“to make big money in stock market, not only you should be right, but also others must disagree with you” ~ TheVIP
“sex and trading have a lot in common … both require two parties & a matching price or barter of expectations” ~ TheVIP
i only learn something new in trading, when i lose money & i am still learning
Trading – The Oldest Profession
“visualize taking a loss – where you are wrong – a losing trade shouldn’t make you a loser; turn it into a learning opportunity” ~ Brett Steenbarge
about 5000 years ago, as the civilization started, people started living in communities & shared the resources, they grew cattle & crop; mined the metals and built the tools; & then traded all.
isn’t trading risky? or isn’t trading same as gambling, which has negative connotation in most people’s head ..?
first, why do you think gambling is bad ..? don’t you gamble in your life everyday ..? like driving a car or flying on a plane … rather, the questions should be, do you know the odds of winning in gambling, driving a car on a busy road or surviving in a car accident ..?
now let’s talk about trading: there are two sides in each trade – a winning side [likely with higher odds than the other side] & a losing side … in that case, the question becomes,
which side of the trade are you ..? remember the casino buildings in Vegas & the marble floors in them – who pays for them & who owns them ..!
now, let me address the risky part … have you watched Blue Angles flying over San Francisco pier & downtown? flying a jet plane is extremely risky, but for a jet pilot, its day-to-day life; of course, it can take his life; so is walking in San Francisco downtown … what’s important, is to know your limits & know your odds, e.g. don’t drive a formula one race car on the day you get your driving license, although it may be perfectly legal to do so.
conclusion: there are risks which are unavoidable and are inherent in everything that we do in life, including walking on the street or driving a car – but there is a difference among knowing your odds, ignorance & stupidity .. [see more on this topic on Humans/Risk taking page]
isn’t stock market random ?
academics believe that randomness is the hallmark of an efficient stock market, which is what i also studied in business school; & IF the markets are random, traders can’t make money over long-term, as the next move has equal probability of going up or down … & IF you believe in that, you may wanna give up trading before you begin
what is [OR is not] trading ..?
whenever people hear the words trading or stock trading, pictures of various wall street movies like “wolf on the wall street” depicting the crazy lives of traders come to people’s minds, and how fortunes are built and lost … and there is some truth in that … however, i am not sure if people understand the meaning of the word “trading” in itself, which is derived from trade …
trade probably has no negative connotation to it .. so, how come we are comfortable with trade, but not trading … i think it is due to lack of knowledge and understanding .. so, let me first explain “what’s trading ..?” .. & second, “why/how most people get into it ..?”
trading is a form of business where a person (trader) uses location, volume and/or time advantage and finds a differential in prices to make money using the paradigm buy higher [than the lowest] & sell lower [than the highest] (or in reverse for short sells) within your time interval (which is a day for day traders) … more on buy higher and sell lower later … which is NOT same as buy low, sell high, that is preached by wall street folks ..!
whether it is the story of Harrapa civilization, American Indians in the west, or Marco Polo from Venice … people have been trading forever by taking goods from one place to another using the location advantage … also, have you seen various trading posts found in Arizona & Utah ? … those posts are simply a centralized location (use to be) that provides a volume advantage; i.e. folks at the posts use their capital to buy the products in bulk from traders passing by, and sell those goods in retail for a higher price … & third is the time advantage .. as a trader you can buy goods cheaper when they are out of season and sell them for more in season .. it would be knowing the demand function and then “buy in low demand and sell in high demand” will ensure your success ..!
BTW, exploring & trading are always linked together … i consider myself an explorer first and trader second … & so far, none of these activities, as i have described them, would qualify as gambling .. of course, a business is about profit & loss .. even though, your goal is to make money, it doesn’t mean you won’t lose from time to time …!
running a successful business requires building your sustainable competitive advantage (SCA) … do you have an SCA that you can use against millions of other traders competing with you everyday, and those IVY league college educated quants, who can make a killing by exploiting an advantage of a few pennies, as by throwing billions of dollars for those pennies, they can make millions, while you will be destroyed.
finally, trading is the oldest form of business .. in old days, farmers grew grains and other crops and traded them with goods at a marketplace … while in modern world, instead of actually trading real commodities, we exchange securities or contracts, as they make the process easier … trading has been going since the beginning of the civilization, especially in Harrapa, a civilization which is linked with the origination of India, where i am born … further, my ancestors, as far as i know – my dad, my uncles & my grand dad were all involved in trading, although it was trading of clothing material … known as Aarhtee (आढ़ती) in old Delhi … so, the moral of the story it is something you got to have in your DNA.
