Don’t Become the Indicator
(Updating some posts, this was originally sent 4/11/2024 to email list members)
In my LONG trading career I’ve gotten to know a lot of traders. They have different styles and different ways of approaching their particular market or trading instrument. They have different ways to enter and exit a trade, and different money management and risk management approaches.
But, they’re styles all work for them.
I’ve come to realize there are so many ways to make money in the market it can be overwhelming to try to learn or even study them all.
But there is one kind of trader, and I have not known many of these but I’ve known a few, that you don’t want to emulate…but you can get great tips from them!
This is the short lived contrary indicator trader. It’s astounding when you stumble across one, because they literally give you almost perfect timing signals. You enter a trade when they exit, and exit when they enter.
I know, it sounds bad, but I’ve found some of these traders, again, I haven’t found many…and they go bust in short order…but when you run into them you want them on speed dial. “Please just let me know whenever you enter or exit…just curious what you see.”
You yourself don’t want to become the contrary indicator trader, believe me.
Over the years I’ve thought a lot about why these people trade at all, first off, but that one I can’t solve. But, I’ve also thought about why they become the contrary indicator trader in the first place.
My best explanation is a lack of process. They seem to almost always trade on “gut” or “instinct”, and never using any of all the other trading techniques I’ve seen my successful trading friends use.
When they enter a trade, it’s always “I think this is going up (or down) because of X…(and the next time it’s Y, and then the next time Z)” and they always exit with “I can’t take it anymore”. Which, if you know one, is the PERFECT buy signal.
So, while trading is never easy, the process of trading is not hard. And it always begins with…you guessed it, actually having a process!
So, whether it’s with me, or someone else, or a book or a YouTube video…find a process you can follow in your trading and avoid at all costs becoming the contrary indicator trader! (But if you don’t heed my words…let me get you on speed dial;)