Illogical things about trading

Hi gentlemen, here is a list a things that i find illogical at trading:

  1. Are we really trading against wall street, the hedge funds, etc… ? (i mean, for ECN accounts). If so, why don’t we use the same tools ? I dont think that a wall street trader is putting some fibonacci and saying " hmkay the level is reached now ima sell ". And if they do that, so how come 95 % of us lose and the vast majority of them win ? I don’t thing that this is sooooo hard to read a fibonacci retracement.

  2. If these people use the same tools than we do, why do they need to go to harvard to be hired ? If they don’t use the same tools than we use, what do they use and why don’t we use that ?

  3. Why do people use higher time frame ? If i can put a stochastic and a Channel up pattern in a daily basis, so i can do the same in a 5 minutes chart and win some money a lot more often. It’s not like a category of people need 1 week to spot a head and shoulder, and another need 1 hour. A pattern is a pattern, on a 5 min chart and on a weekly chart. So why trade the weekly ?

  4. Seems like the wall street traders trade each day, so why should we wait couple of days to find " the good trade " ? Are we so dumb compare to them ? Like they can spot 10 profitable trade a day, when i can only find one during a week ?

I have the impression that retail traders are just a big group of losers that give money to the broker while the real traders make money out of the market.

But i dont think that it is because of " money management " or " trading strategy " .

Every body know perfectly the technical analysis and we aint so stupid. If they win and we lose it must be another reason and i’d like to know what is it …

Thanks.

Those who win are those who treat it professionally - doesn’t matter if they’re professionals or retail traders. With the professionals these are guys who have spent a lot of time getting up to speed, have received training, mentoring and education at their firms, understand the market, understand how different factors influence the market. They’ve spent their working day plugged into the circuit for years, know what’s what and have gotten constant feedback and critiquing of their actions from their seniors. In addition they also have access to contacts in the marketplace which gives them an extra edge. Every time you open a trade you’re competing in a market against these type of people. Retail traders, for the most part, just don’t take it seriously enough to compete and get hosed as a result.

Okay…

re 1) I dunno about you, but I’m not trading ‘against’ anybody. We don’t use the same tools institutional traders use, because those tools cost millions of dollars apiece … the same goes for professional news services, subscription to which costs thousands a month; retail traders don’t have that kind of money to invest in analysis and automated execution. 95% (if indeed that number is correct, which I doubt) of retail traders lose money, because a large majority of these 95% don’t bother educating themselves properly and hence have abominable money management and inferior strategy; in addition, I think most of the 95% are people who just enter trading with a few hundred bucks (like going to Vegas for a weekend), lured in by the myriad of ‘[I]Get-rich-quick[/I]’ scams, and hardly any knowledge … they are gamblers, not traders.

re 2) see ‘item 1)’.

re 3) People like higher time frames because trends, support/resistance levels et cetera tend to be stronger and more reliable with longer timeframes. If you execute five trades on a shorter timeframe, gaining 20 pips a trade, compared to executing only one trade on a longer timeframe, gaining 100 pips, the only one showing increased revenue is your broker, earning spread five times. Usually targets decrease in proportion to timeframe decrease.

re 4) What keeps you from trading every day? I average two-point-something trades a day. The number of trades you take in a day/week/month depends on your strategy, not your smartness or education.

Retail traders aren’t a ‘big group of losers’ but rather a ‘group consisting of 80-plus per cent gamblers’.
It [I]is[/I] because of money management and a valid strategy … those two things make all the difference.

Everybody knows perfectly well that technical analysis (i.e. most indicators) are only good as a supplement to trade ideas based on price action and chart patterns. If you enter trades solely based on what a Stochastic, a set of MAs or any other indicator (be it leading or lagging) signals, you will surely lose money in the long run.
The only reason why some traders win and others lose is that some stick to their (validated) trading plans while others don’t.

Cheers,
O.

Well Say!! Well Done!!

:60:

Others have tackled the rest of the questions well, so I’ll take on this one specifically as it is related to a conversation I had a couple weeks ago with a former bank dealer. To put it simply, bank traders [I]have to[/I] trade all the time. It’s their job. Most of them are operating in a market making function of some type, so they are in and out all the time. If they aren’t trading they are out of a job but quick. Retail traders, though, can be much more selective. We need only trade when we see a good opportunity.

Well, really! that’s very interesting. So they trade all the time minus their breaks! So we kinda lucky sitting in home and relax! lol.

Market makers on equity exchange floors must have a legal bid and offer on the books every 15 seconds. if they fail to do so they are penalized and removed from the game for several days i forget how long but its a long time maybe 2 weeks or so.