stock trading
now that you got a hang of trading .. let’s talk about stock trading
stock trading is a special kind of trading, and here is why ..?
if you watched cowboy movies, there has always been a duel scene in them in which the boys settle in open with pistols … stock trading is something close to that .. e.g. there are two parties involved in any transaction – a buyer and a seller … it is kinda duel between the two, where one is a smart guy who will make money and the other is a loser … although neither of them know the other when they are clicking the buttons .. now if you are sitting on your trading desk & just about to click a button, you should pause for a second (or more) to think if the person on the other side of the trade is smarter/fast thinker than you .. why is he willing to sell when you are planning to buy ..? .. do you think you are smarter than at least half the trading population; if not, there are good chances that you are the loser.
given that you don’t know who is on the other side, you should only trade when the odds are such that you know more than the other party .. & you should NOT even think about trading, if you believe you are in the bottom 20-30% pool in trading population .. you got to be above average to make money in trading .. & way above to make it a sustainable business.
fast decision making: another key aspect of trading is how quickly you can make a decisions & with confidence .. let me explain, let’s say you are trading oil or gold – it’s same a barrel of oil or an ounce of gold but its price is changing every split-second in front of your eyes based on things that are happening all over the world & your job is to value the same barrel of oil or an ounce of gold, moment by moment and make a decision whether you want to buy/hold/sell a position with your own money – it’s not monopoly with paper money … are you getting the picture ..?
on a typical day [2017/2018], i execute 10 trades; that is 20 decisions (open & close) a day; i.e. 5,000 decisions annually, where i calculate the price of a commodity / security in my head in real-time and then make a buy / sell decision in split second, based on what i think market will bear later in my trading time frame … that’s lot of decisions in a really hot situation, where there is no time for self doubt … btw, a trade constitutes 1 or more contracts – so the number of trades has nothing to do with how much capital i trade.
finally, when you know for sure that you are above average, & you are a fast decision maker, you got to have solid ego to believe in yourself that you are ready to beat anyone on this planet (btw, i am not going to tell you anything conventional!) because you don’t know who is on the other side of your trade .. so, to be a successful trader, you got to be smarter, faster, and egoistic than your opponent whom you can’t even see .. and if you are game .. go straight on.
why do you wanna do stock trading ..?
here are a few scenarios that i have gathered so far:
1) you lost your job and have nothing else to do, and some capital is sitting in your bank account not earning much … while you are searching for the job, you have plenty of time, so why not give a try to trading, maybe you will get lucky, or am alternative will be to try your luck in Las Vegas; BTW, i did both of these at the same time ..!
2) you have an easy & boring job and can afford to check quotes and trade in between your meetings …
3) during the dot com boom, ladies in Bay Area used to trade in between making paranthas (a delicious Indian bread & my favorite) and exchanged trading ideas over kitty parties … our van driver, hired by Sun Microsystems, used to trade in between stops, as he shuttled Sun employees in between buildings across bay area … who says there is harm in making money as long as you keep eyes on the road ..!
4) your friend / neighbor brags about how he made 50% on a trade the other day, while your are struggling to signup for a cruise to make your wife happy … those are all the wrong reasons to go into trading, as where is your competitive advantage ..?
anyways, after trying this for a few months, your account doesn’t go anywhere, as you are just breaking even and most of the money is made by your broker in the form of commissions … eventually, your broker discovers you, as there is ‘plenty of fish’ in the pool, where you are trying to learn how to swim … your broker offers you a free course, where you will learn all the tricks from their experts, while you get some free food .. you think there is nothing to lose, as even if you learn nothing, at least your can enjoy a free meal .. you can’t be far from reality .!. & it never occurs to you that if these experts knew anything to make money by clicking few buttons, why the hell they are working for someone else and teaching all the secrets to idiots like you.
