Thanks for the book links mav, added to my list. I'm too busy at work to be trading right now but I still enjoy following this thread. I hope you guys all have your best trading ever this year.
THis is something that confuses me a bit when I read this. Maybe you can clarify. To me, it would seem that trading has a few different phases once you are on the road to success (assumming of course you eventually make it that far, which is a big assumption.) But once you have something, a style that works, in a set of conditions, it seems like things would get simpler, and less intensive. I understand that the markets are constantly changing, and evolving, and you need to tweek things here and there to maintain your edge or success, but when I read that people are spending 60 hours, it boggles my mind. I can see spending alot of time obtaining, creating, and testing a system that works, but once you have it, isnt it just a fine tuning exercise? What am I missing? I mean we arent analysts poring over sheets, and interviewing managment. Doesnt it get to the point where less is more? and that spending so much time researching and anaylzing goes against what successfull traders do? To me, it would seem that spending so much time coming up with a reason why x should happen, and y shouldnt, would do more harm than good. For example, being aware that a certain number is being released at 10:00, or that earnings are coming out on a certain date is 1 thing. That way you can react to how the instrument behaves, and know that a signifigant event is on the near horizon so you want to possible get out. But forming an opinion on the reaction or lack thereof on a qualitative basis seems like a no no. Look at CNBC. TO me, it seems like 90% garbage. All the analysts and strategists explaining everything in hindsight seems to just complicate the process. Or "traders" coming up with a complex scenario story as to why things are happening. I am thinking out loud here, thats all.. Can you maybe break this down and point out flaws in what I am thinking?
Happy New Year to all. I believe 2012 will be a profitable year so long as we all have a plan and execute it with the help of ACD, (and of course, Maverick and the many others who lend their time and experience to the thread). Best Wishes in 2012!
Great question mdl. Let me just say, Fisher and I are in complete agreement on this. Fisher has stated many times that he reads everything under the sun. He probably spends 60 hours a week just collecting information alone. He has stated this on one of his videos and in another article online about him. This is the part I truly believe most guys don't get. Trading is really really hard. There is no point in your life where you just have it figured out. Where you have a system and you just wake up and execute it. That is a pipe dream. I wish trading worked that way. But it doesn't. I have stated this several times on this thread that ACD is about "price action". Price action is a very long drawn out process. It requires one to know "everything" that is going on in all the markets and have the ability to ascertain what exactly everyone is focusing on at that exact point in time and how they are reacting to it. This is an up at dawn, round the clock process that cannot be streamlined or minimized so one can spend the rest of their day at the beach. Honestly, this is why most of the guys in my office failed. They never understood this. And believe you me, I beat it into their head on a daily basis. There is no point in your life where it starts to get easy. You have to work at this every single day the rest of your life. This is the part I have mentioned on here where guys realize this and begin to lose interest in trading. They get told in seminars in hotel banquet halls and in books that they too can make a living trading working only a few hours a week or on the weekend and who the hell wouldn't want that? Hell, I would love that. I do have other hobbies I would like to pursue. LOL. BTW, this has nothing to do with analysts over analyzing things on CNBC. They are talking about long term fundamentals for the most part. I'm talking about price action. Two very different things. I hate to break anybody's heart here. But Fisher has talked about this. So has Paul Tudor Jones. Two of the greatest trading minds we have have both said exactly the same thing almost word for word. And I am in complete agreement with them. I can assure you that the market pays no mind to squiggly lines on a chart or what "my important levels" are. The market is a million times more complex then that. Believe you me, I would love to be able to trade from a yacht entering trades when two squiggly lines crossed each other. But that is a fantasy. The dirty little secret most parents don't teach their kids is that to get anywhere in this world, you really do have to work for it and don't stop till you think you have enough. There are no cruise control buttons in life.
