Whether you’re trading Currency, Stocks or the ETF market, it’s EASY to fall victim to bad ideas.
You’re surrounded by them!
Perhaps you’ve tried watching CNBC or other media outlets for trading info.
If that thought has even crossed your mind, STOP!
Those talking heads know zero about trading successfully. They just repeat the same old platitudes.
Here’s one example of many I could share about why it’s so important to chart your own course.
In the late 1980’s the Money Supply numbers were of great importance to the talking heads on TV. All the world’s commentators were touting the figures to find the true Trend of the Markets.
I was working as a Jr. trader at the time in Deutsche Bank NY, a job assigned to me (in lieu of getting coffee, cigarettes, and newspapers for the senior dealers) was to do all the research before the numbers were to be released.
They barked at me, “Hey, Tom go to the Economics Department and get their take on what they think the supply should be, Check COT (Commitment of Traders Reports), get together two weeks of historical data of the DAX and S&P 500.”
Oh boy, I thought I was learning the “secret sauce” of the market. I couldn’t wait till I was able to trade my research along with the other guys. Fast forward to the release of M1, M2 and M3.
I was given the ability to trade a Minor Currency with a s/l limit of $25,000 USD. I had a position that was based on our numbers: Long USD against South African rand.
The theory was Higher M1 means rates need to go up to combat Inflation. The Numbers came out Higher! Great the research paid off, now to just collect my earnings!
“Price In Dol/Dem Wolfgang” yells out at the voice brokers.
No price, market DEAD silence.
“Sean G Price in Dol/CHF please…” The rest of the 45 traders were in a roar as well!
”Tom Offer out Dol/CHF1.36 45 offered!”
I jump in as fast as I can to repeat the order to Gary my Broker “DOL/CHF 1.3645 offered”
This price was 60 pips higher than the current market price.
Gary replies “No takers Market Lower”
WTF was my thought!
Gary screams out over the Box “1.34 30 GIVEN!”
The market is selling off… ”What’s my South African Rand doing I think to myself?”
I quickly get a price as fast as I can in USD/ZAR, and realize my position is worth $8609.00 dollars less!
I hit the bid as fast as I could with a stinging loss of 35% of my P/L!
What did the talking heads say in the afternoon?
“M1 came in higher today, right about where the market was expecting those numbers to be. So, profit taking occurred!”
They were then onto the next Bullocks subject!
What I started to learn, not fully at the time, is that all the Data in the world will not help, even if you call it correctly.
Price is the ultimate Arbiter.
You must learn to listen to the market, ignore opinion, and apply strict attention to the action of the Market Itself.
MARKETS are Never WRONG. Opinions and data often are!
Now you can toil through all the information out there, learn from your mistakes(maybe) and through extensive study of how certain information can be grouped together and handled in a certain way to develop your own system.
Or here’s a surprise:
There’s an “easy” way to make this happen…and you can also travel the world while you’re at it….