Are You a Lonely Wolf or a Social Animal?
Some people don’t like to play team sports because they don’t want to lose the match due to the mistakes of others. Some people don’t want to play individual sports because when they lose they know they are the only ones to blame. Trading is usually an individual “sport” unless you are working for a bank or other financial institution on a trading floor. Especially for us retail traders, trading is a lonely activity, but nonetheless, often we gather in chat rooms, forums and similar platforms. Are you one of the guys who likes to be surrounded by other traders or you want to be left alone to think about your trading? And is one way better than the other? Maybe we can find some answers.
The Slippery Finger
A long time ago, in a galaxy far, far away… no, that’s not right. Some time ago I used to trade with a friend. I never actually met the guy, we just used Skype but I think I can call him a friend. Every morning we would sit at out computers, talking about the next trade, sharing reasons why we would take it or not, warning each other about news or major economic releases and more importantly, helping each other with our patience. See, we both were a bit overly eager to enter trades, rushing in like there was no tomorrow or like the market would stop Friday and never open on Sunday evening. We liked to joke, saying we have slippery fingers, sometimes pushing the trade button before the actual signal.
In this regard it was very good to have a friend, but after a while other people joined in; friends, then friends of friends, then the neighbor of a friend’s sister-in-law, then his dog (I still wonder to this day how was that dog able to type but hey, some things I will never understand). By the end it had turned into a yapping Skype room where people posted about the latest flick or pictures of their dream cars. My initial trading companion cut back a lot on his trading due to other business keeping him occupied so I realized it was high time for me to make my exit. I don’t know what happened to that room, but I hear the dog is managing a huge fund… maybe I should have stayed? Anyway, the moral of the story is: as long as a social environment is productive for you and clearly helps with your trading, stay there and make the best of it but sometimes even the best social gatherings start to suck so you must know when to step out.
All That Glitters Is Not Gold
As a newbie it’s good to have some sort of guidance from more experienced traders, but sometimes it’s hard to see who is really an experienced trader and who just wants to pass for one. Come on, it’s the internet and people love to appear what they are not. They like to say: “Oh, I traded this and that, made lots of money, went on vacation with my supermodel babe, bought a new car”. But can you believe everything they say? Nope because it’s so easy to fake everything. Think about forums and people posting winning trades: say that everyday some guy posts about 3 – 4 winning trades, with pictures, entry price and all. At first glance you might say he is the greatest trader of all time and you might be right but can you be absolutely sure he posts ALL his trades? Wouldn’t it be possible that he only posts the winning trades? Yes it would. Maybe he takes 10 trades per day, wins 4, posts only the winners and Boom! – he’s the greatest trader in the world. Then you want to learn from him, socialize with him, heck maybe even ask him to trade your account and pay him a fee or something. See, that’s a con of social trading, but can be avoided easily if you understand that all that glitters is not gold.
The Big Clash Of Opinions
Inevitably when people come together to trade binary options, some will have different opinions than others. Maybe you look at your charts and believe price will go up in the next hour, but you go into the trading room (be it a chat room or a forum room) and John says he is sure price is going down. On the other hand, Mary says it’s clearly moving sideways and that she is going to take a Boundary trade. The Dog is simply wiping his monocle, refusing to give any advice and humming “… like a dog without a bone, an actor all alone…” Confused yet? Are you still sure price is going up like you thought in the beginning? You don’t know what to believe anymore and now you are just like a dog without a bone or an actor all alone – a dog wants a bone, an actor wants an audience and you want a trade, but thanks to the other traders in the room you don’t have a clear bias now and don’t know what to do.
There’s an upside as well and I believe this one tops the other cons: having more eyes looking at the same thing makes it easier to analyze and also it means you won’t miss out on good trading opportunities. Many times I’ve been working on something else and forgot to check charts but somebody in the chat room gave me a heads up so I was able to take the trade. Also, when it comes to the analyzing part, some people are better than others at different aspects of trading. Say a guy is very good with Support and Resistance, other is good at interpreting price action and you are good at trading with Moving Averages. When all of you come together and each one brings to the table his best tool, it’s easier to succeed than a single trader who knows how to use each of these tools but doesn’t excel at either one.
The Bottom Line – Should You Be A Social Animal?
Yes, definitely Yes! But you have to be EXTRA careful not to fall into the trap of yapping rooms. Chit-chat and small talk ruins the very purpose of a trading room or a forum room dedicated to trading together. Always remember that you are not there to talk about what you had for dinner, but about trading. Now let’s not be absurd, of course you need to talk, bond and possibly make friends but you have to know when enough is enough and when the room becomes more focused on chit chat than on the next price direction.