Some people act as if trading were an activity similar to what they were doing son goku with the search for Dragon Balls: There are a number of elements to gather, put into place, and from there you’re done, you become a successful trader who can trade any market.
These “magical” elements start out as, generally, technical indicators that form a Trading System: Oscillators that indicate when the price is overbought or oversold, Averages that indicate the trend, Projections and Fibonacci Retracements that reveal confluence areas…
If the trader is smart enough and manages to survive the first few months, they may be lucky enough to incorporate other less tangible itemss but absolutely necessary. Concepts like the Ruin Risk, Maximum Draw Down, Money Management or Emotional Management they appear on the horizon as other Dragon Balls to be found.
When these elements have been understood, and are incorporated into the daily activity of the trader, another great challenge appears: the discipline. Thus the operator begins to understand that if he is not firm in the execution of his work plan, he will not achieve sustainable results over time. It is precisely discipline, hand in hand with Emotional Management, that is responsible for the failure of the majority of participantsand it is that traders usually sabotage their success by going against the rules and principles that they know they must follow.
If the trader achieves mastery of the technical elements of a Trading System, incorporates the key principles that have to do with risk, position and emotion management, and manages to be disciplined, he has undoubtedly traveled a long way. long way on the road to consistency.
Now, at this point, it may be that the trader continues to harbor wrong ideas about what it takes to be successful in the markets. There is a variable that cannot be left out and that makes trading different from looking for the Dragon Balls, and that is that it isn’t true that once these elements have been incorporated one is already prepared and ready to succeed.
Markets are not inert and immutable entities, but rather dynamic relationships between agents subject to constant change.. From the interaction of the hundreds of thousands of participants who approach the market to satisfy their particular interests, some movements or others are generated, and thus, the markets move bullishly, bearishly, or in congestion, and with a few degrees of volatility and liquidity.
The aspiring professional trader has to incorporate the ability to adjust your performance to the dynamic expressed by the price, and this dynamic is in perpetual change, so your way of trading should be flexible and adaptable.
If the trader believes that once he has learned a system, it will continue to work for life, he is wrong, and this is necessarily so because the system has to be at the service of the market structure and not the market structure at the service of the system. . Trading systems are designed to identify those moments where there is a greater probability that the price will move in favor of the trader, and its essence is the study of the price quote. But the price quote varies as the interests of the participants vary.
In recent years, changes in the market structure have accelerated and thus, what used to happen slowly now happens at great speed.. This is so, in part, due to the influence of new technologies. Globalization and the flow of information, leveraged on the resources that computing, engineering, and modern mathematics allow us, make markets show accelerated changes both in their composition and in their behavior.
Without going any further, it is estimated that the High Frequency Trading (HFT) supposed in 2010, a percentage superior to 70% of the transactions…
These technological elements are added to the exceptional measures that governments and central banks have to take as a result of the crisis.
The result is that the structure of the markets dances to a frenzy, composing a cacophony that forces the trader to adjust his steps if he does not want to be stepped on over and over again. And these adjustments must first be incorporated into the mental baggage of the patient who has to understand that it is something unavoidable, and then into the technical baggage that allows him to respond appropriately to the new structure.