With today’s trading technology, the new trader finds themselves in an enviable position, versus the solo trader just 15 years ago. With the advent of all the on-line data services and electronic trading. The playing field has been leveled between professional traders and solo trader using a personal computer for quotes and relaying orders. Witness the sharp break in pit closures in recent years. This is an important clue that the solo trader is no longer at the severe disadvantage that he was several years ago.
With trading technology indeed, you could even make the case that computer-assisted trading has benefits not accorded to pit exchange traders. For instance, I can often see a divergence suggesting a remarkable reversal, between indices prices and the EUR/USD currency running side by side of my chart, when I can count five-minute bars both in terms of time and price on my screen. My charting program gives me more than indices and forex pairs that I can call up in an instant. Today's technology simply gives the day-trend solo trader an edge he/she didn't have years ago.
Even still, while undoubtedly helpful, trading technology is nothing more than a tool—albeit an important one—for today's trader. I am reminded of a student of mine who blamed the lack of multiple indicators for his trading losses. BTW he had eight monitors. The bottom line is, the technology cannot save you from yourself if you make classic trading mistakes. Nor, for that matter, is the answer in the technology. The key does not just have the correct indicator, but knowing how to interpret that price action correctly. This, by the way, is why formulas are so alluring for the solo trader. He/she thinks the answer is in the numbers, when in fact, their personal psychology has much more to do with success or failure in the market.
Sometimes, you can have everything at your disposal—a fully funded trading account, first-rate computer software, a good clearing firm, even a winning trading system—and still endure losses. This is the time to step back and take a good look at your trading style. How are you contributing to your losses? What mistakes are you making? One way to formulate an intelligent strategy is to emulate those who have succeeded at this challenging game.
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