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In reality, every trader goes through this stage, whether it's Soros or Buffett. Nobody is born with an innate ability to trade or solve the problems that arise in trading. Personally, I dislike referring to individuals in this stage as "traders" because it tarnishes the profession's reputation. I prefer to call these individuals "gamblers" because, all too often, they cannot distinguish between gambling behaviors and trading behaviors.
Novice traders can be classified into two tendencies based on past experience. The first is the dependent trader, while the other is the overconfident trader. Let's start by discussing the dependent trader. Understanding this type of trader is not difficult. Think about whether there is always someone around us who wants to find a leader to "take care of" them wherever they go. They are skilled in handling things, but they lack independent opinions. They have never thought about improving their own abilities but hope to gain benefits through dinners, gifts, and other means. This type of person can be found everywhere, and they have a certain survival space in China. Trading behavior reflects one's personality, and in the trading industry, there are many people who would rather believe in so-called insider information or visit industry "experts" in the hope of getting guidance. Essentially, this approach is not feasible because the financial market operates on a winner-takes-all model.
It's not appropriate to discuss the authenticity of the so-called insider information. Even if the quality of the insider information is high, it does not guarantee that one can understand the market's response to this information, which will be analyzed in-depth later in this chapter. In fact, many dependent traders lack a financial education and hope to take shortcuts to make money. However, it takes two to tango, and we must examine this phenomenon from both perspectives. With careful consideration, we can understand the logic behind it and appreciate its cleverness.
In order to help readers better grasp the concept, allow me to share a story. In some remote mountainous regions in China, there are individuals who claim to be divine doctors, offering ancestral secret formulas that can cure all ailments and guarantee the birth of a baby boy for pregnant women who consume the formula. It is well-known that in a large enough sample size, the likelihood of having a boy or a girl is infinitely close to 50%. The "divine doctor's" secret formula actually has no healing effects, and its clever business model lies in the unequal contract between the divine doctor and the patient. If a pregnant woman who consumes the divine doctor's secret formula gives birth to a boy, she is required to pay a gratuity to the divine doctor as compensation. However, if the woman ultimately gives birth to a girl, no fee is required. This "no success, no fee" model appears reasonable to many people, but in reality, the contract that allows the divine doctor to profit regardless of success or failure is not based on their skills, but on the rules they have established.
The story is easily comprehensible, and it draws a parallel to those who frequently promote so-called insider information. The divine doctor's secret formula is analogous to insider information that has "no therapeutic effect." The chances of a pregnant woman giving birth to a boy or a girl are akin to the bullish and bearish lines on a candlestick chart, where the probabilities of both are not significantly different. In the end, if someone indeed profits from insider information, many people will naturally show gratitude to the information provider. Conversely, if they lose money, the divine doctors will have already prepared a set of excuses to alleviate the situation. This is a game that both parties are willing to engage in, yet many people still willingly give money to the divine doctors. As for the ultimate outcome, I don't need to delve much deeper into it.
Dependent traders often lack the ability to think independently, as they tend to rely on the opinions of financial experts on major financial channels or the internet. While they may not blatantly copy or mimic these opinions, their decision-making/>/>/>/>/>