Binge Watching Movies Beats Finance News

2020-05-04 | Simpler Trading Team

Too many traders fall into a trap where they leave their jobs and follow what Simpler Trading refers to as the “news setup.”

They get excited because they are finally able to trade full time. They have relief from feeling disadvantaged for so long… getting quotes from their smartphones, sneaking in trades between meetings, and hearing about key news events only after the markets have closed.

Then, as full-timers, what do these liberated traders do? They plop down a TV right next to their computers, turn on news 24/7, and glue themselves to the screen searching for trading opportunities.

What they fail to realize is that news has a different purpose than what traders need. News is focused on the primary job of providing viewers with just enough entertainment so they tune in and stick around for as long as possible. Ever notice how news “teases” the next segment several times during its current rant, then fails to deliver in full what the “tease” offers?

Networks know very well that when more people are watching the news, the network makes more money from commercials — eyeballs and advertising time. It’s as simple as that.

Let’s be clear, news can be worthwhile to watch, and when things get serious the news is important. Take into account any recent, or past event, where something big and terrible happened, floods, tornados, shootings, and the current pandemic with all the news it has created. The tragedy of 9/11 is still etched in the minds of many millions of people.

The news of terrible and historic events can be a gut-wrenching experience to watch, and the reporters and the networks can do a great job. That said, traders must realize that they cannot make a living “trading the news” off any financial news channel.

By the time something appears on TV news, it is way too late to react. Trading floors have already heard the news, and by the time it makes it to the public, the floor traders are closing their positions, ideally to suckers who just saw the headlines. If anything, finance news could be used as a “fading tool” — taking the opposite side of the news.

Once news runs out of stories and starts repeating the same things over and over, simply turn down the volume and either turn on a commercial-free music radio station, or some “brain focus” music free on the internet. Even switching to previously viewed movies as background noise can help with focusing on trading compared to “late-to-the-game” news.

Traders making a living full-time in the markets spend their days waiting for specific setups to take shape. Yet, one of the biggest weaknesses of most traders is a need to be in every move. If the markets start running away, many traders just can’t help but jump in, fearing that they may be missing something big.

This is a fatal flaw that will ruin any trader who can’t control this habit. If there is anything to hammer into your brain as you grow as a trader, it is this: it is okay to miss moves.

Professional traders miss moves while amateur traders try to chase every move.

It may sound too simple, but by listening to music or keeping a movie on in the background, traders have something they can use to pass the time while they wait for their specific setup to take shape. This makes them less prone to jump impulsively into trades just because they are bored or because they can’t stand missing out on a move.

The goal is not to catch every move in the market. The goal is to take the specific setups that you have outlined as a part of your business plan. Otherwise you are just a gunslinger and, sooner or later, you know what happens to gunslingers. (Excerpted from “Mastering the Trade,” 3rd Edition, by John F. Carter, Founder of Simpler Trading.)

We Saw: late-day rally in markets to stay positive — 

  • U.S.-China issues rumbling again
  • Warren Buffet shaking up airline stocks
  • Concerns with meat packing industry

We’re Watching: … how “sell in May” will shape up —

  • Fed to take on "fallen angel” junk bonds
  • Airline stocks falling down 60% on year
  • Will recovery be a tortoise or a hare?

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