you visit the training center … there are 50 – 500 people, depending on the class, who are in a similar situation like you, who want to turn into overnight millionaires .. look at the their faces closely .. the presentation starts with how can you live an easy life off some island with some fancy cars, a beautiful wife, couple of kids and never have to work for anyone … they teach you how to make money in any market – long, short or sideways … in fact, you don’t even need to know which way the market is going … you say, “yeah, i can handle that ..” … i say, really (!), you wanna be so stupid that you don’t even know where the market is going, and at the same time, expect to make ton of money ..! … then they teach you how you can manage “risks” by putting a stop on your losses etc. .. you say, aha, “that’s exactly what i was missing, .. oh yeah, computers can do that for me !” … you don’t even need to watch the stupid terminal all day … you better start learning golf as you will have plenty of time and money in your life … you say, “why i didn’t know about this until now … screw the job or looking for a job … i can handle that .. piece of cake .. & i am the smartest guy in this training room anyway .. rest of them are suckers … i can make money while picking up on my golf game .. life will be good and all i need to do is to convince my wife with this wonderful idea” … as you read through this paragraph, you must wondering how come i know this in so detail.
& you guessed it right, i have gone though any & all of those courses that you will ever go to .. however, i don’t go there to learn the material, but to learn what other suckers are learning, and based on that i can predict your behavior … now you know that i am a deadly contrarian .. & what they teach you in those course is NOT trading but a plot of a suicide mission .. & the odds are not in your favor as about 95% of traders are doomed to lose money and wipe out their accounts within one year (fyi – as in 2017, i am in year 4 working as full-time and year 6 as part-time).
“i did trading in past …… but wasn’t making much, should i try futures” ?
you can’t imagine how many times i have heard “[when nothing else is working in your life], let’s go for trading & when you really wanna become rich quickly, let’s jump into futures trading …” so, let me address futures trading.
here is the best analogy that i came up with: if investing is like driving a car, then trading futures is like flying a plane (say Boeing 747), although both car & plane have gears and acceleration mechanisms, but learning how to drive a car versus fly a plane are fairly independent processes … & if you have seen Blue Angels flying in San Francisco & elsewhere, they go straight up & down – that is the best way to describe trading in futures … although, a car, a plane & a jet have a lot in common, the difference is in the gut of the driver/pilot, who is in the seat … so if you have the gut, go for it.
looking from execution perspective, as i explained earlier, trading is like a duel with another trader on the other side of wire .. so, it’s like going to war … & if your opponent is flying a jet, would you wanna hop in your Boeing 747 and go face-to-face ..? the outcome will be a disaster [for you] … if you are flying a jet plane (costs million+ dollar), you need a payload to match .. so its an expensive expedition.
finally, even if you are prepared with a jet & have a good payload & you are hell of a pilot, you can still end up getting shot, which means you lose your plane as well as your life .. & that’s million dollar down the tube, not counting the value of your life … & if you survived, will you be ready for another fight tomorrow ..?
in nut-shell that’s futures trading, & btw, if you are a damn good pilot & a fighter, it is the fastest way of becoming rich.
how about options ..? “my broker tells me that i can make money in up as well as down market”
well, if you have nothing else to do in your life and your goal is to make or lose few hundred dollars a day, then playing options is a good way to kill time … however, options are neither designed nor used for that objective.
[June 2015] i attended a seminar where they teach you how to make money in the range of 100 – 1000% using options & i had to sit through the whole seminar to figure out what they didn’t tell you … yes, they are right that if the options trade goes as you expected you can make 100% on the capital invested, but what they don’t tell you is that most of the calls get expired before materializing; i.e. the money that you used to purchase the call is gone .. 100% loss + the transaction costs, which went from your pocket.
interestingly, in the same seminar they tech you how to make money first by buying calls rather than buying stocks to fetch 10x return in comparison to stock and then they tell you to sell calls to make money … really! … as both can’t be true at the same time … and you can very well be on the the wrong side of the trade and hence lose money on both the trades.
here is my take: successful options traders have access to inside information … yes, you heard me right …! whenever a piece of new information is generated, it is always accessible to few before it becomes public, and those few don’t lose the chance of making a quick buck from it .. including the event of 9/11 (remember Bobby Axelrod, even though its is fictitious ..!) … & the safest & oldest way to play such game is through options .. so, from time to time, there is a huge increase in options volume of certain security, which is initiated by those who have access to this information or their agents (btw, trading securities / options based on insider information is illegal and it’s treated as a serious crime & i am not recommending it, but explaining how a few make a ton ..!) .. those who can get access to information from time to time make big bucks playing with those option .. & some of them get caught and spend life in jail with big fines … but right after their trade, this activity is picked up by a few who pay a big bucks for this [option volume] information.
