“Everybody gets what they want from the market” – Quote by ED SEYKOTA from the Market Wizards book!
Do you agree with this? Doesn’t everyone want to make profits? Or is there anyone who wants to lose money? We all know that 90% of market participants lose money! If we assume this quote to be meaningful, it implies that 90% traders want to make losses!
Ed Seykota is a Commodities Trader who in 1970 pioneered a computerized trading system for the futures market. Lets try and dig deeper into his quote and understand it from a different perspective.
Have you come across any old relatives who are perpetually ill and if you ask them how are they doing, they take pleasure in talking about their illness. For example” Oh! My Arthritis is my best friend now” Yet, they are also taking medication to get better, although nothing is really helping. Do you think they REALLY want to get better? Does the intention of wanting to get healthy echo in their conversation? Or are they comfortable with their illness ? In my opinion, it’s the latter! Now, You might be wondering why would someone want to be ill? Right?
Some people need love, affection and care more than good health! When you are sick, a family member or a friend is generally around to take care of you, make you eat food and medicines on time and generally be nice to you. Old people wish to be cared for, and when they are getting that, they really accept the illness subconsciously, because they are being cared for due to the illness.
The key word here is sub consciously!
Lets get back to the quote again and try to understand the similarity between the above scenario of an old patient and a trader, especially beginner traders!
When we start trading, we get hooked on to the excitement of trading! We start over trading. We love the rush we experience when we make a huge profit and we experience frustration when we lose but we come back with a vengeance and try to challenge the market with a bigger volume this time to recover our losses. We either win it back (rarely) or we lose all of it and we load our accounts again and start again. We also have an amazing story to share with our friends or fellow traders about how we bought at the lowest price or how we booked profits at the perfect support or resistance level. After 13 years of trading, I am quite confident that most people who have traded more than a year have experienced this. This is Excitement. Although consciously we wanted to make profits but sub consciously we were hooked on to the excitement! The fun! The adrenaline Rush! The emotions being experienced!
Trading is a psychological game and your sub conscious mind programming plays a major role while engaging in this game too! Making profits is boring! You wait for the price to reach your entry level. You trade with 1-2% risk. You have pre defined stops. You follow a trading plan. You stick to the rules of your strategy. You analyse and observe a lot and you trade less. All this is really boring, ISNT IT??
There are very few people who would be content with a life like that! Very few people can consistently trade mechanically with no emotions controlling them. In my view, this number is less than 10%. This 10% trading population does not trade for EXCITEMENT. They trade to make PROFITS! And do you think they make Money? Do they get what they want from the Market?
Of Course they do! This is the 10% that makes money from the market.
So, lets ponder over this quote again: “Everybody gets what they want from the Market” and lets ask ourselves, What do we really want from the market? PROFITS or EXCITEMENT? Because you can only have either of the two. And only you can decide what you want from the market.