Trading is simple; it's just not very easy. Can the average guy make a living at trading? No. If he has the necessary patience, discipline, perseverance, and drive, then he isn't an average guy.
Can an average guy make a living at trading? Among other things, that depends on what the definition of *average* really is. Persons of average intelligence and above average control over their emotions can and do make a living from trading. Persons with above average intelligence, with poor control over their emotions can blow out a large trading account in a matter of a few months. Persons with above average intelligence and great control over their emotions can have a drawdown streak that can shake their psyche to their very core. To me, trading is not about beating the more experienced sharks etc. that are out to get your money. I think that that kind of an analogy is a crock of $h*t that someone with a big ego dreamed up one day when he was patronizing one of his fellow traders. (ie: I'm a shark and I'm gonna get ya boy") Somehow it became a metaphor that stuck well enough for other traders to pick up on and plant it in their own minds and then repeat it often enough until it seemed true. It's not about another all wise, all experinced trader with a T3 connection to the internet and a better charting program with a faster order execution platform that is going to take your money if you don't have just as good or better than he. (well maybe for scalpers) But Ed, you were talking more along the lines of swingtrading or if daytrading, holding longer than seconds or a minute. A decent reliable charting program and a decent reliable order execution platform should suffice well enough with a decent high speed internet connection that is capable of handling a fair amount of data during peak trading times. These can be had as a package or subscribed to seperately. Some are better than others, ALL of them fail from time to time and none of them are any better than your connection to the internet or how good or poorly the backbone of the internet is functioning at any given time. (or in the case of globex....well...that's another story...lol.) Granted, I think that techincal analysis can be helpful with providing some insight into gaining a higher probability of making more entries that will become profitable trades. However, in my opinion, exits are much more important than entries and it is through disciplined exits that a trader either makes a living trading or doesn't. What I'm trying to say is that having a very good understanding of technical analysis is definitely a very big plus if not an essential, it still, in and of itself does not make one a good trader. Understanding the markets and what makes them move takes time and (unfortunately) money to learn. Rare indeed is the person (average or super) that comes into trading and just blows the doors off of the markets and does not have to go through trials and tribulations at some point. Even armed with a thorough knowledge of technical analysis and other first hand experience of hows and whys of market movements, a trader has to have or develop a very sharp knowledge of self and then exercise discipline and stick to their plan, managing their money in such a way that after a period of time, their profitable trades are greater than the sum of all their unprofitable trades - commissions - computer and isp costs - trading platform/ charting costs and utility bills, phone bills, groceries. house payment/rent, the whole none yards of ammo! Many traders can't handle it - for whatever reasons !!! Anything can happen at anytime and at that moment all the T/A in the world takes a distant second to money management. Trading is 90% between the ears and strictly exercising discipline is key. If my perception of T/A is screaming short and the market just keeps going up - then the heck with my perception of T/A, either I change my stance and go with the market at that moment or at least stand aside and don't get run over by a moving train, no matter what *I think* the markets *should* be doing based on my perception of charts, logic, whatever. Missed money beats the heck out of lost money. For most, it takes time and money, passion and dedication, and the utmost of discipline to learn this craft. It takes being able to admit when you're wrong (quickly) and forget it (just as quickly), so that one will be able to enter on the next opportunity when the market presents it. It takes the abilty to sit tight when you're right and not jump too soon, too often. One CAN go broke taking profits!!! Trading is about learning to make good entries, but more importantly it's about learning to make good exits and above all, it's about what's going on between those ears and how that can affect how well a trader exercises discipline and adheres to his\her trading plan. I believe that there is a fine line between trading to preserve capital and trading not to lose and the latter will inevitably defeat a trader. (I wish I knew how to better convey my meaning here) I suppose that some of these traders know what I'm trying to say. The more I read it, I'm not sure that I understand it...lol... but it's about staying focused and cutting trades that are going against you but also it's about allowing them enough wiggle room to filter through the noise (so to speak) and then allowing them to perform better than just at or near breakeven when they wiggle into profitabilty. For me - this is one of the toughest times I have at sitting tight - after the trade has gone against me (has not hit my stop) and then comes back to me, then sitting tight and letting it work further in my favor = staying out of the kitchen and allowing the stew to simmer until done, so to speak. *To me*good trading is about having and using the discipline to stick to my game plan, no matter what. It's about not looking at an unprofitable trade as a bad trade if my rules were adhered to. It's about not looking at a profitable trade as a good trade if I broke my rules. It's essentially about following my rules and having more cash in my account (over time) than I did last *whatever*. (I suppose that this statement is relative to indivduals and indivudal's learning curves so I said *whatever*) It's about having to pay taxes at the end of the year. Anything less is either learning curve or just plain and simple, not being profitable. Good trading is not about beating the markets, sharks, market makers, specialists,or as quadz 1,2,3,4 would say, " the manipulators" or whatever. Good trading is about keeping self from being own worst enemy and teaching self to become own best friend. Anyway, it's getting late and I'm starting to ramble in my own mind - what's left of it Best regards to you Ed in whatever you decide to do. PS. I think that when someone decides to actually make a go at trading for a living, then they just lost the title of *average person* - whether or not they acheive lasting success with it.
PlumLazy, You have the wrong handle. The time, effort and thought that went into writing that post was anything but plumlazy. Natalie
I don't usually like to tell someone that they had a good post because it just takes up non-trading related space. But; NICE POST Plum!!