April 2, 2013
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Why Most Successful Traders Don’t Reveal Details of What Their Methods Are
An alternate title for this post would be why you should suspect anyone who offers to teach you “easy trading secrets” for big bucks.
Someone in the twitter stream this week was commenting on the need for traders to get professional help (ie paid training) if they wish to have any success in trading. Of course, you know I had to correct this misinformed individual on the error of his ways by telling him I achieved success with no paid help so he needs to rethink his statements.
During the ensuing conversation, he asked if I’d be willing to show him my methods and that he’d be willing to pay me if it improves his trading.
What was my response? It’s the common sense response you would expect from someone who actually knows how to trade – I told him I have no desire to share my methods since I can make my own money with trading, so why would I weaken my edge by making it public?
You see, trading is an open loop system, where the market reaction is based on the inputs of others for a collective result. This means there are no “fixed” methods that are guaranteed to work independent of market participants knowledge.
Here’s an example of what I mean – let’s say there a bakery that lowers the price of their goods based on the amount of traffic in their store. Now if someone were to carefully observe store traffic throughout the day, they could arrive at the best time to go there to get the best discounts. Now, that “answer” isn’t fixed in that it depends on the other shoppers to continue their habits. If the person were to announce to all what the best time of day to shop there was, more people would go at that time and the price would go up, cancelling out that time advantage.
The same thing applies in trading. In order for the market to make dramatic moves up and down, you need people to drive that market behavior, and make mistakes in the process to help that movement along. Revealing a working method to the masses would mean it would be compromised by overuse.
So if you do have a method that works in making money, why would you put it at risk by selling it when you could use it yourself to make money instead? That means you have to be suspicious of anyone offering to teach you “sure fire” techniques to make money. After all, if it is that “sure fire” and simple, why isn’t the seller using it themselves instead of trying to sell it?
So if someone is selling training, you can be sure that if they are legit, there will be no “simple” or “magic” solutions to easy wealth and will require much work/practice for any hope of success. There is a reason why the trading success rate is low, it requires work and effort like any other worthwhile venture. You can also be sure that the trading experts are keeping any “simple solutions” that work to themselves.
Comments (9)
makes sense to me!
Because people are different. Even if I tell people my method, which I do, people might react it different with totally different result. I have offered my system to one of my friends I met online. But she still loses money.
So it is not about the method, it is not mysterious at all in the stock market. It is all about greed and fear in the market.
@Judy - I agree that in order to use any method in the market accurately or effectively, one has to already have mastered the market basics of dealing with greed and fear. I’m guessing that your friend wasn’t having much market success before she started using your methods as well.
However, the point is if many people know what you were doing and changed their behavior because of it, that would also affect market outcomes as well. A classic example of this is the head and shoulders chart pattern. Before people were aware of what that formation meant, it was likely much higher in accuracy in determining market turns, but now it and other popular market patterns have lost much of their effectiveness since people now look for those patterns to act on them. The move from passive to active market participants which can change outcomes.
A successful method lets you exploit the movement of the market to your advantage. You can have mastery over greed/fear, but if your method isn’t good or properly applied, there will be no payday.
L O L !!! Tell me your secrets so I can eat more of the pie you’re eating.
How do you feel about Timothy Skyes?
@consignedhearts111 -So you wanna be this guy eh? https://www.youtube.com/watch?v=qEviunetIH8 =)
lol interesting.
it’s funny though. in other aspects of life, a lot of people seek advice from those in successful relationships, pursuing successful business ventures, achieving successful dieting – and then they don’t want to follow the advice. maybe money would be different, since people are greedy and having it seems to facilitate most other things in life. maybe not.
@BumbleBoTuna - Haven’t researched him, but he’s into penny stocks, that’s a fringe area that I wouldn’t recommend people spend time on when the bulk of trading volume and money isn’t there.
@consignedhearts111 - I think it depends on what they are told to do. People don’t like to make sacrifices or do heavy work, but they are usually good at following guided steps, which is what system trading is like. If it works, it will encourage others to follow the same steps as well and eventually the market behavior changes as more people change their behavior to follow the system. This is why you can pick up a trading book with “proven easy methods” that have worked in the past, but are spotty today. The methods that still work and are listed are complicated and subject to interpretation, making it difficult to master. The lazy factor kicks in and most people won’t put in the time/effort to master the more complicated methods. The thing is even complicated methods get easier to do over time as one gains familiarity with it.
As with anything, no motivation, no hard work, no reward. Another thing people don’t truly understand.