Posts Tagged ‘retail traders’
In today’s market, with the advent of high frequency trading platforms, it is even more important to clarify the reasons for entering the market. Super computer trading platforms are designed to take advantage of market movement in fractions of a second. The idea is to make $.01 on a stock trade 40,000,000 times. If you think about it, what clearer value could there be for a trading strategy. Tiny profits many times over and over again.
To get a better idea of this, 60 Minutes’ Steve Kroft hosted a segment on the secretive world of high frequency trading. It’s a small peek into who might be on the other side of our trades.
There is a school of thought that says that if you really want to be a profitable trader, you need to have all sorts of methods to trade. Sort of like a carpenter that needs to have a variety of tools to do the job the ‘right’ way. Well, having done some wood working myself and having worked with a few carpenters, I know that a master carpenter has one hammer that he or she uses all the time and only goes to something else if there are extraordinary circumstances to do so.
This thought that more methods means more trading opportunity and, by association, more money, is simply false. More trading MAY lead to more money but it will certainly lead to more risk. The objective of your trading strategy should be to eliminate risk from your trading life.
This article talks about choices from a marketing point of view, but if you think about all the pressure put on retail traders to buy the next greatest strategy, the article is very appropriate.