The market attracts those least suited for it. Why do those people you mention trade? Imagine if they didnt have an edge....
Nodoji SAID: I've never traded e-minis, but I would guess the same S/R behavior applies to investors and longer term traders with regard to these market indices as a whole. The mental toughness you need as a trader is the patience to wait for strong setups based on S/R levels, improving your probability of success, rather than the desire to "make something happen" where action is unwarranted. The other mental toughness you need is the ability to cut losses based on an advance plan WITHOUT HESITATION. Donna Nodoji, EXCELLENT, SUPREMO, great stuff. You trade stocks, fine and dandy-whetever floats your boat. So from a e-minei guy to a stock person YES the support and resist levels work the same because humans are far less advanced in the innate life sustaining requirements of Fear and Greed and the basic FIGHT or FLIGHT response when confronted with danger. Traders think they are smarter these days because they have whiz bang computers and all that jazz but in reality all that jazz has just caused more of a BIG BUZZ in their heads because Fight or Flight has not kept up with electronic advances. As humans we are SLOW to advance in the big picture of development. We can build THINGS. we can develope THINGS, we can change a lot of THINGS but we are still who we are. Humans have not developed much since women discovered men in caves and started down the road od domesticating man by starting when the little lady put curtains up in the cave. men and women have moved out of the cave but they still think in many respects like they are still in there.
from the following artical: read the whole thing and get a idea of some of the evils of money without brains. ......................... Starting with the tax cuts by US president Ronald Reagan of 1981, and especially after the near-worldwide evaporation of socialism in 1989, the regulatory, budgetary, and especially tax policies of the major capitalist democracies began unequivocally to favor the rich. This meant that greater and greater pools of free capital, once spread more or less evenly in smallish amounts among the broad middle classes, began to be concentrated in fewer and fewer hands of those at the very top of the income pyramid. This process barely slowed with the election of center/left-wing governments in the US in 1992, Australia in 1993, Britain in 1997, and Germany in 1998, and it continued after the US victory of George W Bush in 2000, and the passage and implementation of tax cuts heavily skewed to the rich by his administration in 2000-01. The REST OF THE ARTICAL: http://www.atimes.com/atimes/Global_Economy/HG06Dj02.html
Very good point! Never thought about it that way, but in so many ways there is truth to your statement.
what is an edge anyway? someone please define "edge" in a trading circumstance. maybe I have one, maybe I dont. if I do have one, I'm not sure how I would define it. if I dont have one, I dont need one. my income from trading is greater than my expense from trading, so what does that mean?
I define an edge as a statistical probability that will work in your favor. The analogy between a gambler going against a casino which has a mathematical certainty against the gambler on each and every decision and trader who has an edge in the market is not apples to apples. Why? Probabilities (trading edge) and certainties (casino expectation) are not one in the same. No doubt, if a trader has no statistical probabilities working in his favor, it doesn't matter if he is like a mindless robot--it won't matter, he will lose; but having this edge does not guarantee he will be long term profitable if he has no discipline. In addition, trading edges come and go as more and more participants come into the market and compete. The casino needs no discipline--its positive expectancy will never change as long as the current game rules/payout remain the same. All things being equal, a gambler who continually plays in a casino will eventually lose his entire bankroll despite intermittent runs of good luck. I hope that clears this issue up.
You are right. One again I never said having an edge was not important. I never said it wasnt necessary. It is VERY necessary, and very important. However I believe the mental aspect to be even more important.
I'm focusing more on my mental state in trading than anything else right now. As far as I'm concerned it the toughest part, so it deserves the most of my attention right now.
As Yogi Berra once said, "Whatever you do in life, 90% of it is half mental." Hope that clears things up.