June 14, 2006

The Rush Of The Pit

The pits at the exchange are exciting. Traders frantically move about the floor, buying and selling. It's exciting to watch. You can feel the energy and it can psych you up just by watching. Well, that depends. Some people may find it noisy and anxiety provoking rather than energizing. The frantic motions of the traders may put them on edge. The environment in which you trade does make a difference. Everyone has his or her own personality and preferences. Some may seek out hustle and bustle while others may prefer quiet serenity. It's important to decide which environment you prefer and create an environment conducive to your style.

There isn't just one right way to trade. Some people prefer constant action while others prefer a quiet, meditative approach to trading. Some traders prefer to do extensive backtesting in a serene atmosphere. They love to just quietly sit by themselves and study charts. When it comes to placing the trades, they may actually call a broker rather than place the trade themselves. Indeed, some professional traders who prefer a concrete, data-driven approach to trading actually dislike placing trades. They prefer to call a broker to place the trade. To them, the enjoyment of trading is in developing a sound strategy, rather than taking the action to place the trade. Again, there's no one right way to trade. What is right for you may not be right for someone else. It's just a matter of knowing what you prefer and matching your trading style to your preference.

There's no right or wrong way to trade. Some traders prefer safety. They prefer to trade only during a solid bull market where everyone is enthusiastic and the indexes go nowhere but up. But the markets don't always go up, and there are times when you have to think creatively and go your own way. To trade like a winner, you must think outside the box, guessing what the crowd will do next, and anticipating how the movement of the masses can benefit you. The astute trader knows when to follow the crowd and when to go against it. The crowd is usually right, until the market trend turns. Some analysts are saying that we are in a turning point right now. It may be that an overvalued market is correcting or it may be that the economy is going to head south. Whatever it is, many are planning for a crash, maybe not a big crash but a little one at least.

The environment you decide to trade in is critical to your success. Some prefer a quiet environment where they can think clearly. Others need action and excitement. Which do you prefer? Whatever environment you find helps you trade with an optimal mental edge is the one that you should cultivate.


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