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Six Ways to identify Novices

October 18, 2008

Market is a place where you get to see market newbies by dozens. Investment gurus term them as newbies, dumb money, Aunt Millie and a variety of condescending names. Often I make it a point to stay away from them[I have this superstition it destroys trading focus], but with time I have almost zerod in on six indicators to classify him as a noob or a trader worth of some salt.

  1. He watches CNBC,subscribes 10 journals and buys newletters of atleast 4-5 gurus: I think this is one of those damaging habits of listening to people who matter the least. This time in Money Today [dont ask me how I was caught reading it 🙂 ], people were talking about investment in foreign sylvan lands. Come on, give me a break! Do you think, I can do that? Six Months back people were talking about resurgence of gold and its high price action. Didnt seem to work, did it?
  2. Thinks of ‘Why’, rather than ‘What?’ : I believe this is one of those collateral mistakes people make when it comes to understanding markets. They think, if global markets fall the Sensex will fall or better yet, if DJIA falls Sensex will rise. This could not be further from truth. Studies have shown Sensex is more correlated to Hang Seng[ ~0.42] ,than DJIA[~0.38].But in absolute terms even such numbers prove to be dumb means of predicting tomorrow. The points[Sensex vs HangSeng] just looks like salt and pepper noise.
  3. Talking about Markets with everyone within a mile: They are usually the new entrant to the market, who believe stocks are the way to go and it is the gateway to the financial freedom. Interesting! and Exciting! And unfortnately they cant control themselves from discussing it with everyone.
  4. Believes to be rich, every trade has to be a winner: The potential to not digest in losses sets a novices away from real traders, any day.
  5. Times the market, Top or Bottom? Open any channel any trading morning, the hosts will be asking their first question to any European/American securities analyst, “Is this it?” or “Joe, is this the bottom?” And half of the time, Joe on the other hand says, “Yeah this is, but further downside possible”. If you forget to follow this, dont forget rule 1. Keep them off!
  6. Looking for a sixth reason, when 5 reasons do just well:
3 Comments leave one →
  1. Soham Das permalink*
    October 18, 2008 2:18 am

    The next one might be Six ways to identify good traders

  2. October 18, 2008 3:19 pm

    Well..can we make it The One and Only way to identify good traders…

    1. Subscribes to Jumpup feed…

  3. Soham Das permalink*
    October 18, 2008 9:19 pm


    Wow,that was a wonderful compliment and I am feeling the ego boost, which is really bad for people who trade 🙂
    [Traders cant allow themselves to fly too high when they make a winning trade and cant let themselves drop when they make a losing one. They have got to be a Buddha but I wonder what will he do with the money]

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