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  • KP

Which Trading "Expert" Should I Listen to?

I remember reading a simple story about the contagion of negative thinking. It triggered awareness in my thinking like nothing I read before.

The story is of a man who lived by the side of the road and sold hot dogs. He was hard of hearing so he had no radio. He had trouble with his eyes, so he read no newspapers.

But he sold good hot dogs.

He put up signs on the highway advertising them. He stood on the side of the road and cried, “Buy a hot dog, mister?”

And people bought his hot dogs. He had to increase his meat and bun orders as well as

a new stove to take care of his trade. His son came home from college to help him.


But then something happened. “Father, haven’t you been listening to the radio?” his son said. “Haven’t you been reading the newspaper? There’s a big recession going on. The European situation is terrible and the domestic is even worse.”

The father thought, “Well, my son’s been to college, he reads the papers and he listens to the radio, and he ought to know.”

So, the father cut down his meat and bun orders, took down his signs and no longer bothered to stand out on the road to sell his hot dogs. His sales fell overnight.

“You’re right son,” the father said. “We certainly are in the middle of a big recession.”


I don’t know if this story is fiction or fact, but it certainly tells the story that many of us have probably experienced before.


The moral of the story: Our thoughts, beliefs, and ultimately our actions can be susceptible to outside influences if we’re not careful.


Trading requires more than the average amount of mental fortitude, at least consistent and profitable trading. Anyone can look at a chart and click a mouse button to buy or sell, but to consistently make money trading requires a little more skill than that.


Successful traders can’t afford to spend their mental capital on what others think or say about their trading, especially if those people have never traded. But, this also includes the people of the med


ia and even some so-called experts who have experience in the markets.


One of my trading mentors has an indicator that tracks the professional sentiment of stocks and commodities, taking their newsletters and quantifying their bullishness or bearishness outlook.

The indicator shows when most of the “professionals” are bullish, and soon thereafter the security goes down. And vice versa when the pros are bearish, the security goes up. It’s quite telling; maybe we shouldn’t be listening to them.


So, who do you believe?


The “experts” and “professionals?” Well, they could be wrong when they’re adamant that they’re right. The news and media? Good luck with that one. Let me know how that works out for ya.

Now, I’m not saying someone else can tell you for sure. I, for sure, don’t. You can spot a phony from a mile away just by .


I think the best person to learn from is yourself. Yes, you absolutely need to learn from successful traders how to trade, but only YOU can teach you how YOU trade.


Your personality is unique. Only you know how you handle long losing streaks, or long winning streaks. Only you know how you react to devastating losses or miraculous gains. Only you know how your emotions effect your trading, no matter what methodology or trading system you follow.


Stay selectively blind and deaf to the nay-sayers, especially if you have found a system that works for you. The best trading expert for you is YOU!


Especially the “former” you. The experience you obtain, and the skill you develop, the knowledge you gather from past trades. Learning from these will do more to help you become a profitable trader than any “expert” claiming they can predict the future, much less your future.


Keep a trading journal. Compile your experiences, your thoughts, your emotions. There will be times in your trading career that you will look back on those and be able to learn something from them. Much more easily if you write them down!


Happy trading!

KP


DISCLAIMER Options, Futures and Forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. This is neither a solicitation nor an offer to buy or sell futures, options or forex. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed here. Past performance is not necessarily indicative of future results. 

CFTC Rules 4.41 - Hypothetical or Simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, because the trades have not actually 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. 

Testimonials appearing may not be representative of other clients or customers and is not a guarantee of future performance or success.

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