Trading Being

Making Sense of Trading

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The Market is Always Right 1

Many trading experts refer to the idea that the market is always right. This saying means that the ultimate authority on market behavior is the market itself. Market behavior is reflected in price. Opinions about market direction abound all over popular media. Some of these opinions are based on economic events or on fairly robust indicators that predict where the market will go. The only information that matters, however, is what the market itself is actually doing. Market behavior does not always jive with economic news or concur with the indicators. For example, the market may unexpectedly fall after positive employment numbers are released. This may occur because the news has already been priced into the market, or because the market has hit important resistance (a price at which an advance stalls), or because some other event exerts more influence on the market. The point is that when our opinions about market behavior clash with reality, then we have to accept the market is right. 

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Traders as Learners

The conditions under which we learn to trade are usually quite different from conventional schooling. These differences have implications for the factors that aid and hinder learning, and ultimately the learner's progress.

1. People who choose to trade as adults have often experienced success or accomplishment in other areas of their lives.

Implication for learning to trade

Learners expect and are used to success. The self-confidence that comes with achievement aids learning in the long run. In the short term, however, over-confidence may reduce learners' openness to trading lessons.

2. The structural and support systems often available during childhood are no longer available during adulthood, when many first learn to trade.

Implications for learning to trade

Learners must decide what and how they will study.

Learners must be capable of creating a learning structure that might include a schedule and reward system.

Learners have to rely on self-generated emotional support and encouragement. It can be difficult to find such support when one loses money trading.

3. By the time adults begin trading, they have accumulated a personal history of habits that are fairly well-established ways of thinking, doing, and feeling.

Implications for learning to trade

Some patterns of thinking are particularly pernicious to trading. A common example is the belief, "I know for sure what will happen next."

Some behavioral patterns are detrimental to trading. An example is to increase the stakes following initial loss or challenge.

Some emotional habits are bad for trading. An example is to continue an activity while feeling angry.

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Trading is a Unique Profession

The Dream

Trading does not require formal credentials.

It offers freedom from workplace rules.

It makes you your own boss.

It promises wealth.

It provides gains early with apparently very little effort.

It provides a scorecard that's easy to track.

The Reality

It takes hard work to become a professional trader.

Competent traders follow rules and are disciplined.

The market is a ruthless boss.

Many traders lose a lot of money before making consistent profits.

Initial, early gains serve to lure many into trading and disguise the treacherous nature of it.

The scorecard looks bad for a long time at the beginning of the trading journey.

[tradingbeing]

Welcome

Progress in most professions requires continual learning. Trading is no exception. If anything, learning is par for the course and the journey is endless. The market is a tough teacher who does not care where we come from, who we are, or what our excuses are. Some view the market as a contrary, psychotic entity. Others see it as a cornucopia of opportunity. Both views are valid.

We can engage the market and experience extreme satisfaction. Alternatively, we can engage it and experience extreme pain. One thing is certain, trading involves the gamut of emotions. Further, progress does not occur quickly or in a straight line. We move forward three steps, and then fall back two. The learning is intense and often painful. There are as many different ways to get burned in the market as there are to trade. But, others have done it before us, survived, and even prospered.

Great traders exist and, fortunately, their advice and perspectives are available to us. Some of this information has become a list of commonly accepted trading wisdoms. One example is, "Cut your losers." Another example is, "The trend is your friend." Psychology and education also offer information that can aid trader growth. Educational topics, such as critical reflection and adult learning, are very relevant to trading.

Pertinent subjects from psychology include cognitive biases and humility. This site examines such content along with veteran trader advice by looking at the meaning of such information, and why it matters. Sometimes, understanding the "why" can help propel us forward.

The goal is to advance our own abilities by studying traders' behaviors, thoughts, and emotions through the lenses of education and psychology.