Too Much Information

It is not possible to trade without knowing enough to trade well.

However, information, reading books, articles, newspapers, newsgroups, etc. will not put money into our pocket. Only actual trading will.

According to George Andrea's research it took 1500 years to double the amount of human knowledge a few hundred years ago. Today, the available information doules with each year. (Think of Internet just as an example.)

So how can you keep up?

What moves the market?

Many people answer (indadquiatly) that if there are more buyers prices goes up, if there are more seller prices goes down.

This is not true.

For every sale, there is a buyer. For every buy, somebody is selling.

In fact, you could say that you are trading people not shares or currencies. Who is the greater fool the person who buys or the person who sells? And which one is you?

Prices moved by two factors:

• Supply vs demand (not buyers vs sellers)
• Manipulation by market makers (by people with a large pocket)

By the way, this is the reason why people monitor volume of trades not just the price. Volume will tell if the price was moved by real big demand or by just a temporay weak supply or demand. The volume tells this story.

Are you over-confident?

Louise Bedford, author of many books like "Charting secrets" and "Trading Secrets", asked something like this from her audience: "if you think you are an 'above average', raise your hand!".

19 people out of 20 raised their hands.

So what lesson can we learn from this? Why is it that 9 people out of 10 loosing money on trades?

Many times, people with above average intelligence believe they are not so good because they understand how little they know.

Even Aristotle who was one of the most influental in building the foundation of Western phyilosopy, who also did research in botany, zoology, phyiscs, astronomy, chemistry, meteorolgy, geometry and many other fields on science such as politics or economy, even he thought how little he really knew.