some option players follow big volume on regular basis as they play across the securities .. then these guys come on CNBC and other media channels & talk about their trade, and some of you who listen to them get the idea and join them in the trade .. however, by this time, the price of the option has already gone high that your chances of making money are about 50-50 .. i.e. some days you make money and other days you lose; however, your broker, who got you into this mess makes on both side and collects a piece of your account each day .. & within 6 months you will close your account, likely losing all your capital … @ this point of the story, as Yashika would say in her own style …” theeeee …. end ..!
currency trader – let’s start at the top … “i used to be a currency trader & now i am trying …”
when i hear this line, i just look at them with awe for their bravery .. i know in early 2000s, currency trading was popular; so a large number of people who couldn’t find job after dot com burst got involved in it … they made some money but lost a lot … i feel really sad when i meet such people who need a simple job, but think currency trading is a solution & as a result lost all their savings .. they assumed that it is about looking at some charts and placing bets where you lose a little and make big … nothing is far from truth.
currency trading is the most volatile because:
1) it’s 100x leverage; i.e. a 1% move can wipe you out, when all-in
2) the variables are far too many which impact the demand
3) there are some long-term trends driven by political situations.
i still don’t trade in currencies .. maybe some day i will .. given i need a 24 monitors / machines to trade one index future … my belief is that it would require at least a double (48 monitors) setup to trade currency … i am not there yet, but i am working on it.
do you think trading is easy or hard ..?
in this world, everybody is connected … social media is a norm … tweeter can send you the hottest stock list along with buy & sell decisions instantly … people desire instant gratification … it is no wonder that they turn to stock trading to make quick money as side business … the barrier to entry for trading is quite low … all you need is an internet connected device, a brokerage account, $2,500 balance & few minutes during the day to check the quotes and trade … and sometimes people get lucky in making money … especially, if their entry [in trading] coincides with long leg of the market, just like entering in a casino & winning first few bets … and then come a set of losses … followed by serious losses … then comes depression … and, then they start attending some. courses, meet other people to figure out the holy grail … & they meet someone like me who is crazy enough to leave a high paying corporate job and switched to trading as a profession … so they ask me about my secret
and, in turn, i ask them a simple question … do you believe stock trading is easy or hard .. ? or is trading harder than most other jobs in this world ..? and, in reply, i see a long pause, sometime funny faces, but generally no words ..!
in my opinion, surgery is one of the most complex job in this world and only few become the best surgeons in their area of expertise .. & it takes 10+ years just to become a good surgeon … a good surgeon earns about a million dollar a year, while the best surgeons earn multi-millions each year .. in contrast, a good trader earns multi-million dollars each year, while the best traders earn billions+ … so you decide whether trading is easier than surgery or not …!
anyway, that was the easy explanation and now comes the harder version … if you are still interested in trading, here is how i would describe it … first, you may wanna see the movie The Big Short based on the book written by Michael Lewis to have a good understanding .
but here are the steps, in general, and also shown in the movie:
1) build a hypothesis about a market & test & retest
2) work hard to prove it wrong, and when you can’t … go all in … with a caveat to manage your cash in such as way that you don’t run out of it [as in step 3-5 below]
3) people will call you crazy as the market turns against you .. people will laugh at you .. you retest your hypothesis and stay firm
4) market still going opposite to your belief/hypothesis … people/investors are losing patience … threatening to withdraw their money … you retest your hypothesis & still confident; so stay calm.
5) you are about to lose your shirt, but your believe in your theory, your data & your God … and then arrives the first news to confirm your view point … you say yes! .. now it’s my turn [to take a punch].
6) more news arrives and people panic people are starting to remember you … praising you’re a genius … & you say, yess … yessss .. yessssss ..!
7) enjoy your millions / billions … depending on the size of your bet ..!
