It is human nature to be impulsive, 
irrational and
incoherent.
999 times a man would turn right and then all of a sudden
turns left to debunk the theory that that all turns are right handed turns.
Logic itself dictates that the mere semblance of human rationality is itself at
best a fluke aggregation of repetitive human behaviour that forms the slightest
of patterns within a swirl of endless
possibilities.
On a micros sense; the individual is largely way out of control; largely
indefinable, in spite of a sum of behavioral characteristics that would define
some sort of shape. However; the larger we extend the group of individuality,
the more definable the aggregation of human behavior. At a micro level; the
independent human being is unique and largely unpredictable.
However, we do not live alone in this world; we live in
groups with our fellow creatures. Essentially, we are social creatures, we move
in social masses, and more importantly we tend to follow each other. This, at a
macro level , is a group of individuals that have greater mass and shape and
direction of thought. It is this macro level, the aggregation of a group of
people, with their own collective
thoughts, joys, fears, anticipation, greed, desires and hopes that becomes the
market definition of price action; for all prices today are but a mere
reflection of the collective sum of human thought at that moment in time.
The trader profile by nature is an individualistic person,
very much alone, very much the master or demon of his own universe. "Amongst
them but not of them, wrapped in a shroud of thoughts" as Byron would have put
it; self-centered, and self-assertive; his directions reflect none other than
the micro level of human unpredictability. When we are in a group, as a herd
we flow against the danger of stalking prey, we move in numbers, our mass gives
us a sense of safety, our bulk a meaning and a purpose, and out collectivity a
strength to persist. But when we are alone, we are bombarded with danger, our
fears run amok and even jump at our own shadows. It because the trader, is an
individualist, more often than not, in the long run, he will succumb. It not
through the lack of effort, or commitment and drive and passion to grasp and
learn; it is because the markets in the long run play a numbers game, cold,
unemotional, facts and figures, that move in shapes and patterns, and the
individual at times can fail to recognise this numbers game; where many a time
the best thing a trader can do, is step aside, rid himself of all fear and
expectation, and simply observe how the numbers draw out, how the zigs and the
zags fade into trends, and the human impulse to pull the trigger and get right
in there into the thick of the market action, could be quietened and stilled,
through passive observation of the appearance of key moments that define the trend
winds that we can catch and take a position.
We suffer into truth; the pain of playing roulette, the
abysmal neglect of observation, by throwing ourselves into the fray and being
in there just because we feel that we need to make a trade. All traders go
through these juvenile phases and most will die, never to resurrect and
mentally scarred to learn from their mistakes to commit to a new trading plan
and strategy for success. We all get burnt taking positions on market open and
then going through the indignity of a whipsaw that drags our positive into
negative, and then we compound the misery by doubling up and accelerating our
own demise. We have all been there with our demons on the screen making the
worst possible choices because we imposed our own thoughts into the numbers game
that cares not for the demise of yet another trader.
Day trading does not work. Period. From the nascent days of
the hi-tech bubble in 2000 with people drawing on their home equity and credit
card to trade internet stocks on a wave of hysteria, to the recent advent of
forex trading portals with massive 100-1 and 200-1 leverage. People have been
swallowed alive like a mere blip in an ocean where a single tsunami of market
opinion can suddenly turn and does not present a freak occurrence but rather
the norm. Through the thick and the thin, the art of swing trading, taking
entry positions through chart analysis of key component indicators, is also a
very dangerous premise. Swing traders typically plan for a 2-3 day event
horizon; but the market is notorious and pull backs again can wipe out the
swing trader as well as the day trader in but a moment.
On the other hand, a well calculated position trade with a
well defined strategy to reach a certain price mark, coupled with adequate
option hedging, has a longer run sustainability in the markets which merely
play the numbers game. For once we are rid of the compulsive urge to glare at
our screens day to day, and once we can see how the market moves in rhythms to
numerical patterns in the longer run, then the chances of success, the
probability of correct underlying assumption of price movement, is increased
because at once we learn to move with the crowd, and against the short term
noise that can lead us to doom and self destruction.
If masses of large speculative traders and institutional
houses move in a pack with the numbers, then the best thing the individual
trader can do is learn to follow in the footprints of the giants and look
closely ahead at the horizon at the target number, across the dangerous
landscape of ravines and thorns and danger.
The futures markets for currency is a marvelous reference
point, in that the weekly commitment of traders report, tends to identify
patterns of large commercial trading. Coupled with longer term chart analysis, like
the weekly and monthly charts, with the correct use of several pronounced
indicators like moving averages, relative strength and Bollinger bands for
longer term analysis, the position trader is able to collect more information
and reach a clearer perspective than the day trader
In conclusion, upon reflection, in my view, true success,
comes from learning to understand that we are truly alone out there in the
markets, and truly we are so insignificantly small. Yet, in understanding our
weakness comes our own internal strength. In the face of adversity comes the true grit that defines our very humanity. Once we can grasp the very nature of our true selves in relation to the universe, then only can we make the necessary steps in order to survive, and ultimately thrive within this market chaos. if only we have the the recognition that a selection of medium and
longer term objectives through the study of patterns, will lead us to
understand how the numbers game can finally move in our favor; then only we could find it in
ourselves with patience to understand and fashion a financial order for ourselves from chaos.
Pieter Bergli - DeLoren Trust Holdings
Free Forex education for the betterment of a trader's livelihood
Disclaimer - U.S. Government Required Disclaimer - Commodity Futures Trading Commission
Futures and Options trading involves risks of losses. No representation is being made that any reader and account will or is likely to achieve profits or losses similar to those that are being discussed on this blog http://forexeducationperspective.blogspot.com/. The past performance of any trading system or methodology discussed is not necessarily indicative of future results.
CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.
All trades, patterns, charts, systems, etc., discussed in this blog http://forexeducationperspective.blogspot.com/ are for educative and illustrative purposes only and not to be construed as specific advisory recommendations for actual trades. Disclaimer - http://forexeducationperspective.blogspot.com/ bears no responsibility for the trading actions of its readers.
Disclaimer - U.S. Government Required Disclaimer - Commodity Futures Trading Commission
Futures and Options trading involves risks of losses. No representation is being made that any reader and account will or is likely to achieve profits or losses similar to those that are being discussed on this blog http://forexeducationperspective.blogspot.com/. The past performance of any trading system or methodology discussed is not necessarily indicative of future results.
CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.
All trades, patterns, charts, systems, etc., discussed in this blog http://forexeducationperspective.blogspot.com/ are for educative and illustrative purposes only and not to be construed as specific advisory recommendations for actual trades. Disclaimer - http://forexeducationperspective.blogspot.com/ bears no responsibility for the trading actions of its readers.
