For folks who are trading profitably and consistently in 2-3 instruments for a good period of time, do you see the need to look into trading other instruments and markets?
I'm looking at discretionary traders who spend huge amount of screen time daily
Different instruments have different behaviors, the method which is successful on one instrument generally cannot be applied wholesale to another (especially in different markets - eg forex vs indices vs commodities vs options) without changing at lest the parameters.
Looking and learning the behavior of a new market/instrument and modifying your method takes time and can disruptive to your actual trading which is bringing in the real income. Even the current instrument which you are trading could change in its behavior over time and you need to constantly update your trading approach to keep your trading results consistent. So you need still watch those you are familiar with constantly
The main reasons for looking at new instruments are increasing revenue streams and diversification.
I have a feeling most profitable traders are actually one trick ponies - they focus on one thing and do it particularly well, is there a need to learn another trick?
Last edited by jonc; January 27th, 2015 at 01:15 AM.
Hmmmm....well I have been doing basically the same type of trading since I started over 20 years ago, long term investment and long term swing trading in stocks.
I have at one time or another thought that options might be interesting to try, but rejected the idea when all the confusing jargon and procedures (to me anyway at the time) made no sense at the time. I thought of daytrading several times but frankly don't want or need the stress of sitting before a monitor waiting for an event to happen, recognizing it... getting in and then out... so, though I have some of the tools to execute and complete a trade , I lack the tools to find good opportunities to use these tools on.
I make a pretty decent living at long term trading/swing equity trading. I find it constantly challenging, interesting and I get more and more ideas within this approach... I am never bored.
There is nothing wrong with becoming very good doing something rather being mediocre doing many things. I saw a signature line another poster had that was attributed to Bruce Lee "I fear not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick 10,000 times."
This is very wise in my opinion. Trading is not something that can be learned in a few months and you know everything there is to know. The more you practice that one "kick" the better you understand the craft and if you are wise you will expand your knowledge within that kick. To float around like a butterfly touching on many styles of trading does not allow you a chance to develop any expertise in one in particular.
Trading in one area should not be a static thing... becoming good at it requires a lot of work... to split your attention among several trading areas is not the best way to trade IMHO. Yep, Bruce Lee has it right, as I see it....
Imagine the scope of information needed to know just one market really well. That answers the questions itself unless your tactics is analyzing global trends, which are most often represented by correlated moves across different instruments.
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