The act of completing a trade, in essence, is very simple. A trade is simply executing a buy order, holding the ‘open’ position for a period of time and then executing a sell order. Selling short would be the opposite.
The physical act of a trade is very simple. The two transactions (buying and selling) can be placed over the phone with a broker or over the internet via an online trading platform. That is all there is to a trade.
However all the ‘things’ involved with the decision-making surrounding a trade may be quite complex. The complexity is not a physical one, unlike executing a golf shot from 190 metres to the green into a 30 km/h wind, avoiding the lake on the left, the trees on the right and the bunker in the front to land it three metres from the pin.
So you may ask, if the complexity is not a physical one, then what is the complexity, and why is it complex?
The answer is traders create the complexity. It occurs in their minds. Successful traders execute trades—it is what they do and it is simple and effortless for them. Unsuccessful traders spend most of their time struggling and straining through the decision making process of what to buy, when to buy, how much to buy and whether to hold or sell, with each step of their process re-enacting in their subconscious a painful experience from the past. This happens automatically, without any volition, or effort.
One Response
Hi Gary, just a general comment. You were recently on Sky Business, and you said two of the most significant comments I have heard. Fist you remarked on how if you listen to all the doomsday people, you probably never get into the market, and thus miss making money just (my words)’trading with the trend’ The second comment was the economy and the share market are separate and do not usually match. These two comments I believe are gold. Cheers Grant