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Robert,
On Date: Mon, 18 Mar 2002 08:58:12 -0800, you wrote:
"From: "Robert Moore" <robert@xxxxxxxxxxxxx>
Subject: Survival
So you should get lots of support. By definition, the majority of
contracts or shares etc. are bought above the average price - so the
majority are wrong.
Still think being in the majority, this time of opinion (excluding the
lurkers) is a good idea?
Ric, I respectfully point out that there is a big flaw in your logic
here:
The majority are usually right! The majority of people don't eat dung.
The majority avoid bears in the forest. The majority of people don't like
to be bothered after they have said, "I am not interested."
Just because someone is in the minority doesn't make that person
correct.
Side note: There is an evolutionary reason that the majority are right.
Those in the past that ate dung and cozied up to bears in the woods
didn't survive to pass along their strange inclinations. People who fully
listen to every sales pitch, thoroughly investigate every product, and
try every offered service waste very valuable resources. They will not be
long term survivors.
Regards,
Robert,
A Usual Lurker, who will now not waste any more time on traderscalm sales
pitches and (finally!) use "Message Rules" to block
them"
I accept your right to filter out what you do not feel comfortable
with.
And I respect your preferred communication is one-way only.
So you will probably not see this reply, but others who do not put their
head in the sand will - and it was never to those with ostrich like
qualities that I was communicating with in the first place for they
cannot be easily assisted in their current state.
A few traders make a lot of money, most are reported to lose -
why?
Being different is hard as we are herd animals.
But being a member of the crowd is going to make making money trading
harder for all and for some very difficult.
Let us imagine you believe, as Norman Winski recently said,
"Bottomline, buy against support, sell against resistance,
preferrably in one market at a time. If wrong, get out."
Many traders place stops to enter (or close) positions around support and
resistance.
So if you are right and the market goes your way, then any profits are
shared by a large number of fellow traders. Your profit is
going to be that much smaller.
How are we going to get bigger profits? An answer is to share
them with fewer traders.
So, Norman may be right if you place your stops and entries at these
popular places, but in the opposite direction to the majority (like
market makers are forced to do) - when the market goes your way, there
are fewer traders to share your success - you make more money.
Also if you place your stops to close at other places than the crowd
selects, when the market moves your way you are going to have fewer
traders to share the profits with.
Using Norman's vernacular: Bottomline, your rewards will be higher
if you are not one of the crowd.
But being a member of the crowd is so much more comfortable.
Shame about the reward to risk ratios that go with crowd
membership.
But, by definition, it will only be a minority that can overcome crowd
forces - to not be a member of the crowd.
Are you a member of the crowd? The simple way to tell is if
you get angry about a trading idea - if so, you are a member of the
crowd.
Another way is if you find these ideas uncomfortable and like Robert,
feel a need to filter them out.
Are you a member of the few, congratulations on your high reward to risk
ratio without stress?
Entry to the few is free.
Exit from the crowd costs ego dearly - getting pass denial "You mean
I have to change?".
May your potential be realised, Ric.
www.traderscalm.com
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