AND if you can’t handle the above mentioned scenario … i.e. don’t have a strong heart & gut; have heart conditions or not medically fit to handle the above scenario … don’t even think about entering into trading.
don’t want to make it complicated …! “i only wanna make little money on the side …”
this is the biggest fallacy in people’s head because when you start trading, you do it simply to make big .. no one starts it to make a few bucks – it is like when you sit on that chair in a casino … the fact that you make big or small is simply an after effect, but let me explain using another analogy that you can’t survive taking it easy ..
let’s take the example of an average surgeon .. being average, he adds a line next to his name plate in front of his office ..” i am an average surgeon, with 55% success rate” … now think how many patients will he get … after a while, he will end up closing his practice.
by comparison, trading allows you to make much more money than a surgeon, so, it must be harder; otherwise, most surgeons will end up giving their jobs to become full-time traders, and in fact, some of them do … moreover, just like average surgeons, an average trader would not survive … he will end up losing his account since only the best survive in this business & they will suck in all your capital as the best surgeon will take away all the patients .. making little money on the side is either a fallacy in your head or an after effect ..!
moral of the story is that in trading, there is no such thing that i wanna make little money on the side, and keep things simple .. [gambling, trading or surgery] it is, what it is & your thinking or goals are not going to make it easier ..!
trade anatomy -cross-sectional view
you are sitting on your desk in front of a computer screen, clicking those red/green buy/sell buttons seems like singular activities, at least some of you feel that way; i.e. you are alone in the universe while no one is watching you … but the reality is far from there.
the fact is that there is someone (a person or a machine) on the other side, possibly sitting half way or one third around the world, who is offering an exact opposite trade than yours; i.e. buying for a price that you are selling and vice versa.
the questions you should ask are: 1) who is this other person & 2) why is he willing to let you make money at his expense; i.e. in between the two of you only one is smarter … only time will tell.
so, by chance if you are paired with a novice or a newbie, you may win on that trade and would consider yourself lucky or smart .. however, if the person on the other side is smarter than you, chances are high that you are the one who is making a mistake and end up losing money on that trade.
it is impossible to know who is on the other side; however, there is way to know using statistical approach … & here is what i ask people to do: go to a trade show or attend a seminar with full of trader, be among a good size group (say 20 people sitting on a table) and then make a judgement of your own .. are you smarter than at least half of them ..?
& then think about all those people who were not there – who work for big houses, who have billions of dollars, IVY league degrees and the largest computing horse power in the universe .. & then think who is the sucker on the table in poker parlance
trade anatomy- Top View
now that you got the cross-section view (remembering my good old days of engineering drawing classes); let’s talk about what happens in term of a queue/stack at the market maker.
when your trade is executed, say open a long trade, you are literally at the top of the market maker’s stack; in other words, there are number of sellers who want to sell at that price and there are number of buyers who want to buy at a lower price than you (even if they want to buy at the same price, they are behind you in the queue) .. i.e. you and only you are the buyer of that security at that moment at that price, and at least half the world is on the other side – selling the security … & looking at you!
the question is who will have the last laugh .. think about it … & give me a smile!
execution
first, people may not realize that the even if they make money in one trade it has no linkage to their success [or failure] in next trade … i.e. each trade is independent in itself like rolling a dice … so if you trade like me – 10-20 trades a day (each trade can be of N contracts) – you are making 20-40 decisions whose outcome is absolutely independent of each other.
executing a a trade requires a set of steps: each trade starts with a idea / opportunity / gap that you find in the market / stock … you come up with your thoughts and based on that you open a trade … what happens after you open is absolutely out of your control; e.g. the trade may become in-the money and later goes out-of-money … so you need to make a decision when to close it; e.g. if the trade is in the money, should you hold it longer so it makes more or should you close it so you take the gains … & who knows by holding it longer, all your gains may turn into losses …. decisions , decisions, decisions …
so, i came up with one of lines … “opening decides your gains while closing decides your losses” .. so it’s all about timing of those decisions.
if you open a trade either too early or too late, you are not going to make much – timing is everything & your gains depend on your open … & if you closed it earlier or later
& market did turnaround then you will end up losing. & you have to do this again & again for the rest of your trading career ..!
trading is one of a kind …
now that you have read so much what trading IS NOT & if you have hanged around so far,
based on my experience i have to tell you what does it mean to become a successful trader & I am still learning … so, here we go.
Strategy
1) right education to know the current state of business – if nothing else, go through this website which costs you nothing
2) knowledge of basic mathematics, science & economics – if you studied them in high school & got good grades without cheating
3) using 1 & 2, build a sustainable competitive advantage so you can run trading as a successful business
Preparations – mind, body & DNA
4) a trader’s mind set [that winnings are your profits and losses are costs of business]
5) courage & confidence to play with your own money (not OPM) & mental strength to return to trading next day, even when you lost big today … now this will make you think about trading ..!
