When it comes to trading in today's markets, you don't have to be a genius. In fact, I think that too much information keeps you from properly dissecting and analyzing what's really important. I have many trader friends who utilize only one or two simple concepts to trade and yet have been very successful.
Take the example of a trader I'll call LIZA, a close personal friend of mine. Before trading, LIZA used to be a master plumber at one of the major ballparks on the East Coast. Somehow he ended up on the Nymex trading floor and has become very successful. Without taking anything away from his success or his unique style of trading, it's fair to say that he does not have an MBA or a dual degree in business and law; he isn't even a college graduate. What he does possess is an innate ability to quickly grasp what's going on around him and a tremendous amount of self-discipline and confidence in his own decision-making ability.
So one day while I'm letting him buy me a tuna fish sandwich, I asked him what was the method to his madness. What made LIZA tick? What he told me was simplistic in nature, but very revealing: He never trades the opening because he feels there is too much random movement in the first hour of trading, and he can't get a good handle on the market. Rather, he comes to the trading pit after the mid-afternoon lull. He looks around a bit, and he observes those traders who are smiling. Then he looks around a little more and sees those traders who are frowning. And he simply follows those who are smiling and he fades those who are frowning.
Now mind you, I have tremendously understated LIZA's trading ability because he has tremendous pit skills. Yet, his approach to the market works. Believe me, there are many other traders who spend their entire lives on the trading floor armed with graphs, charts, and technical gadgets that I have no idea what they even are, and they struggle to make a living. At the end of the day, these people are usually scratching their heads, while my buddy, LIZA, always seems to have a smile on his face.
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