HOW GOOD ARE YOU?

The difference between those who have entered the market recently (last 1-2 yeas) and those who have been around for long, is the expectation of how they will make money. Newbies expect to make money every day in the market. Theoretically, you can- because new opportunities show up every day. So, newbies keep looking at the all the stocks that are moving, looking for ways to get into them, regretting the ones they missed and bewailing the ones that they did get into (because they may not be performing).

On the other hand, those that have been around for a while, realize that, even though theoretically possible, it is not practically achievable to enter or catch every mover. This they have learnt, perhaps at considerable cost, over time. Thus, you will see a great deal of action from newbies while you may see limited action from the more experienced set.

It is not as though more experienced players are slow. It is just that they get into what seem like surer things. There are two ways to attack- one uses the automatic rifle that fires 100 rounds a minute. Newbies are like that- spraying bullets all over the place but hitting targets by chance. Experienced traders are more like snipers- using a good rifle that fires a single bullet but hitting the target. Modern warfare is being won by snipers rather than soldiers firing automatic weapons.

Of course, modern warfare is now giving way to Drones controlled by a person miles away from the scene. This is the power of technology. Markets also have adapted to the advent of technology by creating Algo trading– which is somewhat like a sniper and automatic rifle rolled into one! Not only does an Algo watch all the stocks but it fires at one of them when the setup is right. So, it seems that even the experienced have now to learn new tricks!

Going back to the point of making money every day, an additional point to consider would be that the market is different almost every day. So, whether one is a newbie or an experienced hand, both are left guessing as to how the morrow is going to be? But is that the correct question to ask- about how the day is going to be? Understand that the day is going to be whatever it is going to be. But the real deal is, how are YOU going to be?

Newbies are the same every day even though every new day brings completely new sets of opportunities, risk and rewards. Experience should teach you (and does) how you need to be more adaptive to how the day unfolds. Meaning, as an experienced trader, you need to be ready to move the way the market asks you to move. It is a simple fact that no one can tell the market how it should move. Therefore it stands to reason that we had better learn how we should move in accordance with the market.

Much of the time variables of fundamental analysis tells us how the market should move. It is only technical analysis that tells you how the market is moving. Therefore a good market player will use fundamentals to inform himself about how a stock should move but uses technicals to see whether the stock is moving in that way or not! Then the question becomes of how much of fundamentals you can understand and work as well as how good at technicals you are to interpret the moves in the market.

For a newbie, all market moves are unexpected- for, they just need the market to move in the direction of their positions. For a more experienced player, a lot of market moves can be expected and therefore planned for.

When you have anticipated different moves that the market can make, then you are in a much better situation compared to rest of the players. That is when you give yourself a chance to win. When you plan this way every day, you give yourself a better chance to win every time you choose to participate, even every day, if necessary!

Therefore it is all about how good you are every day when you come to the markets. Every day can be a good day- provided you know how to extract the good of that day for your benefit. Or, you prepare yourself such that you know reasonably well how you can extract the good that is present on that day. If you cannot, you let it pass. Once you learn that art, you can be surer of profiting more consistently from the markets.