Why do noobs make money?

Discussion in 'Psychology' started by Kubinec, Apr 29, 2010.

  1. Kubinec


    It seems, at least to me, like it's a commonly accepted wisdom that the first few trades a rookie trader makes are profitable, and form then on they go downhill.

    That got me curious.

    I remember a year ago when I first traded at a prop, my first day I was in the positive more than on any of the rest of the days I spent at the prop.

    What is it in the mentality of a trader that enables him to make money in the market when he's ignorant, and start losing money once he supposedly becomes more *aware* and educated?

    Sort of a paradox.

    My own opinion on this is that when we place our first trade ever, we wait to see a move in either direction, and trade on the momentum / with the trend, as it seems like the most obvious method to take money out of the market. This is indisputably the only proven consistent method to profit from trading. Yet something happens in the trader's head that changes the perception afterwards, or at least that's what it seems like.

    I remember joking with my fellow proppers that if a firm wants its new traders to be profitable, they should teach them to just trade the opposite of where they think the market will go.

    Imagine what would happen? 90% of traders would be profitable :D

  2. The market knows when it's your first trade and they rig it so you win just to make sure they hook you in for a lifetime of losses. :D
  3. Anyone can get lucky even a newbie. Besides they don't know any better so they swing without fear. Then they get lucky and most often the law of averages catch up and they blow up or have serious DD.
  4. Kubinec


    Hahaha, seriously, right?

    Even before I worked at that prop, I was interviewing at another prop and they had a demo day for applicants where each of us was placed on a sim. I'm not shitting you when I tell you that I did not even know what a candlestick chart looked like at that time. I basically ignored it as I didn't understand the chart, and I only looked at the price spread. It was some blue-chip. I saw it going up, then slightly dropping, going even higher, slightly dropping again, etc, and from that I decided to buy. At the end of the day, I made $350, with a bright smile from ear to ear bragging to others how much I made. :D

    Funny times.
  5. 377OHMS


    "Why do noobs make money?"

    Because they don't know what they don't know.
  6. Andyroki


    noobs make money because they don't know any better. As you think you are learning you go on emotions and start to predict the market, and we all that not many can. But but but......

    There is an easy fix. As you consistently loose money do the opposite. If you are thinking about buying a stock, sell it short. Do this until you start to loose money than again do the opposite. :D
  7. Andyroki


    I forgot to add. You can try the revers approach.

    download TurTrades from Turtrades.com .

    TurTrades lets you trade in the past and if you click "Next Day" it will fast forward a day. This way you can test the go opposite theory.
    Basically if you think stock is a buy sell short. If you think stock will go down buy it. Try it, it is kind of fun.

  8. That's basically it. The reason is that a newbie is not unnecessarily overcomplicating everything at the very beginning.

    Then, when he begins "analysing" the charts, the losing ensues. This is because he's starting to look at the price lines, that are really not continuous lines, but just connected dots, a.k.a events. The market consists of events (price hitting new high, last low, volume drying up etc.), not of some animated graphics that supposedly can be used for prediction.
  9. Lethn


    That's odd that you said that because I used to do nothing but lose most of the time when I first started, now I'm just not losing, the profits are slow but at least I'm not losing :D
  10. i remember the first game i bowled ever, without any training or anything, i had like 3 strikes.

    trading is like bowling. any lucky mofo can get a few strikes now and then, but to bowl 250+ game after game for years takes skill.
    #10     May 2, 2010