The story is absolutely real and true. A few years ago one of my friends who know what I do asked me about how to get out of debt and make money trading. To help him out I gave him a list of steps to follow to get rid of debt within a few years. This is exactly the same list my mentor gave to us some time ago. I never used it myself because I don't have any debt and my mortgages have been paid off too. To inspire my friend to embark on a difficult journey to debt free living and possibly financial freedom, I shared with him my own experience and my mentor’s with a few facts I saw first hand - my mentor once made $2 million dollars profit in one single day (true story). But to my surprise my friend thought I was crazy, so I stopped telling people about my mentor and my trading. Most time I am just listening without saying a word when people around me talk about stock market and their investments.
If you think this story over, you will realize as I did that we all see things within our own belief structure we developed over our lifetime, but that belief structure has many blind spots that distort our perceptions and prevent us from seeing many life's possibilities if those possibilities don’t exist in our belief structure. Just think about your beliefs about America before you arrived here for the first time. How many things we would have never believed possible are indeed real and true right in front of our eyes! Making $1 million dollars in a year is impossible in my friend’s belief system, so making $2 million in one single day is of course insane to him! Yet it's a fact and is real, because I was there to witness it that day!
Then I realized that trading is exactly the same. We all see market differently based on our unique belief structure about how market works – not how it really works. Based on our own unique beliefs each of us “saw” the market differently with mental bias we are not even aware of. This is why at every second of every day there's a battle in the market between people who believe price is going up and people who believe price is going down. No amount of technical or fundamental analysis can explain why there are always two opposite sides to every transaction. If you believe you and your analysis are right, then you are basically saying whoever at the opposite side of your trade is wrong. What makes you so sure about that? Only your belief about your analysis (obviously your opposite side believes just the opposite). This will never change - market works the same way as it did a hundred years ago. If you think your analysis and evaluation can consistently find you winning trades, you are thinking in illusions, my friend! Your blind spots have prevented you from seeing many other real market potentials you believe can’t or don’t exist-think again.
Most people take a risk without being consciously aware of their perceptual bias and their own psychological process (I am talking about what triggers your emotions of greed and fear). They enter a trade when they trust their opinions or analysis enough, but they never take time to ask themselves: if analysis really works and can make them money consistently, all stock analysts and Wall Street ph ds would be billionaires by now.
When someone says that there’s no method with over 70% chance of winning, he is thinking like my friend, because he believed strongly enough about what he read and heard regarding the chance of winning in the stock market. The possibility to win over 70% of the time is not in the realm of his belief system, so he simply dismissed it without giving it a second thought. I share with you another fact that one of my trader friends has made winning trades over two consecutive years month after month without a single loss! Have you read it in any books? Did you ever hear about it? No, but it’s true. To change your results you must start from changing your beliefs about the nature of market, your analysis, and risks in trading! Never ask “why” market/price does this or that, it’s even more futile to analyze it to find out “why” or “what does it means?”, you only need to ask yourself how you should respond when market does this or that – long, short, or wait on the sideline.
I met Steve Nison some years ago (he basically introduced candlestick charting to US and wrote several very good books about it), and he told me he didn’t trade at all except teaching seminars and providing commentary and consultation services. (I don’t think Sam Stovall trades too, if you know who he is.) If the “father” of candlesticks can’t make money based on candlestick charts, what’s the chance you will based on candlesticks? Yet when you believe it strong enough, you will keep using it (I am not saying there’s no merit in learning candlestick charts, there is but not in the way most people do). I have heard of people using astrology or moon cycles to trade too, if you laugh at them, you should really take a serious look at your own beliefs and premises about the nature of market. Yours and theirs are the same based only on beliefs, not facts.
I don’t know if you all have read “Market Wizards” about those super successful traders and investors. How many of them have you ever heard about and how many you know have ever written any books about trading? Almost none! So you ought to know that those people you hear on CNBC everyday, those who wrote trading books or blogs every day on web are not necessarily successful traders; in fact 99% of what you read or hear are useless noise, but not if you believe in them. So in reality we don’t trade stocks, we trade our beliefs about those stocks and about our analysis. That’s why market is a mirror - your results directly reflect to you your beliefs and current stage of maturation as a trader, nothing else.
My friend, trading and investing are 95% mental and 5% technical. If you want to win consistently you must shift your focus from analyzing the market to analyzing yourself – you must understand your own belief structure and perceptual bias in “seeing” the market. You must develop the discipline to take small losses until you understand the true nature of the market, by then your execution will be flawless and in sync with the market almost all the time. Otherwise you have no chance to win.
I have said what I need to say and done what I promised myself to, so the floor is all yours. I wish you all the very best! If you have any questions, please contact me at gulee at hotmail dot com, I will be glad to answer them. Have a wonderful weekend!
No comments:
Post a Comment