by Mike L.
The market doesn't give a rat's ass about you. I can't be more candid than that. Recall those days and nights of you screaming at your computer because the charts aren't going your way? Did all that screaming and vein-popping ever work? Probably not.
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You need to get a good grasp of reality. The market is a collection of machines and peoples' emotions. It's a collective that is both irrational and vast. To purely approach it with qualitative strategies would be to expect failure. So how do you come to terms with this as a trader? It has to start with yourself. Stop thinking it's all about you, it's NOT. The markets do not care about who you are. Even billionaires lose significant amounts of money in the markets.
As a trader, I am pragmatic. If the market rises amid a flurry of worsening economic data, then so be it - trade it. We always put into practice the saying, "Make hay while the sun is shining." Almost always, you have to remove rationality from your market strategy. It's the new normal: fundamentals are useless, economic data are useless, it's all about what the brazen few think and want to do and where they want to take the markets. This is what our new market reality is. If you fail to accept this, you will continue to play in a market that no longer is a shadow of its former self.
Think of it this way, when you play dodge ball, you know who your opponents are - you know who the kids who are most agile and most athletic are. This is what the market is now - we identify who the big players are, and who the quick ones are (HFTs). As soon as you know what they're capable of, what their usual tactics are, you can start devising strategies to avoid them. It would be naive to think that each day you trade, you're trading against a human being. Machines now dominate the markets and you have to take your game to a whole new level.
If you don't believe me, ask those people who went long into AAPL's release of Iphone 5S. See if they're extremely happy w/ themselves.
Happy Trading! :)
Mike Lim is currently the CEO and Co-Founder of Equity Sense. He founded Equity Sense together with Gavin Martinsson. His twitter handle is @MEQSENSE. He has been trading for close to 10 years. He mainly trades futures and options.
Traders from Equity Sense will be writing on this blog on positions and other market-related things.