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Trading for a Living

Market Gurus

Gurus have been in the markets since the markets developed. The opinion of gurus nowadays spread quicker than early days. This is because of the development of technology.


There are three kinds of market gurus:


A) Market Cycle Gurus: 

These types of gurus forecast every rise and fall in the markets. The logic here is that if he forecasts everything, there is a probability that some of the forecasts will turn out to be true, which will increase his fame. These kinds of gurus last for 2 – 3 years, and their success is generally dependent on short – term luck.


Once these gurus get exposed, their fame gets destroyed and new gurus emerge.


B) Magic Method Gurus: 

A method guru emerges when they discover a new analytic or trading method. Traders always look for an edge over fellow traders, and when a new method is discovered everyone wants to jump on it. But when everyone discovers these methods, they become ineffective and these gurus also disappear with them.


C) Dead Gurus:

As time passes, a dead guru's books are reissued, his market tactics are scrutinised by new generations.

The gurus will keep on coming. As intelligent traders, we must realise in the long – run, no guru can make us rich. We have to work on it ourselves.


Trading is very difficult and a person needs to be very serious if they want to be successful in trading. But there exists various self – destructing things a person can do some of which are:


A) Gambling:

The key sign of a gambler is the inability to resist the urge to bet. If you're suffering losses and you feel that you're trading too much, then stop trading for a month, and re-evaluate your trading methods. If you cannot resist trading, then it’s time to develop your personality for your betterment.


B) Self Sabotage:

People keep blaming others and not themselves for their mistakes. They do not succeed in life generally.

The author says that our mind can be a major reason for our failures and that we should find our weaknesses to change ourselves. Keeping a diary can help, reasons for entering and exiting a trade should be written and later evaluated.

We need to be aware of our tendencies to sabotage ourselves. We should stop blaming our losses on bad luck and other things and take 100% responsibility for our results. Look for repetitive patterns of success and failures. Those who do not learn from the past are prone to repeating it in the future.


Trading lessons from Alcoholic Anonymous (AA):

When he was practicing psychology, Dr Alexander came across an alcoholic group, known as Alcoholics Anonymous, whose main aim is to keep their members sober, who were previously alcoholics, smokers, etc.


The following are the lessons that can be learned from AA:

1) Aim to be a trader for the long run (even after 20 years).

2) Learn as much as you can, read, write and always listen to experts, but keep applying your brain too.

3) Do not get greedy, and base your decisions on short term fluctuations.

4) Analyse every event in the market, I.e., if B went down, why did it go down?

5) Develop a money management plan.Our 1st goal should be long term survival, our 2nd goal should be a steady growth of capital, our 3rd goal should be high profit. Most traders put the 3rd goal as 1st and forget about the other 2.

6) Learn how to avoid losses.

7) Change is hard, but if we want to be successful in this profession, we have to work on changing our personality.

8) A trader needs to understand that the trouble is not with their methods, the problem is with their thinking.

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