Good Trading MUST Feel Un-Natural... Here's Why (Part 1)

01/15/2008 12:00 am EST

Focus: STRATEGIES

Barry Burns

Founder and Owner, Jaguar Trading

Does it ever feel like there's someone in your monitor watching your every move and trading the other side of the market, making your trades fail?

I've had many students make that comment.

Some of them were pretty serious and actually accused their brokers of trading against them. I had one student send me a copy of a document from a broker that stated that they might indeed take the opposite side of a position he has. He sent me a copy of a scathing letter he sent them accusing them of doing just that to purposefully profit from his losses.

I know it may feel that way sometimes, but I don't think anyone's broker is all that interested in a newbie's $20,000 trading account. Sorry, it just doesn't really hold much interest for them.

Still, it cannot be denied that it is often uncanny how the market seems to do the exact opposite of our trades over and over!

  • It does feel like it's intentional.
  • It's so consistent that it really seems there's someone watching us.
  • It feels like there's a real intelligence trading against us. It can't be chance.

OK, the truth is that it isn't chance. The truth is that there truly is an intelligence trading against us. But it's not what you think. It's no one trader or trading firm. And no, though it may feel like it, it's not the devil. It's the collective intelligence of the market. In other words, it's the mass consciousness. In lay terms, it's the masses.

The markets move based on the principles of mass psychology. In trading, a small number of people make a lot of money and the masses lose. So to be profitable, you must be one of the small minorities. Now here's a mind twister for you:

Do you think you will be one of the few who can be better than the rest?

If you do, then congratulations, you lose! Why?

Because the majority of traders believe they will be part of the minority-the winners. So simply by saying you will join the minority, you are expressing the feelings of the majority and have established yourself solidly in the camp of the mass psychology!

Ouch. My brain hurts now.

So what's the alternative? To think you will be a loser? Stay tuned for Part 2 tomorrow.

By Barry Burns of TopDogTrading.com

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