An insight into the becoming of a winning trader...

[The following was written by the legendary trader Larry Williams in an introduction in one of his books (Picture Perfect Trading, 2005, p. 5-6), and the topic is about the most important ingredient for winning in trading.]

In these pages and at this seminar you will be given all the tools, formulas, patterns and systems to beat the markets.

But that is not nearly enough.

How can that be? Is it possible for someone to mess up a good system that much? The answer is one most students do not want to hear. As I see it, our market successes have nothing to do with whether or not our parents loved us, we were beat, or not beat, as kids, not does it turn upon our self image, some inner desire to lose or self destruct. That's quite frankly, all a bunch of bull to get you to buy "motivational" tapes and sessions, taking you one step further away from the truth.

It is hard to make money at this business... because it is a hard business... not because of what's hidden in the recesses of your mind or the shadows of your past.

Here's why this is a most challenging business; at the heart of it:

"The market is a collision of random events, spiced with human emotions and fundamental realities."

Until you fully grasp the meaning of this statement there is no way you can become a good trader or speculator. Did I suggest it was predictable? No. Did I suggest it was a living breathing organism, as do many, that can be figured out? No.

My understanding, and this comes from within me as well as having the fortune of knowing traders better than myself, is that the market is largely unpredictable... full of randomness and wildly gyrating public emotions.

Oh, yes there is some hope... the hope is that of the fundamental realities and what, if to any extent, we can understand human emotions. The despair is the huge doses of randomness we live with ... every hour of every day.

I will show how here, how we can profit from human emotions, patterns, trend, gaps, sentiment surveys and the like. We will also look at the fundamental realities, what the super smart money is doing, interest rates, earnings and fundamental value based relationships.

But... until you learn to deal --- accept and embrace --- randomness, your career will oscillate more than a 3 day %R, from one side of the charts to the other.

Know this:

1. When you are losing money the tide will soon turn to profitable trades. When you are making money the tide will soon turn to losing money.

2. Your success will come from the questions you ask and the responses you make.

3. Because of the randomness you can never believe in anything except protecting your dollars and that randomness will prevail.

4. This means you cannot buy lows and sell highs... which in turn means you need to gise the market leeway, but also use stop losses.

5. Due to all the above... your battle is the battle for consistency... anything in the way of that should be destroyed.

ALL YOU HAVE TO DO TO GET TO THE NEXT STEP IS... Largely, just do the opposite of what you have been doing. If you are like most, you have not been consistent, not organized and not asked questions of the market... you have asked questions of your broker, at parties, in chat rooms and to supposed experts.

As far as I am concerned no one --- including me --- is an expert at this. Some are better than others, but most who hold themselves out to know so much, don't trade or lose. Yet they have the audacity to continue telling you what to do.

I get angry when I have losing trades, am not nice to be with, get anxious in trades, upset with the world, just as you do or will. The difference may be that I look at the emotion and move past it... that I mask my emotions so the world around me cannot (must not) have a clue of what is happening to me. You don't want to play poker with me... I have learned that to succeed I must sublimate all of my market emotions and at all times.

Be very careful you do not transfer this to sublimating all emotions, I've been down that path, it is not a healthy one.

The more you play the role of a detective... a detached detective at that... the more successful you will become. And now... it's time to start detecting reality in the market place.

With best wishes for success
Larry Williams