Wednesday, 22 September 2010

Competing and Adapting

Traders seem to be complaining again about not making money. This happens from time to time as things change in the markets. Whether it was the stock market doing away with fractions and going decimal or the growth of High Frequency Trading or something else we have yet to experience, traders need to continue to compete and adapt.

Adapting does NOT involve throwing away everything you are doing. If you have a sound methodology that is built upon identifying the order flow then the basis will never change. What does change is the rhythm or fingerprint of a particular market.

When you decide to trade, you are faced with quite a big decision before you really know anything about what you are to do. You really don't even know the questions. How do you start? What do you do?

When I started intraday trading really did not exist, unless you were on the floor or worked for a broker with a close enough access to the floor. Markets were much slower. News traveled slowly. We just started to trade by trial and error. I can't remember anyone ever telling me what I had to do to make a trading decision. People used to phone their broker and started the conversation with "What do you think about.......". Of course the broker didn't have much of a clue because he was a broker. He was a salesman not a trader.

Those of us that survived the early losses sought out ways of educating ourselves. How we did that varied a lot because there was no internet, no prominent information. Books and magazines were only sold by specialist shops which were hard to discover.

I was fortunate to discover charting in about 1969 - the good old Edwards and McGee book that is still the bible for chartists today. Then in 1979 I joined CompuTrac, the first computerised technical analysis group, based in the U.S. I was in Australia then. We used old Apple IIs with 64Kb of RAM and two floppies if I remember correctly. Steve Jobs was just out of his garage and starting to shave. He and Wosniak were the team.

Today, someone who wants to enter trading can get his education, learn his craft and reach CP (consistent profitability) all without risking one cent of his capital trading. Yet we are told that 90% plus of traders still lose. Why? Because they are not doing a good job of getting educated and training themselves. they risk their money trading and do not spend the money, time and effort to become a CP trader. I wonder how many surgeons would want to operate before going to medical school. It doesn't matter because there are laws to protect us from untrained doctors. But we all have the right to p*ss our own money away without any supervision. Those guys are the other side of our trades. Its cheaper to get educated than to lose the money to the market.

Today's trades, sometimes I try and get on the bus before it arrives.


  1. Hi EL,

    May I know what data feed you are using in combination with Market Delta? Do you consider Zen-Fire and Trading Technologies as good data feeds (for the case that your broker offers them)?


  2. Samer, I use eSignal. Non of the feeds are perfect. I have used zenfire and it was OK.