What Does It Take To Master The Markets? Many times in my career I have encountered new traders who believe they have the ability to master the markets after reading a book on trading, or even because they have obtained some form of degree. Most often the first question I ask them is; are you a fundamental trader? Fundamental traders are those who generally read a companies balance sheet, (example-EPS, PE, EBITDA, book value, etc.) or perhaps they are a technical trader which is someone who uses charts of past prices, patterns, and stock market cycles. More often then not the trader is unsure of a specific methodology and is typically dependent on someones opinion to invest or trade a stock, usually from a book or talk show. Within minutes, I realize that the new investor or trader is grasping onto a dream encompassing an optimistic hope mode.
Trading is one of the most rewarding, yet highly demanding ventures that an individual can pursue. Often I compare the markets to the world’s largest arena filled with gladiators from ancient Roman times. There is over a billion shares traded everyday globally and the participants range from huge institutions such as insurance companies, commercial companies, hedge funds, mutual funds, banks, broker dealers, down to the individual investor. These participants have different types of goals and strategies that are being applied. Many institutions and traders have a longer time frame horizon and are looking for larger gains from the market. Then on the flip side there are many institutions and individual traders that are trading in a shorter time frame and looking for smaller gains. This is all part of the vast ocean of trading and investing. Yes, the big fish does eat the small fish, and the food chain theory is alive and well in the global trading world.
As most people, I’m a sports fan and enjoy watching a good athletic event. In the past few years the very popular sport of mixed martial arts has emerged to the forefront of athletic competition. This is a dynamic and fascinating sport that is very diverse and requires countless hours of physical training, studying, dieting, mental strength, and a true dedication that few can achieve. Recently I had the privilege of meeting a mixed martial arts competitor and I asked him how he got started in this sport? The fighter informed me that he was originally a boxer, later studied the martial art of Judo, and now he concentrates on the martial art of jujitsu. I then asked him if he learned the basics in Judo and Jujitsu and combined the techniques? Again, to my surprise he is a black belt (expert) in both martial arts. This means he is a black belt in two different forms of martial arts, as well as a professional boxer. The next statement was a something that I will never forget. He said, “I still need to continue to learn everyday and master more if I’m to continue excelling in the sport. I’m forever a student of mixed martial arts.” Then it really hit me. This is what it takes to be successful in anything that you do and the reason why only a few are able to reach the elite level.
So what does it take to become a successful trader? This is a recipe that I’m certain will be different for each individual. It is truly an endless journey. The more you seek, the more you will find and there is surely more than one way to achieve your goal. In my personal journey to learn and understand the markets over a decade I have read over 200 books on the markets. Many of those books I have read two, three, and some four times. I have watched countless recorded trading videos, attended over 100 live seminars, and worked personally with some of the best traders alive. I have studied every bull and bear market in history and continue to learn and discover new market patterns and cycles every day. I know and believe that I still need to learn and master more as this is an ever changing arena. I am forever a student of the market. True market mastery is not a nine to five job where you punch a time clock. The real work usually begins when the market closes at 4:00pm ET. Every evening, I usually spend three to four hours reviewing charts and looking for setups for the next trading day. Reviewing charts on multiple time frames and performing multiple mathematical formulas is the norm.
In order to be successful in anything you must have a true passion. Trading is no different then a doctor, lawyer, accountant, or any other profession. A comedian I saw said it best, “a person with a job can’t wait until 5:00pm for the day to end so he can go home. A person with a career doesn’t even know its 5:00 pm and when at work he thinks he is home.”
Trading is a skill that takes a life time to master. However, it is the best and most rewarding profession in the world with many perks. Be your own boss, make unlimited amounts of money and learn how to read people. After all, when you trade you are not just trading stocks but people and their emotions. Learn the proper tools, keep learning, and make a fortune.