A Healthy Challenge Yes. But Trading a Struggle? No That’s Not the Way.
Imagine you're sitting at your screens.
You're a new trader at a professional trading firm.
How are you feeling?
Are you struggling?
You look around at your also new colleagues.
Are they struggling?
Here's a snapshot of new traders at a recently opened satellite office for 7 Points Capital.
Look like they're struggling? Exactly!
But why will surprise you.
See:
If you're looking at charts, lines, indicators, footprints, volume, market profiles, patterns, VWAP, Time & Sales, the DOM (draws breath) for your reason to take a trade...
Finally you find something that seems it's working 👊. Phew!!
And then without warning you're painfully shaken up realising it's no longer working.
And it's back to square one. Feels like a struggle. Agree?
Why's it happening?
Can you put an end to it?
Remember the movie The Matrix?
The main character Neo is a computer programmer who awakens to the world he's known is an illusion. Turns out he's living in a virtual world.
What he thought was a city he was walking through:
Is really some sort of simulation.
And there's a similar illusion in trading.
You sit down at your screens to trade and you see 'this stuff' 👇
Tell me:
How many hundreds or thousands of hours have you painstakinly looked at 'this stuff':
Comparing different time settings
Zooming in and zooming out
Drawing in channels or support lines
Adding some indicators
Maybe some order flow stuff
And so on
Right?
Okay try this:
Imagine you're sitting at your screens. You lean in, squint your eyes and really concentrate.
Here's a visual:
It’s a big crowd of people?
Yes.
It's clear in the 3 min video
👉 https://youtu.be/ogVtxs7zDQs
What about when you had something working?
People come and go in markets and the reasons why they're trading change. Agree?
Mess about enough (those hundreds or thousands of hours), and you randomly stumble upon monetising the current who and what they're up to in the market.
But it's short-lived: Spectacular trade example.
One of the best trades ever was when China retaliated against prior Prime Minister Scott Morrison's call for an inquiry into the origin of COVID and China's subsequent handling of it.
Quick refresher: China increased tariffs on a range of Australian exports even banning some altogether.
What didn't make it into the news:
Massive aggressive short positions hit the bid in the Australian dollar futures during the Asian stock market hours.
It created the illusion of a whale getting short.
And thinking - "that's some massive institution who knows something we don't" - speculators joined in.
Now how else do you hurt Australia's export market?
By increasing the price of AUD.
Those significant sell positions were a combination of red herrings and or profit-taking on long positions accumulated at lower prices but done so more evasively.
When enough copycat traders were short the prominent selling would disappear. At the flick of a switch the artificial price ceiling on AUD evaporated.
Have you ever seen footage of a damn wall break?
The sudden release of all that built-up pressure creates a canon-like explosion of water firing through the break.
It's what happened in the AUD. An eruption of vertical price moves aka 'short squeezes' caused by short traders urgently exiting - fighting it out amongst each other to escape rapidly escalating losses.
Now the trader who derives their trading from stuff on a chart (lines, indicators, etc) isn't going to know when the jig is up.
So if they were fortunate enough to stumble on a way to monetise that event - they'll give it all back, continuing to do the same thing once the people in the market making the moves and how they make their moves have long vanished.
Back to those relaxed traders at 7 Points Capital.
It's true:
Combining all the jigsaw pieces to uncover the above trade is more advanced.
Hold that thought for a moment.
A reputable firm or mentor gives you a war chest of ideas to trade based on different people in markets and how to monetise them now. Trading this way is a healthy challenge. It's not a struggle.
See the 3 minute quick example.
👉 https://youtu.be/ogVtxs7zDQs
Want more advanced trades that are more rewarding?
It comes with more experience.
Truth is:
The joy in trading comes from seeing how much you grow. And your yardstick isn't your bank balance.
Your yardstick is doing stuff you couldn't do earlier in your career. Bank balance is a reflection of that growth.
The sooner you start growing the sooner you see exponential growth.
That's all for now.
Further reading:
Largest trading edges are found where? It's all in the scale of time