Many traders believe that their aim is to forecast future prices. The amateurs in most fields ask for forecasts, while professionals simply manage information and make decisions based on probabilities.
Take medicine, for example. A patient is brought to an emergency room with a knife wound—and the anxious family members have only two questions: “will he survive?” and “when can he go home?” They ask the doc- tor for a forecast.
But the doctor isn’t forecasting—he is managing problems as they emerge. His first job is to prevent the patient from dying from shock, and so he gives him pain- killers and starts an intravenous drip to replace lost blood.Then he sutures damaged organs. After that, he has to watch against infection. He monitors the trend of the patient’s health and takes measures to prevent complications. He is managing—not forecasting.When a family begs for a forecast, he may give it to them, but its practical value is low.
To make money trading, you don’t need to forecast the future.You have to extract information from the market and find out whether bulls or bears are in control.You need to measure the strength of the dominant market group and decide how likely the current trend is to continue.You need to practice conservative money management aimed at long-term survival and profit accumulation.You must observe how your mind works and avoid slipping into greed or fear. A trader who does all of this will succeed ahead of any forecaster.
[I]The New Trading For a Living[/I], Alexander Elder
All across this forum you see people claiming to be day traders but dishing out forecasts.
Intra-day trading is deceptively hard because it’s all about real-time information management. Many around here are playing the wrong game.