I assume you asked a rhetorical question. But still, I will offer my answer..... You trade against not one trader or one bank but against all, all at once. I view it as a collective conscience an entity if you will. You can't fight the masses. They are always right. Best one can do is hop on for a ride. Massive groups of people all together tend to act at a base level the vast majority of the time, at least up until this present day and, I feel into the foreseeable future. This base level lacks maturity by definition. So to deal with it well one needs a great deal OF maturity. For example dealing with children (low maturity). To be very effective with them one needs great patience (high maturity).
We must be like the fountain or spring that is continually emptying itself of all that it has and is continually being refilled from an invisible source
Buy Low And Sell High (read left to right or right to left....lol)
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If only it was still as simple as competing with guys in the pit waving hands and scribbling down orders by hand. How in the world the average trader expects to beat the pros (much less pros armed with proper firm resources) remains a mystery to me. One lap top armed with some moving averages and a stochastics or MACD? Really?
IMO the average retail trader does not make money trading AGAINST someone but trading WITH. Of course you need a counterpart for your trade but this is not the question on any market you always have a flow of order in both direction it is called liquidity.
It is not for example because you have made a buy and a gain of let say 50T that the guy who sold them to you is an idiot. He may have a thousand good and valid reasons to sell them and just to mention a few: he is edging a position on option or physical market, he bought them 500T cheaper, he is re balancing a portfolio etc...
R.I.P. Olivier Terrier (aka "Okina"), 1969-2016.
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The way I deal with it is I give a very large part of my profits to charity. I spend as much time as possible organising help for people, particularly those who may go on to help others. I don't care about anyone who just wants more 'more' dreaming of being a soccer prince etc.
In my case I'm trading for someone else and that motivates me which is in itself self-serving. I work on commission in a way though its all my own money. Seems to work ok and I don't get 'success anxiety' or other embarrassing "first world" dilemmas. I'm not Colombian. If things seem bleak or I'm sad I know directly from this constant reminder that I am by birthright of my passport better off than most of the world anyway.
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So I can clear my thought better, I feel there is a difference in stock buying where all can benefit from a great company (unless one is short) and futures, where unless you are a commercial, you are taking a speculative zero sum position.
One short. One long. One contract. One winner. One loser.
I just took a short position in the YM at 17599. Someone went long. My target is 17565. If it hits that target I will earn $3500.00 That does not mean one person will lose that. They could lay the trade off on someone else.
My main reason for speaking of the "against" scenario is that I see many new traders take positions without regard for risk, as if the computer is going to hand over cash like a broken slot machine.
They don't think they can lose. They move stops AWAY from their initial risk. I have a stop at 17628. I will eat the loss and move on if I get stopped out.
My goal is to follow my plan. I hope that newer traders can do that as well.
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The biggest factor most traders are trading against is their own mind trash.
I have a very good system that works with very good expectancy. All that is left is to execute. Easier said than done sometimes.
As to the counter party to my trades. I don't give them a second thought and could care less about them. Some big fund or trading desk doesn't give a shit about me, why should I care about anyone else that has joined the game? Life and trading are brutal that way. There is zero room for any altruistic thoughts to enter your head while trading.
Last edited by Hickock; July 11th, 2016 at 07:26 PM.
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I think a retail trader is trading against himself. We don't move the market. We just tag along. Consider as an example, a trend day. The price keeps going up and up. It's like an unstoppable force of nature, but I don't make money because I didn't have the courage to get in. There is no manipulation or trickery, just an unstoppable trend. I fail to see the usefulness of the zero sum argument, even if it is true. The way to make money was to pull the trigger and get into the trade. The only thing stopping me was my psychology.