Followers Are Leaders Only To Other Followers In Trading
Topics: stock market, work from home, home business, investing, online trading, day trading, forex, futures
When we turn to day trading to make our living, something very interesting happens. We often find that we are more willing to learn when we can “follow the crowd” and create our portfolio by watching the actions and inactions of other traders. As we start to develop better skills, insights, and even a natural inclination toward making more profits and making better decisions, it would seem prudent that we scamper away from the crowd and run off to make our own decisions regardless of what other traders are doing. But that generally isn’t the case, at least not for quite awhile.
When we follow the crowd we have convinced ourselves that we are safer, making more intelligent trades, and are somehow protected from significant loss because we are doing what everyone else is doing. Yet what we are doing in reality is really not any safer. In fact, it is more unsafe and actually increases your chances of filing losses and decreases your chances of filing large and exciting gains.
When you follow the crowd you are putting your faith in someone else’s concept, trading decisions, due diligence, and intellectual process over your own. Considering that only you can make the best decisions for you, it doesn’t make much sense to allow someone else to make such important financial decisions for you, especially when the only impact they are even concerned with or aware of is their own financial impact. If you paid a broker to invest for you, they would have at least a vested interest in your success. Following the crowd of independent day traders leaves a decision about your financial picture in the hands of someone without a single shred of vested interest in anyone’s success but their own.
It can be very scary to go out there and break out on your own, make decisions against the crowd. In our minds we have blown it up into something much larger than it really is. We have decided that along the way if someone makes a decision against the crowd and they come out ahead, then they are a genius. Of course, if they make the exact same decision in the exact same way but they lose, then they are an idiot.
Believing that the same decision can create either a positive or negative image of you based solely on the outcome is rather self destructive. Provided that you are making the best decisions that you can based on the information at hand, then you are heading in the direction of success and beating yourself over the head with the age old “should have” or “could have” scenarios isn’t very productive.
Often when we take risks, whether in life or directly related to trading, we look outside of our own thoughts for some sort of feedback about those risky decisions. In doing so, we often offer up our own power of self trust in exchange for some sort of positive reinforcement. You might find it more useful to view the situation a bit more effectively. Are you a trend setter? Are you an overt risk taker? Are you purposely trying to self destruct? Are you looking for an opportunity?
By understanding our own motives we are more easily able to assess whether we are performing tasks and making decisions that we honestly feel are in our best interests or if we are making poor decisions based on the need to please others, to look heroic, or to challenge our boredom. Whatever our reasons, when we make risky decisions, we still need to realize that even in a nonproducing return we have been able to make the very best decision possible for ourselves based on our knowledge and level of self confidence at the time. And there seriously just isn’t anything wrong with that.
Trading from the perspective of accurately determining what works best for you is the most positive place to trade from. Working out your details, your investment plans, and knowing why you are putting your money where you are helps to integrate the belief that we are doing just fine as long as we are making decisions based on the information that we have at the time.
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