Raw Truths About Trading

Natural Contraction

Aspiring traders could surf the web from now until April 2024 and not find all of the sites that discuss markets and trading. I sometimes wonder how anyone finds anything worthwhile from such an endless sea of noise. I am also here to tell you that there is a substantial contraction in this industry… the major group absent from current ranks being those brand new traders. This ebb & flow & ebb of people attracted to markets and trading is nothing new. Same process happened from the crash of 1987 (and 1988) thru the mid-1990s before bull market runs in stocks and commodities brought participants back.

But that’s only part of the story. Retail traders, i.e. individual traders working from home or office are dependent on disposable income for participation. In other words, when the economy booms, people have “extra” money to dabble with trading. When the economy tightens, people have no “extra” money to trade with.

The segment of new traders coming into this field has dwindled steadily since the economic recession of 2008 and continues to wane straight thru. I know this for a fact from several different venues. So do many others, but they wouldn’t dare speak of such things. Major brokers in the futures, stocks and forex arenas are seeking new clients thru people like me at an unprecedented pace. I have never seen so many offers to “partner up” and access my list from some of the biggest industry broker names. Sitting in on various recent webinars, I see one-half to one-third the former attendees now versus years past.

Serious Traders Only
I also see a consistent number of established traders still present in the markets. Men and women in various stages of development in their skills, continue to plug away. People like you, here reading these very words right now.

So what the markets, all financial markets lack today is a steady infusion of “dumb money” liquidity. Instead you now have dwindled volume and open interest across ALL markets and symbols. On top of that, the participants who remain are either HFT firms or individuals of all capital size with relatively greater skills than ever before. Said another way, the lowest levels of competency contributing to the pot are gone. Gone for now, gone for awhile… but gone regardless.

Market(s) Change
That gradual but persistent ebb of new money in all markets is why you see recent price action behave as such. Heavy sideways buzz while algos fight for supremacy inside of volume vacuums. Sudden, abrupt price-action spike or slams followed by equally sudden or abrupt v-turned price reversals. Relatively illiquid markets because the formerly “dumb money” that provided liquidity thru the strikes is gone.

Which is why you see polar extremes in price. Heavy sideways pounding, or strong directional surges. No gradual stair-steps or deliberate 1-2-3 formations unfolding over time. Markets are mostly chop-chop-chop-spike-slam-bam. Markets still move from sideways to up or down as always… but the manner in which they move, how they move is vastly different than years(decades) before.

Constants Thru Change
In spite of all else, markets will always do one thing the same: expand out of contractions while reacting to key support and resistance zones. That fundamental core behavior of price-action will never change because it cannot change. Markets contract and expand, contract and expand. That’s simply what they do.

And in spite of constant, never-ending misconceptions about trading, a few truths are timeless. What you need to succeed thru time as a trader are…

a choice of symbol(s) that consistently make directional moves
the ability to identify key, market-moving resistance and support zones
the ability to measure price direction or “trend”
a consistent strategy to trade around key resistance and support zones
capture trades that profit several times greater than your average losses

Perpetual Disbeliefs
Too many times for too many years now I’ve read online where failed, clueless traders lament about how trading is impossible, nobody has an edge, nobody can succeed over time, markets are perfectly efficient, blah-blah ad nauseam. I have reached a point where I give up on trying to argue or prove the point that successful trading is feasible. There is no point in casting proverbial pearls in front of proverbial swine. It’s a complete waste of time trying to convince an already-closed mind to open itself for new thoughts or beliefs.

I’m too long in the tooth of this profession to work with anyone except for those relatively few who are serious about navigating the learning-curve thru hard work and self-study with time AND a little bit of money invested in their success.

My attitude is, if someone wants to learn how to trade any market or symbol, they have that opportunity here where I give my very best attempts to completely share a decade-plus of experiences, advice and the true core of what it takes to succeed.

Also, if someone seriously wants to learn the challenging, often difficult business of intraday trading they can learn how it’s done right here as well. If our recent examples in youtube and live-room transcripts such as this one right here above isn’t enough to demonstrate we know what you can do, nothing else is.

Bottom Line? If you want to cut thru all the lies, distortions and misconceptions about trading, one choice of solutions for you is to learn what we do and then do it yourself. Another choice is to wade thru the endless sea of noise out there and hope to hell you learn to swim before you drown.

In any event, I wish you the best and nothing less when it comes to trading success. As for me and the active team here at CM? We’ll continue doing what we do in continually winning fashion. I do look forward to working with those who are serious about success. If that describes you, I will see you inside.

For more daily updates from Austin, visit his blog at Coiled Markets.