Activist investing continues to gain advocates — and capital; according to Hedge Fund Research...
Good Trading MUST Feel Un-Natural... Here's Why (Part 2)
01/16/2008 12:00 am EST
Ironically, in a matter of speaking, yes. Most traders go into the market thinking trading is easier than it is, are under-capitalized, under-educated and overly optimistic. The winning trader goes in expecting to lose.Why is this smart? Because you will lose.Trading is a profession like any other, and it requires a lot of education and experience before you become successful. While you are gaining experience you will be losing money. Seriously, it's completely ignorant and frankly insulting to professional traders, to think you can read a few books, take a course or two, and then start making money in a week or a month or a year or two.
Would you have that expectation of becoming a doctor, or a lawyer or a professional football player?But for some reason people think trading is easier than other professions. It isn't.I can't tell you exactly where trading falls with regard to "difficulty" in relation to other professions, but I can tell you this-new traders grossly underestimate the difficulty. I'll grant you this. It looks easy from the outside. It is "deceptively difficult." It's a performance-based profession and very, very psychologically demanding. It's more like being a professional athlete than being a doctor or lawyer. It's less analysis and more performance than most think. Now, back to the beginning of our article .
You are part of the mass psychology. The reason your trades seem to go against you in such an uncanny fashion is because you're thinking and behaving like the masses. Don't get down on yourself. What you're doing is simply "human."
As much as we pride ourselves on being individuals, the truth is our common traits are much stronger than our individual ones. Humans are by nature social beings. We have a herd instinct.
So when we trade, that instinct comes into play. It's the most natural thing in the world and everyone does it, because it's instinct. But to be successful at trading, you must stand outside the herd. So in a way, it can be said that .
GOOD TRADING IS UNNATURAL!
As I've mentored students in my home I've been able to witness this first-hand. Student after student honestly believes they are doing something different from other traders. But as I watch them trade and look at their trading logs I see them all making the exact same mistakes! All of them-without exception. It's almost eerie!
So how do you overcome those natural instincts? Stay tuned for Part 3 tomorrow.
By Barry Burns of TopDogTrading.com
Related Articles on STRATEGIES
While the Dow has not stayed on the balance line we’ve discussed in recent updates, last Frida...
We must apply a high degree of logic in our daily lives to survive and prosper. Yet, in trading, the...
This week is about inflation, inflation and inflation! Today, the US CPI (Consumer Price Inflation) ...