I have very strong feelings about trading indicators. They should never be used as precise, absolute, black-and-white trading signals. Indicators are best used as clues or hints to future price action. Thus, interpreting indicators is much more an art than a science. Too often, though, traders become prisoners of their favorite indicators and lose the ability to think for themselves. What counts in trading is what the market is saying, not the indicators.
– Gary Smith, How I Trade for a Living
ALTHOUGH MANY PEOPLE still consider “timing” the market to be sacrilege, the truth is that it’s no use to be in the right place at the wrong time. In the market, just as at a party, it’s always better not to be early, but fashionably late.
There are plenty of good ideas about what to buy, but a slim number of real opportunities in which to buy them. Things have really changed from the 1990s, when it pretty much didn’t matter whether you bought value, growth, old tech, new tech, bio-tech, high tech, low tech or no tech. In the 1990s, you wanted to be long stocks. Every dog had its day.
In a free economy, you can put your money in any number of potentially profitable places. Knowing a good opportunity for risk capital isn’t lucky — it’s smart.
As a clerk (and later, a floor trader) at both the Chicago Mercantile Exchange and the Chicago Board of Trade, I often wondered why certain pits were bustling, others empty. For example, I used to walk by the Mexican IPC pit at the Chicago Mercantile Exchange — and “pit” was actually being a little generous. The IPC pit wasn’t really a pit at all. It was more of a post — just a CPU for the market reporter who actually keys the trades into the exchange’s system. There weren’t many trades in the IPC index. Two or three contracts a day, tops. (more…)
Statistics and society may predict, but you alone determine whether you will succeed or fail. You alone are in control; take responsibility for your performance and your life. There are always tremendous opportunities in the markets. It is not what happens; it is what you do with what happens that makes the difference between profit and loss.
– Mark Douglas, The Disciplined Trader: Developing Winning Attitudes
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