I read a Reddit post about trader traits and this one really interested me. Since I’m new to the market, I’m not sure how realistic this opinion is or if it Is true at all. I would like opinions please and thank you!
"Across the hundreds of interviews, not one trader said they got their trade ideas from trusting the anchors on CNBC. Not one said they followed buy and sell recommendations from analysts. Not one said they followed a paid alert service or anything else of the sort.
They do their own research, and draw their own conclusions. And very often those conclusions contradict the majority perspective. Many of the traders were outright contrarians in their thinking. They trust their eyes, and not their ears.
When most people are thinking a stock is overpriced and extended, winning traders are often looking to buy. When most people are thinking a stock is oversold and a great bargain or value, winning traders are often staying away. While most people are focused on a few hot names or megacaps, these traders are often focused on companies or sectors that aren’t on most peoples radar.
Being a good trader goes against a lot of natural human instincts. It goes against a lot of mass psychology. Which is part of the reason most who attempt trading lose money. Your natural emotions are often giving you the worst advice, and you have to learn to override them. It is natural to quickly sell winners and baghold losers hoping they recover. It is natural to succumb to and follow the fear and greed you see in others. And so on. You won’t succeed in this game unless you learn to think for yourself and trust your own instincts."
This is a good thread to start talking about psychology. Thanks for starting the topic.
One question, though, What interviews was it talking about?
Kindly link or copy pasta the article to the main body, so we can perhaps understand the context better.
Yes, one has to do a lot of research and practice–this is income and wealth we’re dealing with so it needs serious attention. A lot of attention.
Yes, trading goes against natural tendencies–which is being lazy and relaxed–consistent winner muster a ton of discipline and even force lifestyle changes. Live below your means. Wake up earlier than your peers, sleep later to study even more.
Every trader has tools preferred, so paid alerts can be valid if that is part of the tool kit. It ban be a person calling out a possible play in Twitter or Discord, or it can be an algorithm like Lux Algo, which is gaining popularity here. I, for one, cycle between 3-5 indicators on Tradingview.
It’s best to keep asking questions. For starters and experienced folks alike. You have to take the risk alone, but it’s best to learn from others whenever possible.
*I watch CNBC’s business related documentaries on Youtube, and that’s it. I am of the opinion their interviews pump and/or dump prices for entertainment, play it to your advantage.
Thanks again, others should jump on this topic, soon enough.
Generally speaking, the need for reliance on individual thinking is spot on. (And therefore the need to not follow CNBC or analysts blindly.)
Wanted to share alternative thoughts on some of the observations though:
very often those conclusions contradict the majority perspective
Yet there is the saying “do not fight the trend.” Sure, some of the best trades are the contrarian ones as others are not expecting it as much, and so the premium to take on that trade is less. But this works out less often than informed trend following, simply because the contrarian thing would not be contrarian if it happened more often than not. Also, imagine if someone took the contrarian view (and many did) during the decade-long bull run that just ended. They would have been right over the last half-year, but wrong over a decade. Not the odds most traders take on (though some like Nassim Taleb do.)
trust your own instincts
This goes against all the things laid out in the para earlier, which is weird. Perhaps they did not mean how it comes across… Anyhow, instincts are susceptible to reptilian emotions such as fear and greed. Dispassionate traders who often trade on setups and don’t look at P&L often have the most consistent profitable trades.
Two resources I’ve found helpful since I started learning about trading:
The Chat with Traders podcast - I listen to this while driving to and from work sometimes, and it’s good storytelling mixed with strategies. So many strategies are complex and confusing on their own; the examples help me understand them much better
Thank you so much Rexxar and The_Ni. Your opinions are always appreciated.
This was the opinion coming from OP in this post where he summaries interviews of successful traders from various podcasts/interviews. A pretty interesting read.
I think what beginners like myself struggle with is the reliance on individual thinking. I mean… how can I possibly trust my own opinion when there are highly educated analysts out there? It does not feel right to be a contrarian when making financial decisions, at least as a beginner, and so I do agree with @The_Ni
Yet there is the saying “do not fight the trend.”
I suppose there is a balance that could be made, and some scenarios where a contrarian mindset would be acceptable but I may need a few more years in the market to figure that out. In the meantime, I should sharpen my ability to draw my own conclusions on tickers and maybe take a small position and see my success rate haha.