Going in with eyes wide open
It’s important to be informed about markets and how they work. Many well paid and intelligent people still have trouble consistently being profitable in the stock market despite their training and vast resources. There are a lot of moving parts that influence how a market works or even if it works and we will hopefully be providing more of that information in future pieces. For now it is important to say that while there is a lot to know about the markets, some very important things to think about are things that many people don’t actually talk about.
The first is that the marketplace is a place where there are winners and losers. Winners make money from the losers and the middlemen make money from both. Even though the term “market” sounds like a fairly harmless word, it is better thought of as an arena – a place where people compete.
Trading is itself a competition and the sooner you replace either trading or markets with the words competition and arena, the sooner you will start to see it as the professionals do. In fact thinking of trading like boxing is a fairly handy way to approach things. If you don’t know what you’re doing you certainly don’t want to be stepping into the ring with a pro. Even if you do know what you’re doing you may think twice if you know your opponent fights dirty. Lastly, you have to expect that if you are stepping into the ring you’re going to take a few punches – boxers aren’t afraid to take a hit, they train how to take them properly.
Because you don’t actually need anything more than money to get started trading in the market, your only ‘hope’ of a chance is to know the rules that other participants play by. People have two fists and so technically anyone can start a fight, but that doesn’t quite seem like a good enough argument to justify stepping into the ring with a professional fighter.
The “market” lures people in with the promise of profits – and yes there are profits to be made, however, those who don’t know the rules of the game are the ones who will be giving up their money to someone who knows better.
Even if you step into the ring with both eyes open, you can still get a black eye, but at least you’ll have a fighting chance.