To: Eric P who wrote (2616 ) 8/10/1999 11:23:00 AM From: David Lind Read Replies (2) | Respond to
TA, backtesting and automation are all well and good, but they can't exist in a vacuum. I fear that many new traders, when they are first introduced to charting, look for the magic formulas and setups that must be the "secrets" of successful traders. And it is only natural, since as humans we have a strong desire to create order out of what is initially perceived to be chaos. But that is a mistake that many new traders make, and I want to get that message out clearly to new traders reading this thread. There are no unchanging, always-successful secrets that will unfailingly make money. And if there are, they are certainly not available to the average trader. Something that works this week, may fail miserably in August of 2000. Many other factors must be considered. What is the personality of the underlying market? What is the time of year, the time of the week, the time of day? What news items are impacting the issue? What news items are impacting associated companies and sectors? What is the pricing history of the stock? Where is it coming from? Are you trading up to an earnings announcement, split or merger? How are you feeling? Did you sleep well last night? Are your emotions ruling this trade? All of these elements, and many more, typically create the environment for a single trade. So that "guesswork" that has been mentioned, is our processing of all these elements through our intuitive processes. That is why experience is so important and invaluable before jumping into the market. I was given the advice to paper trade for a year before entering the market. Of course, at the time, with my high IQ and professional success, I took that as an insult. But now I realize more than ever the value of experience in knowing how to put all the elements together for a successful entry and exit on a good trade.
