The Professional Trading Edge

Professional Trading-1

The Game ''Wall Street never changes. The pockets change, the suckers change, the stocks change, but Wall Street never changes because human nature never changes. The game of stock market speculation is the most uniformly fascinating game in the world.'' Jesse Livermore 1923 How do present-day professional traders, in the pit, on the floor, or behind a remote direct-access trading screen, using completely different strategies and time-frames and trading a diverse mix of financial instruments across multiple markets, still collectively generate a much higher percentage of profitable trading income than the general public and the rank and file market participants of the financial services industry? In the stock selection and/or trading process, if you eliminate from your thinking the voluminous and distracting 24/7 tidal wave of ''random noise'' emanating from market gyrations, tangential economic data, conflicting analyst's opinions, financial industry buy-and-hold propaganda, hedge fund blowups, the behind-the-curve mainstream financial press, creative accounting methods, tv's talking heads, the Wall Street scandal du jour, market guru forecasts, long-winded broker sales pitches, jawboning politicians, upgrades followed by downgrades, buy indicators followed by sell indicators, etc, etc, etc, you are left with a very simple but accurate economic theory - the irrefutable law of supply and demand. More buyers than sellers willing to sell at any price level will cause a stock's price to rise, more sellers than buyers willing to buy at any price level will cause a stock's price to decline. It bears repeating; supply and demand determines prices. This proven theory plays itself out in the financial markets every single day, week, month, and year in a number of different ways that can be exploited for profit. Successful professional traders are able to identify trends and price imbalances within the battle between supply and demand and predict the outcome with a consistent degree of accuracy, over multiple time-frames, without being distracted by the enormous volume of largely irrelevant and already discounted random noise emitted by the financial markets on a daily basis that tends to excite the average investor crowd. Because they know exactly what market conditions and corresponding trade set-ups they are looking for, trading professionals are able to navigate their way through the financial noise to consistent profits with far greater precision than the average market participant. Their filtering abilities give them a significant edge by greatly simplifying their decision making process, allowing them to recognize their market opportunities with clarity, and to then act with confidence and conviction. As far back as the turn of the 20th century, Charles Dow, co-founder of the Wall Street Journal, namesake of the Dow Jones Industrial Average and the original architect and advocate of technical analysis, as well as the legendary stock operator Jesse Livermore, who netted 100 Million Dollars by betting short before the great crash of 1929, all the way up to the modern era's famed ''Turtle Trader'' Richard Dennis, who spawned a generation of successful professional traders , were all adamant that above all else it was their disciplined ability to strategically ''follow the tape'' (price & trend) that led them to their greatest profits.