Have you ever really thought about what happens when you fire up a trading platform, and decide to place a trade? It’s easy to think of it as just you and a sea of numbers, or like you’re playing a game of solitaire on the computer. But the reality is quite different, and much more brutal.

Entering the markets is like walking into an arena packed with people and robots, while you hold your wallet (stuffed with cash), out in front of you for all to see. Everyone who enters, does so while announcing:

“This is my money. If you can take it from me, it’s yours. But if I can take yours from you, then it’s mine!”

A free-for-all ensues, with everyone doing everything in their power short of actually making physical contact of any kind, to take money from everyone else, all while preventing anyone from taking money from themselves.

Now, really picture that. Burn it into your brain. Because the fact is that in trading, you are on your own. You have no friends “in the pits.” (I know, we all trade electronically, but go with me here!) Nobody will lift a finger to keep you from adding to a losing trade, or over-leveraging, or fighting the dominant direction, or trading a news release, or any of countless other bad ideas. There are almost no rules at all in fact! It’s every man, woman, or bot for themselves and if you’re broke at the end of the day, not a single participant will cry for you.

This is the harsh reality of trading. It is an absolutely brutal endeavor, and you aren’t just trying to time your reactions against a sea of numbers. Those numbers represent decisions being made by all the other participants. Some of those decisions are openly announcing their intention, many (most?) are absolutely not, and are instead designed to fool you into letting your guard down just long enough for them to reach into your wallet, and snatch some bills.

Trading really isn’t a game of science or math, although math can be a useful component of certain trading activities. It’s a game of speed, psychology, reflexes, nerves, and discipline. If you’re weak in any of those areas, you won’t even realize how badly the odds are stacked against you, until you notice your wallet has gotten much lighter. So take a careful personal inventory of these elements of yourself, and if you find you’re weak in any of these areas – even just slightly – make sure you focus on them and shore them up quick Because you know some other trader is doing exactly that!

Until next time, good trading!

Jonathan van Clute
Community Manager, Trading Research Group