6) right DNA that gives you a solid gut & heart [so your liver continues to churn & the heart remains intact after you had a costly day] … of course, you can’t choose your DNA but you know what you have and be ready to compensate to what you don’t
Execution
7) fast decision making – when the time is right, can you make decisions within second(s)?
8) patience, especially if you are playing a contrarian’s game; moreover, patience to master the trade, this website is a live documentation of my journey over 20 years .. & i know that i am slow moving person but if you have a plan to make money in 3-6 months, i can only wish Good luck to you.
9) [5-10] years of practice to know your partner (which is a security/market & i am talking only one partner; i.e. monogamy & you know mine as its public information mentioned allover this site) … mastering the art of dealing with multiple partners (securities), although theoretically possible, will require more than your lifetime; so you make a choice & know why most traders fail as they change partners everyday … btw, life and trading follow similar principles.
10) willingness to give up your life and ready to work round the clock non-stop (i.e. nothing relevant about your trade can take away your attention)
if you have all of these, then you are a right candidate for trading, feel free to reach out to me & we will make more money than you can ever spend ..!
since you will be giving up a lot, let me comfort you with some upside … the pleasure & joy that you get by precisely projecting the future brings you such a blissful state that are beyond possible that any humanly pleasures can provide you … being your own boss, making ton of money, enjoying anything and everything possible in this material world, & the freedom to do, whatever you want to, is un-match-able.
trading & meditation …
based on the special theory of relativity, the laws of physics are the same (only) for non-accelerating observers; i.e. if your mind is wavering in all directions & doesn’t have the clarity of a pure observer, while she is performing her catwalk, then you are not going to understand a thing or totally misunderstand her.
& that’s why most day traders practice meditation, but even after meditation, whether they are able to capture her moves or not is a totally different matter.
securities traders are like artists …
in trading history, all successful traders are/were like artists, one of a kind .. they see the world differently than others – typically contrarian, but it doesn’t have to be .. their decision making [in trading] is more objective, less emotional, less biased .. check the lines example on the top of Humans / Psychology page.
moreover, if & when you do become a successful trader, do not try to replicate your success by hiring others; i.e. building a team .. it’s a big mistake.
lately (as in Oct 2016), as i get into conversation with various folks, i seem to find more and more people (statistically speaking) who are/were in hedge fund/trading business [at a small scale] .. & when i inquire a little bit more specifics abut what/how they do/did .. i hear some strange comments like, oh, i have other traders, who do the trading [for them] .. & at that moment i just laugh (inside only) & walk away [from them].
you may have seen in movies all those busy, noisy trading floors of large investments banks .. many trading businesses, & therefore those organizations / floors, are built around a theme .. e.g. commodities in early 2000s, healthcare in 2010s .. are you old enough to remember Enron? .. Lehman & friends dealing in mortgage backed securities .. these trading organizations last as long as the season lasts (which is a few years!) … they appear like a new fashion trend and disappear equally fast .. they all make money by buying & selling to each other [raising the price of certain asset class] .. taking the market / sector up & believing that they are the newest crop of geniuses as no one else could figure out how easy it is to make money in trading .. and, as always, shortly thereafter, a large number of traders become out of job as the market / sector takes a nose dive.
real stock traders are like artists, i don’t think you can hire them .. let alone build an organization … or hire someone and teach them .. good traders work for themselves … imagine someone telling you that they have a bunch of Picaso working for him ..!
just look at her …
if you remember the scene in 50 shades of Grey (i assume you have watched the movie; if NOT, please do as the movies shows many aspects of human behavior), when Anastasia interviews Christian in his office as they are meeting for the first time & he offers her an internship in his company.
she says “i won’t fit in here .. look at me” & he replies, “i am ..!”
like this scene in the movie, trading is all about your own point of view & what are you looking at ..!
when two people look at a chart or a number, one arrives at the decision to short, while other looks at the same chart or number and sees it as long, & that’s why any & all transactions occur.
one person sees beauty in Picasso, while other person sees a bunch of funny looking faces.
