Why I Call Trading A Game
Stock index
futures opened
Tuesday’s session with small downside gaps as next week’s FOMC meeting continues
to be the beacon in the darkness. Trading was pretty subdued for the first few
hours as the futures extended Monday’s slide, but, in a reversal of Monday’s
action, the market seemed to simply run out of sellers at daily chart support.
The
September SP 500 futures closed Tuesday’s session with a gain of +5.50 points,
with the Dow futures tacking on +38 points. Both contracts finished in the top
1/2 of their daily range. Looking at the daily chart, both contracts are
holding their triangle/pennant patterns. The ES posted a bullish engulfing line
after reversing off of its 100-day and 20-day MAs to settle back above its
10-day MA. Daily Stochastics have retraced enough to give an “oversold at
support” scenario. The YM also bounced off of its 20-day MA and settled right
back into its 3-week trading range.
               
September
bonds (ZB) posted a bearish engulfing line right at 50-day MA support and a
close above 105.27 is still needed to squelch the near-term bearishness. The
Semiconductor Index (SOX) finally found enough love to bring it back up to last
Monday’s close and its 10-day MA.
Wednesday
is free of any big economic or earnings news and with both the bulls and the
bears continuing to hedge their bets ahead of next week, I’m not looking for any
huge break of this range in the next few days.
^next^
Wealth
Humility vs. Wealth Freedom
Somebody
emailed me last week and asked me why I call trading a “game” (before they asked
how much they could expect to make their first year!)Â I call it a game because
you can never, ever have complete knowledge or total control. You are always
exposed to that proverbial “black swan,” or that unpredictable event that defies
prediction. Even if you have a set-up that gives you a 1 in 1 million chance of
a loss, it might as well have been 100% if it happens to you.Â
Trading is
also a game in which you will never have the most money. Real trading success
requires humility because it can bring you to a point where further pursuit of
money just for money’s sake is a recipe for disaster. A trader who brags about
making $100k/year is naive, and the trader who brags about making $1mil/year is
no less of an idiot. A trader who has done well trading doesn’t need to look
far to find a businessman who amassed a bigger fortune in a “normal” industry,
like coat hangers or bug spray.
At the same
time, though, what trading ultimately does is allow for freedom from the strain
of money. It is freedom in the sense that money no longer controls you. You’re
free from that “grind,” meaning you can work when you want to, and not when you
have to. You can live the lifestyle you desire within reason, and realize that
real happiness is not found on that “success treadmill.” Trading success lets
you pursue and do what you really want to.
  
 
Â
Please feel free to email me with any questions
you might have, and have a great trading week!