In a nutshell any investor that whishes to acquire an asset and dispense with that asset over time can be called a ‘trader.’ Whether you are investing your time and money in stocks, forex, commodities, bonds, houses, apples or oranges, any investment decision over time involves the aspect an art of trading.
Essentially there are 2 types of trader: the technical analyst who will chart price action over time with representations in diagram of the past and present, and then there are the fundamentalists who look for key economic and environmental data such as monthly housing starts, current production capacities and weather reports. Within the framework of technical and fundamental information there are traders who combine both aspects in order to provide the best form of synergetic analysis of price action.
In this investment context there are traders that have a short and a long term investment horizon. There are those traders that have a quick temperament and are best suited for fast moving situations and there are those investors that like to take a few steps back from the market chaos to get a clear long-distance perspective and hear themselves think over a longer time frame. Neither mindset possesses any distinct advantage over the other. Really it is all about you and your character as to whether you are able to digest an process information very quickly or whether you require a little longer time.
In the long run the short term trader, usually day trader is at more of a disadvantage than the short term trader. A few years back I worked as a day trader in the forex and swaps market and the stress of working 2 time zones for perhaps 10 hours a day gradually mounted so high that it began to affect my quality weekend time for recuperation. Stress may come in all forms and usually appears most under duress. Certainly day traders face the emotional pressure on top of the market pressure and even if one’s temperament is suited for fast action, in the long run, it does take a toll on the mind and eventually the body.
When I was first recruited in London I was 20 years old. To my amazement I found out that most of the young traders I was working with were 20 year old East End London boys recruited from the early morning fish and veg markets! For all my education I was quite shocked to discover that education meant nothing at all. That was out of the window from day 1! But what really counted was ability to think fast and scrap for your life; and that’s exactly what the East End London boys could do; fast talking, fast thinking, without much qualifications to their name, they could take on risk and in a blink of an eye book that risk! So if you are not under25 years old then honestly the forex markets are no place to be because you can get bruised everyday. That’s just the facts of life about the markets for a day trader. Good traders that survive over the long run can book 4 out of every 10 trades as a scrap and maybe 2 out of 10 trades as a home run. There are no geniuses in the markets. Otherwise the Bears and Lehmans will still be around.
Mental synergies in the markets are built through years of experience. There is no glamorous fashion parade here. It is a daily grind. There are no quick term solutions to wealth building in the financial markets. For anyone fresh thinking he has a distinct advantage a humbling experience awaits him. Having traded through complicated OTC money markets as well as exchange traded products I think I am well-positioned to say that the best form of trading for anyone that has not worked in the institutional financial arena is as a long term investor looking for position entries and trades that can hold over weeks until price objectives are met. The futures and stock markets are well suited for the non-institutional trader because access to information is fast and execution has improved with new Internet technology.
Above all what makes a trader take a synergetic decision fast depends on the years of data accumulated that helps the brain to build layers of neurons upon neurons of powerhouses of information. Good traders are not born but they mellow through the years and become better with age. The best traders are able to combine years of familiarity with intuition that can only come as more trades are executed. Therefore in my conclusion I must fairly say that in the financial markets at least mental genius is not a gift from heaven but a grade of accumulation in one of the most stressful schools of life: the school and art of making money.
Yours sincerely
TraderSynergyBrain
No comments:
Post a Comment