Trading is About Return on Equity, Period
There are many paradoxes in our business for sure. My favorite is the proportion of equity that Forex dealers spent on advertising and sales (very, very large) compared to education (very small).
However from an account holder’s perspective the biggest paradox to me is that people think that trading is about getting rich, when trading is in fact about avoiding financial mistakes and learning how to increase the return on your money. It is true that because of the fractal nature of markets, and leverage, that an individual can make a tidy sum of money under the right conditions, also known as being in the right place at the right time and taking an oversized risk. But even more important for the bulk of us are the basic lessons involved such as recognizing exhaustive price behavior and long-term trend line violations. Such simple observations as these are what prompted many of us who have lived through a few cycles to avoid real estate exposure in 2005 and 2006 and move our retirement investments into cash in 2006 and 2007 – not bad trades in retrospect.
Sometimes just before I fall asleep for the night I start doing the math in my head on how much money I could make if after the next winning trade, I double down on each successive trade and am right just 5 or 6 times in a row – after all it would be the markets money I’d be using. But the next day when I sit down on the screen I forget all about that because it’s not in my trading plan. And at the end of the day, if I did see a set-up worth the risk, and was focused in enough to take the trade, I’m very happy if I had a winner around 1%, or a loser around ½%.
I try to always keep in mind that no matter where I am in life the only way to make it from here to there is one step at a time.
Jay Norris
Hello Jay
Always look forward to reading another one of your useful articles. Thanks
Hi Kevin,
Thank You much. Have a great weekend!
you forget the young traders who are always looking for an automatic SYSTEM that will do the work for them. Sighs, well I guess everyone has to go through the phases and realize that the market is better traded with simplicity
Thanks Don, Good one!
There is much potential in a grey box however, where the computer is constantly scanning forex, futures and stocks for set-up and signals which we would deem to be ideal and sends us alerts to these. My cell phone could then become like an alarm clock, beeping out trade alerts every time things lined up or diverged. We feel strongly that having made it up through the ranks as discretionary traders really lends us a leg up in working w/ programmers now. From our perspective the computer will never replace the brain, but instead become an extension of the brain!
Stay tuned to Trading-U!