No one likes to lose and yet most investors do things that cause them to consistently lose.
What?
Yep…it’s called thinking you can beat the system.
And with the advent of AI people foolishly think they can now beat the system by getting an AI ALGO or HFT to think for them.
So, today let’s look at how HFT’s and ALGO’s kill the small investor.
But first, some layman definitions.
HFT= High Frequency Traders.
ALGO=computer algorithms that calculate, transact, and execute trades in Nano-seconds. (Faster than the blink of an eye)
The big BOYZ use these programs to trade their own accounts.
And most of the time they purposefully trade AGAINST YOU.
Why is that important?
If you try to trade against them, you’ll get smoked…every time.
I realize that many of you never heard of these terms before but it’s the mindset of trying to beat the house that will be your downfall.
Think of it like Las Vegas.
The odds are against you.
Avoid the Consistently Lose Game
But there is a way to work within the confines of these mega-computer programs and not have to rely on some AI algorithm.
FIRST, you must avoid the mindset of trying to beat the system. Instead, you must adopt a strategy that won’t take you out of your comfort zone.
By that I mean you must place a value (price) on a trade that you like and not worry what the market does.
SECOND, use Limit Prices on your buy and sell orders.
This way you won’t get frustrated when the price jumps around like a jackrabbit.
But here’s the SECRET: It takes the emotion out of the trade. *
(* Please Note: It’s Easier said than done.)
But if you are interested in finding out more about how to take the emotion out of a trade, be sure to read our Short and Sweet Tips column (HERE).
Because, every month we breakdown Wall Street’s jargon into easy-to-understand terms in our monthly newsletter Simplifying Wall Street…In Plain English.
