Being a retail trader is one of the most rewarding yet hardest jobs that you might have. Once you figure out how to make money consistently, sky is the limit. You shouldn’t be surprised though, that such an attractive and lucrative offer usually hides a catch.
The catch is represented very well in the numbers: 75% up to 90% (depending on your source) of the retail traders lose money. I’m bringing this stats up because this is tightly correlated to WHY retail traders lose money.
One of the most frequent theories among beginners is that everything depends on the strategy or the system that they are going to use. I was there as well, trust me. Point is, this believe couldn’t be further from the truth. In fact, in my humble opinion the strategy that you use (the method which tells you when to open a position, for example Moving Averages cross) has no more than 10-20% weight on the final outcome and your bottom line. This is a very interesting subject which i’m planning to develop further in another article or video.
Now let’s talk about strategies and methods of trading.
This is what google has to say on the subject:
Once you have this data or scoring system in front of you, things become much clearer and much easier. Remember that you are checking 4-5-6 factors and if we add multi-timeframes, things get out of control and a bit confusing. That’s why writing on a peace of paper or excel sheet is super useful.
This is a biased opinion, no matter how objective i try to be. Always make your own research and try to come to your own conclusions.
The way to learn a new skill and become good at something is to get knowledge and training from people, successful in the given profession. If you want to become the next karate kid, you sign up in a Dojo where a skillful master teaches you. I believe that this holds true for about anything out there. That being said let’s consider the people (or shall we say institutions) who are most successful in the trading biz and see what they do – the hedge funds and traders of institutions (excluding executional traders).
Think about what they do, how they do it, and why they get the returns they do (besides insider trading and market manipulation lol).
I’m not claiming I know exactly what they do (that would’ve been nice 🙂 ) but there is enough information on the web that gives clues on how their operation is carried.
AI and machine/deep learning is the perfect example. As much data as possible, for best results. Did you know that Jim Simons’ fund collected weather data which helped them build some of their strategies? And that’s just the tip of the iceberg. Have you ever heard about social media scrapping?
I will stop here and give you the opportunity to dig further on the subject and try to get info on the “big boys” aka “smart money”.
My personal conclusion is that the more info we have, the more educated our guess/bet on the market is. What do you think?
If you have any questions, comments or criticism, please use the comments below. Alternatively you can find me in telegram @yordan_k
Chief Trader at Traders Terminal