Some have a distorted view of what it takes to be a successful trader due to the overwhelming quantity of inept resources promoted all over the web. Truth be told, if it sounds to good to be true, it probably is. No software or system will make you a successful trader, but your efforts will. Use your time to learn and experience trading in real time. Experience is the best way to learn and is invaluable to those learning skills like trading. People spend time and energy to do many great things including sports, gaming, and business. Why would trading be any different?
Finding an edge can seem like the beginning of a wonderful trading career, but this most likely isn’t as streamlined as one would hope for. It is easy to look back and prove the worth of some data but it is far more arduous a task to actually act successfully upon that same data. Success is typically earned and not streamlined into your life (no getting rich quick here!). When I first started day trading it seemed almost unreal that I had achieved an above 90% success rate my first month of trading with only one red day of a minuscule loss. Looking back, I now see the folly of my actions. Although the outcome was positive, I truly had no concept of loss and so could have lost it all that very first month of trading. I am fortunate that this did not occur. Later in my career, the market did teach me a lesson on loss as I squandered 20K in just two trades. From that point on my focus was trading while preventing those losses from ever happening again. I have been successful so far, but there always is and will be something new to learn from the market.
Some say that you cannot buy success and this to me is both true and false. I do owe in part my success to paying the market for my mistakes which, believe me, were quite costly. On the flip side, I do adhere to the notion that no purchased software or coded metrics will streamline the average individual to a successful trading career. Don’t get me wrong here, software can most certainly enhance a traders performance but is not a primary reason for success. I know that I couldn’t trade without a good scanner and decent charting software as well as many technological innovations that make my life easier. You can change your equipment but it won’t make you good at the sport, practice will.
Experience is the key to success. A book, a video, historical data; it’s all good until you try to apply it. Don’t be fooled by promises of success from some guru or special signal promoted on the web, trading success manifests through effort. Not all sources of trading information are bad, but a majority of online sources are misleading. Some sources of information are quite valuable in fact but on there own not likely to grant you an edge. I have never determined it useful that an indicator alone be a reason to trade.
Devising an edge in the market can feel like deciphering hieroglyphs while performing calculus problems and rocket surgery at the same time. Although a daunting task, discovering an edge is very possible but excruciatingly difficult. In all market action there exists exchange/trade between buyers and sellers. These trades amount to gains and losses on the part of the participants in the market. The total gains and losses accrue to an average of the total market, meaning that after fees, all trades ever made in the market have determined at this point in time the current price of all assets traded in the market. There is a caveat to this; some assets traded are margin assets and so do not actually exist as anything other than capital (borrowed money). This is why more shares of an asset can be both purchased and sold (or shorted) than actually exist. Edges are extremely rare to discover as trades rely on an equal exchange of gains for losses and so not all trades made by a market participant can ever be just gains (rather, extremely unlikely). This is true for all markets. With this in mind, it is nearly impossible for one to be consistently on the gaining side of trades without others losing on those same trades. On another note, not all traders get rid of there shares and so do bag hold them for a while. This means that there is always an amount of shares owned and immediately tradable at all times but also some shares that are withheld by bag holders.
I believe that a majority of failed attempts at trading success have come at the expense of those lacking both patience and knowledge. Without a concrete and proven plan and the consistency required to adhere to such a plan it is not hard to see why so many traders lose money to seasoned/veteran traders in the market. Build a plan and be consistent. Proving edge is quite tedious but losing to the market is far more costly.
*I wake up before 4AM to setup and turn my trading rig on. I scan the market for possible good trading setups and individually analyze each asset on the scanner. I then begin trading if the market affords me the opportunity. Each trade is made according to my plan. I sometimes trade late if opportunities present themselves. I do this every day as my job. Some days I lose money and some days there are no opportunities for trading and so I just stare at a screen for those slow days. Believe me, it’s not the most exciting gig out there but it is quite lucrative at times. Although, there have been and will be long periods of draw-down that can last for months. Imagine not having income for months. If one has the patience and understanding, emotional control, and interest in trading then it is very possible given an edge to make a job of trading.