Investing, trading, or fishing?
Have you ever heard the expression go fishing? Usually, in trading it refers to an uncertain market when some people prefer to wait before taking new positions. However, fishing can be a very powerful metaphor to characterize the trading/investing world.
You see, when you go fishing you may use various techniques. Some people just throw the net and wait for the big fishes to come. Others may use the fishing rod with different baits and move where fishes are more likely to be.
If you think about that, you can realize that the same happens in trading/investing. Some people are long-term investors, like those throwing the net and waiting for the big opportunities to come. Traders may use different techniques/strategies to exploit the current situation of the market, exactly like the fishermen using different rods and baits.
When someone asks you if it is better to do trading or investing, think of that metaphor. Both the net and the rod can be good systems, there is no right or wrong. They are just different strategies to catch fishes.
This metaphor also tells you why it does not make sense to look for the holy grail, the magic combination of indicators that never fails. It is like expecting to have a fishing strategy where every day you are certain to catch fishes. Unfortunately, nothing is certain, and those saying otherwise are probably lying. That is also why keep moving from strategy to strategy is not a good idea. It is like keep changing rod, bait and location, failing to understand that you will not be able to outsmart and anticipate the fishes all the time.
I would like to conclude with a quote, already reported here. It is from the commodity trader Larry Williams, who wrote: “people who make their living looking into crystal balls are destined to eat a lot of broken glass”. Interestingly, he is the father of Michelle Williams, one of the actresses of the TV series Dawson’s Creek. She was able to win a futures trading competition when a teenager. This is just another confirmation, after the Turtle Trader experiment, that you do not need a degree in finance to succeed as a trader. But this is another story.