Fooled by randomness?

Randomness of market
Believer of efficient market hypothesis will subscribe to the belief of randomness in stock market. Theoretically, it is impossible to predict the movement of stock market and it is logical to assume that the few successful traders are product of randomness. Is that the case? Well, only time will tell. My personal belief is that it is statistically possible to achieve a market beating performance with a carefully designed strategy.




When the dumb money stop being dumb
For the average investors, they should be contented with the market return and they would be better off with investing in a basket of stocks that represent the market or simply buying the index ETF. After all, when the dumb money recognize the challenges in "beating the market", the money stop being dumb. This idea of dumb money stop being dumb is made famous by the "Father of value Investing" Benjamin Graham.




Attributes of a successful trader
While successful traders adopted different strategies and took different paths in achieving their goals, there are some common traits of successful traders. I believe besides a proven strategy, the mindset of a trader is the key to success in trading. Trading in my view is like running a business. As in all businesses, trading involves cash flow out and cash flow in. The challenge underlying most traders is in managing cash flow out. Regardless of trading strategy, there will always be time that a trader has to take a losing trade. This should be regarded as cash flow out (for cost of goods for example) and all traders need to recognise that this is part and parcel of trading. As long as the strategy results in overall profits over a stipulated period of time, that is a working strategy.