At any point in time, there are hundreds of factors which seem relevant to a certain market. Traders and investors often and naturally rely on the more prominent news events that hit the headlines to make their trading or investment decisions. Most of them, however, often buy near the highs and sell near the lows. Why is that?
Trading the financial markets, whether by way of fundamental or technical analysis, is not so much about “predicting the future”. In fact, no one can really do that. Many traders, while complaining about the “lagging” nature of some indicators, mistakenly explain that these lagging indicators are of no value because they are derived from historical data. The ridiculously simple truth is, quite plainly, that we have no alternative! Only historical data is available; there’s no such thing as “future data”! Whether you’re using technical or economic indicators, all analysis is derived from historical data.
All forecasts are a matter of probabilities, not certainties. What we can do, at best, is to use a reliable combination of analysis tools (technical or economic indicators) to attempt forecasting the future in a probabilistic way. This is why all trading and investment decisions must come with a plan for dealing with losses, i.e. those scenarios where even high-probability forecasts turn out wrong (nothing in the future is zero-probability or 100% certain). Many traders and investors have plainly forgotten or willfully disregarded the need to do that. Winning traders and investors are those who can take losses when their views are proven wrong, while ensuring that the gains received when they are right are larger than the losses incurred when they are wrong. The philiosophy of successful trading is really as simple as that.
The accumulation of wealth is a common goal among many people. Despite the many ways in which people seek to achieve their financial goals, very few really achieve financial freedom. In my years of working with traders and investors (and business-people as well), I realise that the mindset very often outweighs the methods in one’s pursuit of wealth. Also, I have seen many people working so hard to accumulate their wealth, only to lose it when the tides of the economic cycle turn around. On the other hand, there are those with humble beginnings who “unexpectedly” achieve huge financial goals. One of the more reliable indicators of one’s wealth-creation ability is whether the wealth created can be retained or made to grow even when the economy and stock market turn bearish.
We all know rationally that markets don’t remain bullish all the time. Yet, I’ve been continually surprised how ill-prepared most investors (including many well-heeled and sophisticated investors) are when it comes to preserving investment capital or even growing it during rececssionary periods. Even if the recent recession were to have ended, we must not manage our finances and investments as if the market is going to be bullish all the time from now onwards. As a successful trader and investor, one of my most cherished beliefs about the markets is based on what the legendary trader, Jesse Livermore, once said, i.e. “The market is designed to fool most people most of the time.” Even when I conduct my training workshops, I continually tell people that long-term and sustainable success in trading or investing (and I suggest, even in managing your finances and businesses) is largely dependent on your ability to distangle your thinking patterns from the crowd. Indeed, I’ve noticed again and again that most people have a high tendency to “buy high and sell low” with regard to their investments.
Winning traders and investors are different not so much because of their intellect or educational qualifications; they distinguish themselves primarily due to the way they think - the way they synthesize available information to form superior decision-making strategies. Being able to emulate the successful traders, investors and business-people on this regard will go a long way towards your financial success!
Incidentally, there is an upcoming 2-day event - “Wealth Academy Expo 2010″ (22-23 May, 9 am to 8 pm, Singapore Expo Hall 2), where some gurus (successful traders, stock investors, entrepreneurs, etc) will share their winning experiences with you with regard to various possible streams of income and wealth creation strategies. If you’re truly motivated and committed to stand out above the majority of people in achieving your financial goals, this seminar is a very good starting point of your winning journey!
Because this event is heavily subsidized by sponsors, the tickets are available at very nominal rates…
PRICING DETAILS
VIP SEATING: SGD199.00 …Seats are Going Fast
GOLD SEATING: SGD69.00…Sorry. SOLD OUT
GENERAL SEATING: SGD29.00…Running out soon…
Venue: Singapore Expo Hall 2
If you want to reserve for yourself a seat at this seminar, you may book online at www.wealthacademyexpo.com.
You can also call AKLTG Singapore Office at 65-62740105 immediately during office hours to book your seat. If the lines are all jammed up, send an email to info@akltg.com and someone will call you back.
“Peak Performance Forex Trading” brilliantly outlines what it takes to lift yourself from the vast majority of traders. Quite simply, it guides you through the essential elements of building your trading business through systematic and thoughtful planning. This book is a must-read for anyone who is genuinely motivated to successfully build a legitimate and sustainable business through Forex trading!
Many traders and investors often experience the frustration of the market going against them “most of the time”. Many people say that “it always goes down whenever I buy, and it always goes up whenever I sell!” Is it a matter of bad “luck”? Or are there some very basic reasons why most traders lose money?
Without a highly systematic and controlled way of engaging the markets, the markets are always rigged against us. It is not unlike going to a casino, where your chances of making money in the long term are practically zero. In the casinos, all the games are rigged against us in the sense that they always have an edge over us. An “edge” is simply a statistical advantage that ensures that you will lose money if you stay long enough in the game. In trading or investing, that “edge” is largely due to many weaknesses in the human psychology, and the interactions between market movements and human emotions. Removing that edge is largely dependent on mastering the psychology of trading, which is far more crucual than sophisticated technical analysis.
This month’s record shows a relatively low trading frequency. Most of the trades were based on some form of trailing stops. As such, the average loss is smaller than the average win. Such exit strategies can go a long way towards enhancing the overall profitability, because we can stay with the occasional strong trends for rather long, and exit quickly when the market is choppy.
As soon as we attain a certain level of competency in studying chart patterns and indicators, the most crucial determinant of trading success lies in the ability to master ourselves. As such, I always advocate spending more time on one’s mental strategies, rather than endlessly pursuing new and sophisticated analytical tools and indicators.