"The secret to being successful from a trading perspective is to have an indefatigable and an undying and unquenchable thirst for information and knowledge. Because I think there are certain situations where you can absolutely understand what motivates every buyer and seller and have a pretty good picture of what's going to happen. And it just requires an enormous amount of grunt work and dedication to finding all possible bits of information. You pick an instrument and there's whole variety of benchmarks, things that you look at when trading a particular instrument whether it's a stock or a commodity or a bond. There's a fundamental information set that you acquire with regard to each particular asset class and then you overlay a whole host of technical indicators and that's how you make a decision. It doesn't make any difference whether it's pork bellies or Yahoo. At the end of the day, it's all the same. You need to understand what factors you need to have at your disposal to develop a core competency to make a legitimate investment decision in that particular asset class." Paul Tudor Jones
Just curious. What type of stuff does he read? The reason I ask is because I like to read stuff at work during my "down time", but seem to have a hard time finding stuff that interests me. I've read all the highly regarded trading books. Some more than once, or twice. Happy New Year John
I remember Fisher saying everything that you mentioned in one of his videos also.. THat is kind of why I rolled my eyes when he also brought up 8th graders making money, and the KISS principle. I guess I was frustauted b/c he was talking out both sides of his mouth so to speak. But I am glad you brought up price action, b/c that was another point I was going to post about. Just from reading other ET threads, I always thought PA was just looking at formations, and S/R, pivots, and other principles that dealt with charting. Finding inflection points, where decisions were likely to be made, and then trading the support or failure, of the setup, while limiting downside risk. But what you say makes alot of sense, in thats its more based on how something is behaving relative to something else. And you eluded to the fact that their are certain tips and tricks that can give clues as to what is really happening (I think one was AAPL having a tendency to sometimes lead the market), or if the market is down, but certain sectors begin to turn up or show strength it might be a false breakdown, etc.. These are things that I never looked at in the past, b/c I wanted to believe (want being the key word) that decisions or trade setups behaved in a vacuum, and what the market was doing shouldnt really matter that much. What happened was my timing was all off. What I thought might happen was often true, it just didnt happen when I thought it would. And when the market cooperated and it moved, often it moved so quickly I missed the move. I then said screw this, why bother with stocks, since I have to be able to read the market, just trade the SPY alone, and master that, then everything else will fall into place. That also provde difficult, since alot of the time it is full of false moves, and difficult to read from what alot of people say. So I guess my attempts are just examples of a trader learning lessons, etc. Anyway, thanks for the insight.
Going from memory, he mentions 2 specific services in one of his videos. (The last video I believe). One is a news service, and the other was a a website. I think the gartman report was one service, and "Depka.com" (a middle eastern news site, probably used for news related to oil I am guessing) was the other mentioned in the video.
Depka was a great news service at the height of the Iraq War. It was an Israeli news service that reported live unedited coverage of the war. It not only reported events that US news media didn't report, but it reported it hours ahead. This was just one of many news services. Fisher reads everything as do I. Could be the WSJ, Bloomberg, CNN, financial blogs, Reuters, you name it. He said he would read hours upon hours of news and maybe only one small item would prove valuable but it paid him back 100 fold. This reminds me of my days trading listed stocks. I would be the first guy in the office every morning in NY. I would read through every single news item on AT news. Of the few thousand news items I would read, maybe, maybe one or two would have any value. But they more then paid for themselves. Guys after the close would come up to me and ask me why I traded such and such stock. I said there was news. And they said what? And I showed them the tiny headline buried in the news at 6:48am. And they would say, Damn...missed that. It's a tough business.
Let me address this. I think what Fisher meant, is that people over complicate the "execution" of trading. Trading itself should be easy enough for an 8th grader to do. That's just using ACD to actually execute a trade. Know your bias, know your entry, what you are risking, and where you get out if you are wrong. I could teach that to an 8th grader. Now, finding an edge...that's a "little" bit harder. LOL. You have to work for the edge. I think I'm stating the obvious here. But actually executing that edge should be child's play. Does this make sense mdl? So I don't think he was talking out of both sides of his mouth. He just talks really fast.