Trading Basics Everyone Ought to Know
Stuart McPhee and Daryl Guppy discuss some trading basics.
DARYL: I was working in Hangzhou in China a few weeks ago, and I said to the audience, “There will be a whole lot of people who will disappear at the end of this bull market, and you’ll find them driving taxis.” And there was a small chuckle at this.
Then I returned to Singapore, and I jump in a taxi and actually just finished doing some work with CNBC, and the driver was talking and he said, “Oh, you’re in financial markets.” He said, “I used to be in financial markets. I was a broker in 1996 in Malaysia.” And he’s still driving a taxi now.
STUART: Well, I guess this is what happens isn’t it all the time in markets and everything else. I guess I just wanted to hit some really important bits. Do you have guidance to people who are starting out in trading? I mean, what’s some of the things that–they can go to expos just like this perhaps or perhaps a little different, more retail expos, and they hear the world being promised to them and oh, just buy our software we’ll be okay. What’s your advice to traders who are just looking at the market for the first time and where do they start? How do they decipher all this? Where do they find the trading basics?
DARYL: The first thing you do is you pay your conference entry fee by credit card and you leave your wallet at home because there’ll be lots of people there saying buy this. This is the secret to the market. Buy this, buy that. There’s less of them now by the way. Buy this, buy that. That’s not the answer. The first thing you must do is research. Some of that’s reading, talking to other traders, buying publications that give you a genuine idea of what the market is doing and how people are reacting.
There is no single solution to the market. If there was, then we wouldn’t have these sorts of discussions. Everyone would be doing it. So what’s important at the moment is simply to sit back, to wait, to watch, and learn because trading in current markets requires a high level of skill; it requires a high level of experience. This is not a market for beginners.
You must know exactly what is happening in terms of your trade. You must know what your plan is for every trade that you take, what you intend to do, what you end up achieving, and why you failed to achieve that particular purpose. Because that’s what will happen. You will fail. It’s not a matter if you will succeed. You will fail. There’s a gentleman called Karl Popper who wrote a book called “The Open Society and Its Enemies.” Now that’s being popularized in a book called “Black Swans.”
And what Popper was saying is that nothing is correct. It is only correct until it is proved to be incorrect. Now, of course, “Black Swans” says all swans are white until you see a black swan, which proves that that statement’s not correct. This is also true when you are endeavoring to master the trading basics.
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August 2, 2009 11:13 am 1 Comment
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