“Everybody gets what they want from the market” – Quote by ED SEYKOTA from the book, Market Wizards.
Do you agree with this? Doesn’t everybody want to make profits? Or is there anyone who wants to lose money?
We all know that 90% of market participants lose money! If we assume this quote to be meaningful, it implies that 90% traders want to make losses!
Ed Seykota is a Commodities Trader who in 1970 pioneered a computerized trading system for the futures market. Lets try and dig deeper into his quote and try to understand it from a different perspective.
Have you come across any of your old relatives who are perpetually ill and if you ask them how they are doing, they take great pleasure in talking about their illness. For example Oh! My arthritis and I are best friends now” . Yet they take medication to get better, but nothing really helps.
Do you think they REALLY want to get better?
Does the intention of wanting to get healthy echo in their conversation?
Or are they comfortable with their illness ?
Well, in my opinion, that’s the latter! Now, this might make you wonder why someone would want to stay ill? Right?
Some people need love, affection and care more than good health! When you are sick, a family member or a friend is usually around to take care of you, make you eat food and medicines on time and generally be extra nice to you. Old people wish to be cared for, and when they are getting that, they tend to accept the illness subconsciously, because they are being cared for due to their illness.
The key word here is subconsciously!
Let's get back to the quote again and try to understand the similarity between the above scenario of an old patient and a trader, especially the beginners !
When we start trading, we tend to get hooked onto the excitement of trading! We start over trading. We love the rush we experience when we make a huge profit and experience frustration when we lose but we come back with a vengeance and try to challenge the market with a bigger volume this time to recover our losses.
We either win it back (rarely) or we lose all of it and we load our accounts again and start fresh. We also have an amazing story to share with our friends or fellow traders about how we bought at the lowest price or how we booked profits at the perfect support or resistance level.
After 13 years of trading, I am quite confident that most people who have traded more than a year have experienced this excitement. . Although consciously we wanted to make profits but sub consciously we were hooked on to the excitement! The fun! The adrenaline rush! The emotions that come with it!
Trading is a psychological game and your subconscious mind programming plays a major role while engaging in this game too! Making profits is boring! You wait for the price to reach your entry level. You trade with 1-2% risk. You have pre-defined stops. You follow a trading plan. You stick to the rules of your strategy. You analyse and observe a lot and you trade less. All this is really boring, ISN'T IT??
There are very few people who would be content with a life like that! Very few people can consistently trade mechanically with no emotions controlling them. In my view, this number is less than 10%. This 10% trading population does not trade for EXCITEMENT. They trade to make PROFITS! And do you think they make money? Do they get what they want from the Market?
Of Course they do! This is the 10% that makes money from the market.
So, let's ponder over this quote again: “Everybody gets what they want from the Market” and let’s ask ourselves, ``What do we really want from the market? PROFITS or EXCITEMENT? Because you can only have either of the two. And only you can decide what you want from the market.
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