Excerpted from this morning's Market Recon column:
Understand: Everything we do or do not do; we do or do not do for a reason that we could explain to a child. If you do not understand something, then do not get yourself exposed to it.
Identify: There are three items that need to be identified as we move along. We need to be able to recognize perceived threats, avenues of attack or approach and targets of opportunity.
Adapt: Environments change. So must we. There are no standard operating procedures. There are ways of getting things done and these methods change. We don't trade in Spanish pieces of eight anymore and professional trading is no longer done by humans. This is why creating the above levels is so key to success. Become what is required when necessary. No excuses. People are counting on you. Failure is not an option.
Overcome: Find a way, even in the face of persistent failure or constantly changing obstacles. Expect victory and make it happen through discipline and strategy. Plan, calculate and act when the probabilities are in your favor. Fade when they are not. Do not fear. Fear is but for the wicked and scared money does not make money.
Carry On: OK, you won one or you lost one. No emotion. You've been there before. Hand the ref the football and jog back to the sideline. In short, carry on with the mission. The game is not over.
Remember always that you are a competitor and will have to fight for your family and their way of life. No one will hand you anything. The machines ... high-speed, keyword reading algorithms, are designed to force market overshoot. When I was young, trades were timed in minutes. Now, trades are timed in microseconds because milliseconds are too slow. That's one millionth of a second, because one thousandth of a second is too slow.
Understand that. That's how your enemy thinks. This market model is not the ongoing, two-sided auction market model that you grew up with. That model was designed to create transparency. You had to identify yourself by naming the firm you were representing and announcing your badge number. Where do you think my "986" came from? This ensured fairness in the process of price discovery at a centralized point of sale.
This current market model is designed to intentionally shield large players from market transparency and prevent fair price discovery by spreading the last sale across a number of fast-moving market centers. Recognize that the scales are imbalanced and as a retail investor, these cretins have decided that you are fodder for their profit. Take offense to that. Let it burn, while remaining in control. Lay in wait for them. They are reading the sports pages while you focus on victory. Know what you want to do when opportunity becomes apparent.
Just because "they" have the advantage doesn't mean that they have ever competed against someone who knows they are the enemy and is ready to defend his or her household. Yes, this is challenging. Yes, we are the mighty. Rock on, my friends.
