Is it possible for two traders to have different views on the Market, and, then for both to make money ?
Sounds impossible, doesn't it ?
But, the answer is YES. There are thousands (or hundreds of thousands) of traders for any given market. Each of them has different views on the market, but all of them can make money in the same market, inspite of having contradictory views. Here is how.
An Example:
The market is currently at 2922. Trader A is bullish on the market. He buys with a stop below 2850. He does not plan to go short if the market fails to rally.
Trader B is bearish on the market. He sells with a stop above 3000. Trader B says that he will go long if the market trades above 3050.
The market falls to 2700. Trader A is stopped out for a loss of 72 points while Trader B makes 222 points.
Now, the market rallies to 2750. Trader A is long at 2750 with a stop below 2700. This time the rally persists, with the market reaching 2950, where Trader A exits. He makes 200 points on this trade. Trader B stays away since he does not have the proper buy signals.
After deducting the loss in the first trade, trader has made 128 points, while Trader B has made 222 points. Both have made money.
What made money ? Think carefuly. Both traders made money since they practised proper money management and followed their rules. Now think again: what makes money in trading? Hint: Answer is disciplined trading (NOT buy and sell 'Calls').
Sounds impossible, doesn't it ?
But, the answer is YES. There are thousands (or hundreds of thousands) of traders for any given market. Each of them has different views on the market, but all of them can make money in the same market, inspite of having contradictory views. Here is how.
An Example:
The market is currently at 2922. Trader A is bullish on the market. He buys with a stop below 2850. He does not plan to go short if the market fails to rally.
Trader B is bearish on the market. He sells with a stop above 3000. Trader B says that he will go long if the market trades above 3050.
The market falls to 2700. Trader A is stopped out for a loss of 72 points while Trader B makes 222 points.
Now, the market rallies to 2750. Trader A is long at 2750 with a stop below 2700. This time the rally persists, with the market reaching 2950, where Trader A exits. He makes 200 points on this trade. Trader B stays away since he does not have the proper buy signals.
After deducting the loss in the first trade, trader has made 128 points, while Trader B has made 222 points. Both have made money.
What made money ? Think carefuly. Both traders made money since they practised proper money management and followed their rules. Now think again: what makes money in trading? Hint: Answer is disciplined trading (NOT buy and sell 'Calls').
