut down, even though the place is crawling with aerospace nerds that love model planes.

Competition exists in business, but rarely do physical laws interact with each other or break down under huge quantities of actions.

As traders, are we chasing obsolete methods that worked before neural networks, machine learning and backtesting, behavior modeling and spoofing came into the arena? There is only so much room for the various services we provide to the market (liquidity, price discovery). But you can't open a K mart next to a Wal mart. It will die a quick death. Remember the turtles?

Nice one, I can understand every word but you put it together the way that I can understand none of it but yet I seems to understand. Next time someone ask me what I do for living, I ll just use this to explain to them.

 

[Wide Tailz]

I appreciate that, and engineering has been a super career for me, but old textbooks still show you the math needed to design a bridge or airplane wing correctly. I threw away most of my trading "textbooks" recently because none of them provided any kind of solution to the question - what do I buy and when, and how much, and when do I sell it?

Well there is one book, perhaps, that explains it. "Beat the dealer", because it's all just a casino now, what with naked order flow, cta strategies, and even sentiment all out in the open.

 

[murray t turtle]

I appreciate that, and engineering has been a super career for me, but old textbooks still show you the math needed to design a bridge or airplane wing correctly. I threw away most of my trading "textbooks" recently because none of them provided any kind of solution to the question - what do I buy and when, and how much, and when do I sell it?

IBD books do a good job of that, W Tailz, mostly single stocks; but i use ETFs+ money markets instead.
Amazing how much USa bridges last + hold up isnt it??
Also interesting a bird + beaver builds a home + beaver dam without math;
also amazing just how sturdy+ difficult to bust a beaver dam is .[NO disrespect intended to Army Corp of Engineers/TVA]
IBD ,FFTY, ETF, sadly seldom if ever beats benchmark-SPY ;
but WSJ News Corp buying IBD for $275 ,000,000 may have eased that pain LOL
Trading - investing not only helps business, transfers risk-reward, provide profits,[P+L LOL] dividends, helps market makers, specialist, exchanges....................................
Thanks for you comments Savior, I simply dont agree with all of them;
except you are right, insurance contract is not the same as some futures contracts