âBy three methods we may learn trading: first, by reflection, which is noblest; second, by imitation, which is easiest; and third, by experience, which is the most bitter.â - Confucious [Ok, the original had 'wisdom' instead of 'trading'] Reflection/Thinking is the best way to find a trade. You understand the trade. Imitating a successful method is easiest, but you don't understand/own the method yourself. Experience - if you last long enough, you can work some things out by trading until some things sink in. More suffering involved than the other ways.
I have noticed, when they start buying, it is usually good to start buying for your own account you may not have much reflection but most likely you have some bitter experiences that you need to overcome hey, don't take my word for it That's just what Confucious say
Confusionist is confusing. Reflection is thinking. Without experience, there is no thinking. You can't think about nothing. Noblest is a strange concept. In trading, there is no such a thing called nobleness. We are all here to take money from other people. It's a zero sum game. I don't see any place for nobleness. If you insist there is nobleness, I am the noble one. I donated a lot of money to others. Imitation? Give me a successful day trader. Nodoji? She talks a lot, much is regurgitated from trading books. Maybe I should say books, without trading. Those authors know nothing about trading. Yes, they describe their failures very well, just like Nodoji. Everybody can describe how they failed, how they lost money: On that fateful day, oh man I still remember that day, when oil dropped half a dollar, I shorted 5 contracts, thinking it would go to 83, but it rebounded, went against me, I averaged in and added another 5 contracts, it contined to climb up, I continued to hold, eventually it killed me...... If losing traders are plenty, imitation only hurts you. Do currency, imitate them by trading US/JPY, or US/EUR, do a pair strategy. I still have no clue what a pair strategy is. But a certain prop firm is offering it as a route to profits. Well, go and imitate them. I heard a Harvard teacher traded through the firm and lost a million dollars. Imitate him, anyone? Experience? You bet. Everybody starts with an account with Scottrade. Damn, the crooks conspired with Knight Traders and front-ran me for years. If you asked about front-running on this website, the posters kept silent. Why? Most of them are working at brokererages. They try to suck you into day trading through front-running brokers. More experience with vendors, sponsors, book sellers, pretenders, etc. It seems, painful experience is the only way to learn trading. You will come across many sharks (again, front-running brokers, vendors, prop firm leeches, book sellers, people like Nodoji who claimed to be profitable, and paper traders who fabricated profit trades. Ok, the last type is victims, not villains, but they mislead other traders) on the way to success.
Problem here is you need experience to understand. Thus stage one is achieved through stage three. And by the way, avoiding bitter only leads to even more bitter and is a weakness.
So then is more bitterness (losses) better so that I learn the most? I realize we need a feedback loop for learning by experience to happen - but if you are learning in that way, you aren't understanding the mechanics of what is going on. Don't get me wrong, I think some people learn this way and can eventually make money. To learn by reflection means you are working out something like a strategy that should work based on reason.
Think it's not that linear: more losses = learns the most. But one definitely needs practical experience to really understand or more importantly accept some trading realities, such as losses. With those additions I absolutely agree with you, trading better be developed on a solid logical base.
IMITATION: When the biggest trading firm in the UNIVERSE, the FED (Treasury, whatever), says they are pumping money in.... well.....start buying. now easily up 5,000 points and the money just pours in....... IF you failed to hear the Fed, or see the biggest trend move in the history of the universe... then imitate goldman sachs........do distressed loans, put servers on the exchange, create tons of fixed income products... make an easy billion. easy