Whitepine,
Let me summarize your post:
"FA- I think this area holds the most promise for making money."
And that's it.
Let me analyze this approach (you are not alone, all of Wall Street, at least the sell side, and most of Main Street, and all of academia clings to this approach, even though it is a proven money loser).
"FA contains numbers, I can read numbers, I think (hope) these numbers will contain answers or hints to answers. I know that if I apply my reason to a universe of things, I will get better results than if I don't. If I apply my reason to learning to use power tools, and then apply my reason to buying lumber, measuring, cutting, fitting, finishing, then I will have a more attractive deck and patio than if I build it as children build tree houses. If I apply my reason to courses of study, attend lectures, listen, take notes, read the required readings in a timely fashion, review my notes, turn in my term papers on time and neatly typed and study for the final exam I will get better results than if I do not."
"Therefore, I think (hope) I can utilize my analytical abilities on these numbers, news stories, analysts' reports and achieve a superior result than if I don't perform such activities. I take considerable comfort that, even if I'm not getting results from my approach right now, at least I'm doing something, and I can justify my approach based on my tool and study analogies."
Fine and good so far. But making money is not like using power tools or taking courses at college. Making money is like, well, surfing. You take your board to the beach and you try to ride the waves. Each wave is different, each day is different.
You can apply your intellect to studying moonphases and tides and seasons, you can read the surfer's almanac about traditionally good days or weeks to surf, but the reality is, your rationality won't help you catch more good waves (winning trades), but your ability to react to what the ocean (the Market) is offering will. Some days you will have to surf small waves or stay out of the water entirely. Other days will offer up fantastic waves, but you had better be practiced at riding waves before they start breaking, or you better stay out. One thing is clear, experienced surfers will ride all waves, small, medium and large, better than inexperienced surfers. And if your goal is to surf a lot, you had better learn to accept that the ocean creates the waves, not reason, that there is no way to predict when a great wave is going to appear, but you have the ability to prepare for them. And, because we can't see where the waves are forming, you will get up on your board and try to ride a lot of waves that will peter out and dump you in the surf. You will also find yourself, unexpectedly, on the wrong side of many waves; you will need a plan (stop losses or other hedging device).
But you can, with this methodology and discipline, learn to surf waves and become quite good at it. And you can, even though you might climb onto 60% lousy waves in trading, be able to trade very profitably on the 40% of good and great waves you find.
Kb |
