From Retail Trader Pleb To Stock Market Connaisseur

The journey from unconscious incompetence to stock market connoisseur.

“I’m Forex Trader”

Having been a trader for so long, its funny when I hear retail traders call themselves a ‘Forex Trader’ or a ‘Gold Trader’. I think the reason why retail traders do this is partly out of ignorance, and partly because it gives the impression of being employed on a desk in an investment firm that specializes in a specific asset class. It has an air of respectability.

As usual, this is part of the disingenuous story of the average retail trader, who is handed a narrative given to them by so-called ‘trading educators’, who either have no real professional trading experience or are knowingly given poor information.

Retail Trader Lies

One fallacy that is sold to the retail trader is the overestimation of the forex market as a tradable opportunity set. There are opportunities in forex, and forex has its place. But the primary source of trading activity for the retail trader should be focused around the stock market.

Why? Because it’s the largest opportunity set with thousands of tradable companies, and it has the best volatility profile. This is not up for debate. Volatility can be quantified and measured. In fact, it is what the trading business is built on.

Calling yourself a ‘forex trader’ is like saying, ‘I don’t like volatility’, which is to say ‘I don’t like opportunity’. Sure, there are occasional frothy moments in forex – the recent action in the Yen, for example. But moments like this happen on a weekly basis in stocks.

Go Where The Opportunity Is

Oh, but if you start looking at stocks, you’ll have to become acquainted with bottom-up analysis: you’ll have to learn how to value a company, read the balance sheet, assess its debt, management and past history. Boo hoo.

This is just trading 101. You want to make money? You have to go where the market tells you to go. If the markets volatility is concentrated in a certain section of the stock market, you don’t question it, you don’t have a choice; you don’t tell yourself ‘oh that’s not in my job description’ – you go where the opportunity is.

This is what is meant by becoming a ‘stock market connoisseur’ – embracing the multitude of skillsets to assess the validity, risk and opportunity of a trade idea, being on top of developments – domestic, international, geopolitical, financial, macroeconomic, sector-specific and company-specific.

The Journey

This takes time. But it can be done. You see the same company names coming up. You familiarize yourself with industries and their respective value chains and players. Every day is an opportunity to become a bit more familiar with the market and the players. Over time, this information compounds, and you start to develop a deeper familiarity with everything going on in the market.

This is part of the journey from going to a lost retail trader to a ‘stock market connaisseur’. By the way, the word ‘connaisseur’ literally means ‘one who knows’. The best English translation of the word is ‘consciously competent’. There is a ladder to climb here – going from ‘unconscious incompetence’, to effortless ‘unconscious competence’. In French, it would simply be from ‘pleb’ to ‘connaisseur’.

Being Honest

I talk about this a lot: intellectual honesty. Its the secret ingredient to climbing the hierarchy ladder.You have to aware at all times, of where you’re at, and where you would like to go.

There are so many industries and vocations where it simply isn’t possible to practice without qualification and a high-level understanding. But because in trading there is just a button that says ‘buy’ and a button that says ‘sell’, people somehow think that you can skip proper training. It makes no sense.

The first step of the journey is paved with honesty. Curiosity will carry you through. Confidence is found in competence, and competence is found is sticking the process – so make sure to learn the process properly. Graduate from retail pleb, to stock market connaisseur!

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