Market Forecasts

"Professional traders know
when a good trade is coming up."

Professional traders can tell from the way the market looks when a good trade opportunity is approaching.

Their systems are designed to take advantage of special knowledge that only they - the professionals know. How else can you account for their success? It's obvious they're 'in the know'.

You would have no trouble at all convincing people about the truth of this argument. But in fact it is quite wrong.

The professional trader has no idea what the market is likely to do next. Even when he places a trade, he has no clue whether or not it will turn out to be a winner.

I can remember when I had been trading for less than a year, losing money but absorbed by the whole business, I spent a little time with a well worn and cynical - but very successful trader.

I watched him open a large position using a protective stop which if hit, would have been enough to wipe out my entire trading capital. "What do you think Silver will do today?" I asked him. "No idea", he said, seemingly unconcerned about his exposure to this risk.

Later on, I came to realise he was relying on methods far more solid than wayward prediction and that was when his lack of concern first made sense to me.

He was using a system he completely understood. The system knew nothing about what was coming next - it was geared to responding to what the markets did and not what somebody thought they might do.

Just ask yourself what would happen if a trader actually knew what any market was likely to do next. One solitary trade would be enough for him to cash in and retire in luxury. After that, so many people would beat a path to his door to learn the secret that he would never need to place another trade.

Common sense tells us that this could never be - and that nobody knows any more about what the markets will do than anybody else.

Acknowledging these trading myths is important because it keeps your thinking on the right track and protects you from ever being caught out by dishonest claims.

 

Modus Trading
Contact David

Copyright David Bromley 2006
All Rights Reserved.

 

 

 

 

[Close This Window] Sample content here.