Trading – the real world

I know a lot of the new traders among you struggle with this and I think the main reason is that there is so much miss information banded about on the Internet by companies who are not real traders. So most amateurs simply do not understand how markets unfold in the real world.

Bottom line, trading is hard. Not because of the techniques we have to learn (these are relatively easy), but it is the psychological toll that learning to trade takes out on us. The markets are no liner, they are driven by emotion, hope fear and greed. These emotions cannot be quantified and put into boxes by mathematical formulas. This is why computers struggle so much and why most so called “strategys and mechanical systems” do not work in the real –world, because the markets are forever changing.

So what hope is there for us ?

What we have to keep in mind, is why we trade, the make money and NOT to predict (or even understand) or try and control the markets. To do this we must keep the losses small and profits large,. It is as simple as that. Too many amateurs try and “understand” and rationalize” the markets in an effort to put them into a psychological structure that we as human beings can understand. But this will never work, because, as already said, markets are based on emotion, and not logic.

So we have to learn how to operate in a non linear environment where the rules can change under us. This is the true challenge of becoming a good trader, learning how to deal with uncertainties and thinking in probabilities and not 100% certain rules. I guess that is why 97% of amateurs traders never make it and end up losing.

This is why I spend so much time and effort in helping you all understands how the real world works, at least then you have a basis to move forward and learn.

Thanks

Steve