Isolate your edge; don't just gamble, trade

The other night I was hanging out with some guy from the Gambia, talking about Reggae and dark-haired Danish girls, that kind of thing. His friend (probably Sengalese) was playing the slots. Hitting the button over and over again. He poured €170 into it, all gone. Sometimes he wins €200 so he wants that back. He even borrowed another €30 from the döner shop and poured that in. He was philosophical about it, but he just can't stop. The Turkish kids all gamble too, but he pointed out that they steal. At least he was honest and sold weed.

Some study [citation needed] showed that both humans and monkeys will find a game addictive when the result is erratic. If its predictable, then the game becomes boring. Even if the terms of the game are against you (its a slot machine, do the math) you will still play it because your brain rewards those sensations.

That reminds me of scalping, which I've told myself to stop doing, and yet sometimes I think I see an opportunity and pop a trade in there. More often I feel the DESIRE to make a trade (missed out on a rally) and then convince myself I see a move and then I'm in. Classic over-trading.

I do know what pieces of knowledge I need to become successful at it. I have in periods been focused and operated correctly and profited. I need market delta, to learn the corporate-bond/treasuries market (as a tell), to watch advancers/decliners and to watch the sectors more carefully. Mostly I just watch TICK and TRIN, and that's not enough.

As I've posted in this blog, I don't see any purpose in scalping other than to learn how to deal with the traders world of :

1. randomness (reacting correctly to unexpected events)

2. market tells (reading the market correctly, not just through price action)

3. focus amidst overwhelming amounts of information (isolating what I do know)

4. the most basic lesson : cut your losers fast, let your winners run

Learning this at a micro, real-time level prepares me for intelligently doing REAL trading which is actually investing.

I don't see any just or moral purpose to scalping, but investing allows an effect on the world.

Not all trading/investing requires having massive analytic and fast execution trading desks. But you have to understand what the little guy can do well and focus on that.

Lately I've been burying my head in fundamental analysis. I'm becoming a fundy. Its amazing : shitty books go down and good books go up. Its fucking magic.