I was about to go broke. It was the summer of 1997, and I was sitting in a day trading room in San Francisco. Just 6 months earlier, I had opened up an account with $20,000 -- my life's savings.
Now we were in the middle of the Asian financial crisis, and I was down to my last $5,000. I wish that I could blame the crisis for my account imploding, but the simple fact was that I did not know what I was doing.
Amidst the fog, with CNBC blaring in the background, and my fellow traders shouting ideas back and forth, I jumped in and out of stocks at a frenetic pace. Sometimes I made money, but I usually lost. I held onto my winning trades too long, and they turned into losers. I held onto my losing trades too long, and they turned into big losers.
A random walk. That is what most people think the stock market is. Just a series of random events with no predictable pattern or link. Just total randomness.
Well, the fact is that most people are right. Most of the time during the trading day the market is random and has no predictable pattern.
This is why so many lose. However, success comes from those few times where there is NOT randomness, when there IS a predictable pattern. When you find these times, it is when you have an edge.
The battle of Somme. The first great offensive of World War I and the moment of truth for the British that would shape their resolve for the rest of the conflict. Among the trench warfare conflicts that took place during the war, this was one of the bloodiest.
The most dangerous place you could find yourself during the entire conflict? No man’s land — right at the center between the trenches of the two opposing sides. A place of confusion, bullets, blood and raw carnage.
Trading into high impact news releases can be very risky. There are ample opportunities to make large profits, but there can also be catastrophic losses if you’re not very careful. Volatility can be extremely high on a major news release. Extreme caution should be exercised, and you need to have a good trading plan. Once the market reacts to the news, there can be some very nice setups for Nadex spreads if you know when to enter your trade.
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