What Doesn't Work
Oh what the heck - I have more time and the markets are closed, so I'll post another installment.
So how did my trading go after my expensive education? I had superior knowledge. I became an expert with option spreads thanks to INVESTools' training. I developed spreadsheets to help me analyze the profit/loss potential. I made trades. I won some. I lost more.
When the FX training became available through INVESTools, a fellow student helped me to get in on the action. With promises of 24 hour trading opportunities, less research to do, no commissions, etc., I quickly saw this as an easier way to trade. I opened an account and started to trade.
But it didn't work. It seemed like every time I put on a trade, the market would hit my stop, only to finally move where I originally planned it to go... only without me. So I sought some more help. There is always someone ready to help you when you're down in this business, as long as you have some spare cash.
Three or four software or trading signal services later I was no better off. So I decided to stop trading for a while. Fortunately, because of my earlier huge losses (see My First Post), I didn't allow myself to lose too much money this time out. But I knew I wanted to trade for a living and I knew I didn't yet have what it takes to be successful at it. So I kept looking for help.
Dynamic Trend Profile. Incite. Candlesticks. Dashboard. NetPicks. TradeGuider. Woody. Triple Threat. More and more cost... and countless hours of backtesting. I read books. I scoured the internet. I searched and kept searching, looking for the silver bullet, the Holy Grail, the magic indicator that would help me succeed. I'm here to tell you (if you don't already know), it doesn't exist.
If you are working with the popular indicators - stochastics, MACD, RSI, Bollinger Bands, moving averages, etc. - or you're into esoteric theory - Elliot waves, Fibonacci retracements, etc. - or especially if you think astrology or life cycles are the answer, forget about it. Forget them all, because none of them work. Even support and resistance levels and trend lines are a myth.
Why do I say these things don't work? Because they only work while they're working! If you've ever heard yourself (or an expert) say "It broke through support" you should wake up. Think about it - this is a contradiction in terms. If it was support, it wouldn't break through!
No my readers, we have all been lead up the garden path. This is all a bunch of hogwash - total crap. But you say: "I've seen it work. When the stochastics turned up and the price bounced off the 20-day moving average, the stock took off again."
Anyone who trades using these kinds of tools will eventually lose money. The only reason they work sometimes is because they tend to be a self-fulfilling prophecy - the masses are taking the same or similar signals to trade. This bulk activity can move the market - sometimes. Heck, even the fund managers use these tools. Ever wondered why most mutual funds lose money?
Now here's an interesting thought: the floor traders use them too. But do you know something? They use them so that they know what the herd (that's us) is likely to do next! That's one way they catch us and beat us into a bloody pulp with our own weapons.
By the way, I'm not writing this material because I am a beaten, disgruntled loser. Yes, I have lost money - a lot of it. But not this time around. I finally found what I was looking for. And I found it in a way that still amazes me. It just happened. It was there all the time and I didn't see it. I sincerely believe that the universe, through my struggling and perseverance, aligned itself to show me the way. This is not New Age mumbo-jumbo. I am a spiritual person and I believe that things happen because we are seeking them.
Do you want to know what it is? Keep reading...
Cheers,
Terry
www.TraderTerry.com
So how did my trading go after my expensive education? I had superior knowledge. I became an expert with option spreads thanks to INVESTools' training. I developed spreadsheets to help me analyze the profit/loss potential. I made trades. I won some. I lost more.
When the FX training became available through INVESTools, a fellow student helped me to get in on the action. With promises of 24 hour trading opportunities, less research to do, no commissions, etc., I quickly saw this as an easier way to trade. I opened an account and started to trade.
But it didn't work. It seemed like every time I put on a trade, the market would hit my stop, only to finally move where I originally planned it to go... only without me. So I sought some more help. There is always someone ready to help you when you're down in this business, as long as you have some spare cash.
Three or four software or trading signal services later I was no better off. So I decided to stop trading for a while. Fortunately, because of my earlier huge losses (see My First Post), I didn't allow myself to lose too much money this time out. But I knew I wanted to trade for a living and I knew I didn't yet have what it takes to be successful at it. So I kept looking for help.
Dynamic Trend Profile. Incite. Candlesticks. Dashboard. NetPicks. TradeGuider. Woody. Triple Threat. More and more cost... and countless hours of backtesting. I read books. I scoured the internet. I searched and kept searching, looking for the silver bullet, the Holy Grail, the magic indicator that would help me succeed. I'm here to tell you (if you don't already know), it doesn't exist.
If you are working with the popular indicators - stochastics, MACD, RSI, Bollinger Bands, moving averages, etc. - or you're into esoteric theory - Elliot waves, Fibonacci retracements, etc. - or especially if you think astrology or life cycles are the answer, forget about it. Forget them all, because none of them work. Even support and resistance levels and trend lines are a myth.
Why do I say these things don't work? Because they only work while they're working! If you've ever heard yourself (or an expert) say "It broke through support" you should wake up. Think about it - this is a contradiction in terms. If it was support, it wouldn't break through!
No my readers, we have all been lead up the garden path. This is all a bunch of hogwash - total crap. But you say: "I've seen it work. When the stochastics turned up and the price bounced off the 20-day moving average, the stock took off again."
Anyone who trades using these kinds of tools will eventually lose money. The only reason they work sometimes is because they tend to be a self-fulfilling prophecy - the masses are taking the same or similar signals to trade. This bulk activity can move the market - sometimes. Heck, even the fund managers use these tools. Ever wondered why most mutual funds lose money?
Now here's an interesting thought: the floor traders use them too. But do you know something? They use them so that they know what the herd (that's us) is likely to do next! That's one way they catch us and beat us into a bloody pulp with our own weapons.
By the way, I'm not writing this material because I am a beaten, disgruntled loser. Yes, I have lost money - a lot of it. But not this time around. I finally found what I was looking for. And I found it in a way that still amazes me. It just happened. It was there all the time and I didn't see it. I sincerely believe that the universe, through my struggling and perseverance, aligned itself to show me the way. This is not New Age mumbo-jumbo. I am a spiritual person and I believe that things happen because we are seeking them.
Do you want to know what it is? Keep reading...
Cheers,
Terry
www.TraderTerry.com
posted by Terry at
5:56 PM
0 Comments:
Post a Comment
<< Home