This week’s lesson comes from my reply to someone who asked me something about the market in a way that most people would ask – as if Traders knew the future …
Conrad,
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- where do you see the economy heading? …
- what do you think the market is going to do? …
- is XXX a good buy now? …
- will the property market collapse? …”
Many people have this perception that I am some Visionary, Guru or Master … I am not. I am just a trader, some say a really good trader. That is all I am.
What’s more poisonous is that they have this perception that winning in the markets is about getting an edge on it by knowing what the market will do next, or literally, seeing the future.
Thus, they will seek out the guru who has the best fortune-telling skills or buy the software that can tell them what the next winner will be.
In their wrong perception of who I am and what I do, they get the notion that I am able to tell what the market is going to do or which stock is going to make the next move.
I don’t. Like everyone else, I can’t see the future.
I can’t know if the market has priced in the worst because I don’t know what the worst will be or was supposed to be. In our business, there is so much noise, manipulation, crime, lies and underhanded dealings that one can never know if something is going to bubble over or pop in our faces tomorrow.
All I do is analyze and form an opinion. It is all analyses based on numbers, statistics, patterns and a good sense of market behavior so that I can form an opinion and bet on that opinion. If it pans out, I make money. If it doesn’t, I cut my losses quickly. That is what I do for a living – calculate risk. I’ll bet on a small risk and avoid the bigger risks. Its common sense.
But how I remove risk is a complex and long drawn process. People think I make easy money but most don’t know how hard I have to work for my money. I’ve learnt this the hard way and my students are all learning it too. The truth can never be hidden.
We just take our positions and prepare for the worse if it should happen. We protect ourselves in many ways like hedging, stops, position sizing, budgeting and financial management.
More than 70% of the time, those bets are profitable. But when they are not, I cut the losers out very quickly without question, hesitation or reservation … now that takes practice and training … lots of practice and training so that discipline is instilled and execution can be meted without emotion.
In some cases, I don’t cut out the loser but instead, hedge against it. Now that takes experience. Experience takes time … a long time with lots of practice and training etc, etc, etc … and you cannot rush the training or the practice because you cannot rush time therefore you cannot rush experience.
Trading is a SKILL. It requires Knowledge, Application, Mentoring and Effort.
Learn. Train. Practice. Work Hard.
There is no other way.
If there was an easier way to make money, I would love to be the first to know about it so that I won’t have to work so hard. If there was a get-rich-quick way to get rich quicker than what I am doing now, I truly would love to know how.
I hope this sheds some light. Trading is not what a lot of people think it is. Serious trading as what I do as a profession is more taxing than anything I have ever done in my life (and it has been a tough life) and requires a lot more discipline and control than most would care to imagine.
Assuming that you’re very new at this, you are likely to be under the influence of media hype and/or friends’ advice. I would suggest that you forget all that and focus on what is real.
The only books I have ever written only focus on trading psychology and long term value investing. I have never and won’t ever write a book about trading techniques because I don’t believe in such nonsense. And that’s because I don’t trade using a standard technique that others can duplicate. The truth is it’s impossible to write a book like that. If it were really possible, there would be tons of money-making books and no workshops. I would love to sell a book like that because it’s easy money. But if I could, everyone else would. Where’s the easy money then? The same goes for trading – if it were so easy to learn how to trade by reading a book, why isn’t everybody rich from reading a $23 book? Where’s the easy money there?
Trading is a personal business and not something you can emulate or copy. It’s like everything else in life – it doesn’t come easy, it’s not so simple and it takes a lot of hard work and experience to master it.
Most who venture into this business have been sold a dream. Stop dreaming … I live in a real world. A world where even the best traders take their lives because they lost everything and more to the financial markets. I have lost more friends in the markets than I would like to count. I have lost many times to the market. I survived and prospered from it only because I worked hard, trained diligently, learned a lot from it and still continue to learn more about it, What I teach my students is what I have learnt and experienced from all those lessons through many years of being in the markets, from the old days of the open outcry market, through the early days of online trading to the current fully electronic age of algorithmic trading.
One thing more than anything else has prevailed through the ages – idiots who think that trading is easy and that the markets can make them rich quick.
Thousands of dreamers have been successfully influenced by the media into believing that trading is easy. And because of the media, most people think the financial markets, especially Forex, is the ticket to success. The fact is that you know that more have lost than gained. So what makes you think you’re infallible?
Do you really want to succeed? Because from where I stand, success looks like a lot of hard work to me.
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Conrad Alvin Lim has been an on-line trader since 2004. Today, he runs FinancialScents Pte Ltd (incorporating Pattern Trader™ Tutorial & Tools), the starting ground for many novice retail traders and has groomed many an institutional trader, financial analysts, bunker traders, dealers, brokers, remisiers and financial graduates from all over the world. More importantly, the Tutorial has outlived almost all its peers in continuously supporting and growing its graduates well into its second decade.
He is known for his unique and simplified blend of Macroeconomics and Financial Management for his Defensive and Psychological approach to trading and is sought after for his intimate knowledge of Macroeconomics, Sector Rotation, Defensive Analysis, Financial Psychology and short-term trading techniques.
To find out more, visit conradalvinlim.com