& that my friend is all about trading ..!
i always recommend people to invest in index funds, while i trade actively .. how so ..?
this is exactly the same strategy recommended by Mr. Buffett – to invest using index funds, while he invests as active manager (i.e. whatever makes sense to him!) with his money … why ..? because most of you have a full time job and other commitments in life, while both Buffett & I (not that i am comparing myself to Mr. Buffett!) work round the clock on our investments … as active managers.
i understand why people are attracted to active management strategy rather than using indexing … just to give you a crude comparison of the two strategies – indexing versus active management … in 2015, Mr. Bogle, who preaches and follows passive investing using indexes has net worth is about $90M (millions) .. not bad ..! … while Mr. Buffett – an active investor has a net worth is $67B (billions) … definitely not bad; OTOH, if you decide to manage your funds by trading actively, it may turn out to be bad OR really bad … i.e. most people who attend those free trading seminars lose all their money within 6 months and then give up trading.
for all aspiring traders …
part of my mission is to educate folks about financial independence & not to teach trading .. i don’t teach or provide advice on anything, rather share my opinions with anyone who is willing to listen and you are free to discard those opinions.
i do provide coaching (at no cost to anyone), but like a coach, i can’t teach you how to play a game, but can only help you improve your game … at the end of the day, it’s your game, your skill.
the first step of the coaching process is for you to go through this site, which you can accomplish at your convenience … interestingly, most people are unable to complete this step (since they are in hurry to trade tomorrow); hence never get to the second step.
watch the movie “The Pit” available at Netflix … the movie will help you visualize various situations described on the site … although the movie shows the life of a floor trader, but the life of an individual trader is about the same except that you are working from home.
as you go through the site, i am sure you will disagree with me on many points, which is normal, but think if i am making sense to you or not .. so frame your questions accordingly; i.e.
1) do you disagree with me because it is not making sense ? or
2) do you disagree with me because you never heard of that perspective before because no one else thinks that way & you are not sure ?
once you have the questions ready, i am happy to meet you in person to provide clarifications / suggestions .. i would be happy to address by sharing additional facts & figures & by providing examples based on real life situations, if i believe it will help you; otherwise, i will leave you alone, as it is not my goal to teach you anything rather clear the fog.
if you get to this point, arrange a meeting & be ready to pay for lunch / dinner; this is only for you to show that you respect the process & if you can’t even afford to pay, then stick with the website and occasional response to your emails, if i find the question interesting.
in our first meeting in person, i will focus answering your questions .. generally, i don’t ask questions, but can measure your progress based on your questions .. further, if my approach makes sense to you, i will provide you homework assignments (for you, not me!) … anytime, you choose not to complete your assignment, the coaching process stops, by design.
i can tell you in advance that typically it takes one year for people to start agreeing / believing in what i say & IF you stay in touch with me & the site for an year .. hoping a breakthrough before that will absolutely be a miracle, which hasn’t happened yet (i.e. in last 5 years).
btw, i am fine with people disagreeing with me because that’s exactly why i make money (being a contrarian); so, if you end up agreeing with me, & we end up against each other in a trade, i would not be able to make money from you; but it’s okay, as long as there are only a handful of people who agree with me , out of millions of traders, i don’t mind loosing in few cases … see this is a beautiful case of being contrarian, as most people in this world like others to agree with me; however, in my case, it is exactly the reverse.
otoh, i can’t help you in your disagreements with my opinions, and i would like to keep it that way; i.e. i am not looking for any suggestions in my flaws .. they will only disappear in due course of time, or it may take beyond my lifetime, as i believe in reincarnation and Hinduism.
how long will the coaching process take place …? i would say about the same that is needed for you to become a surgeon … it took me 12 years working part-time and last 7.5 years full-time (as in 2019) & i am not done yet .. keep in mind, successful traders make far more money [in billions] than successful surgeons do [in millions].
for me, it’s a life long goal of continuous learning ..!
Happy Trading ..!
& in the end …
let me end with the line that i mentioned in the beginning … “I only make money when people disagree with me” … it requires deep thinking to understand the context here ..
thru this website, i am sharing my thinking with you, which may have one of two outcomes:
1) you end up agreeing with me
2) you disagree with me
its my mission to educate people about behavior finance; so i aim to convince you with my kinda thinking, & in this process, if you end up agreeing with me, then i will not be able to beat you in trading and make money in that trade .. now looking at the second outcome, i am equally happy If you end up disagreeing with me, as in that case, i will make money, if you and i are on opposite side.
i am happy with either outcome ..!