One of the things which you learn after spending few years in market is that the day to day news and New York Times headline or conventional wisdom in most cases is priced in by the market. So when you read slowing economy, sub prime bankruptcies, China trade wars, inflation, Iran adventures, and so on and start trading based on it. You are likely to find very little success. In fact you might have to give up trading and find job with NYT to join in with the doom and gloom party.
The market price cycles and news price cycles never match. That is why the market is said to climb a wall of worry. The money making opportunities exist because the news and bearish analysts create a distraction for most average speculators. While majority are busy waiting for the doom to take the market down, the market acts contrary to expectations and offers bullish opportunities.
If you think about it and contemplate why it happens, you can pretty much figure out the information lag between large speculators and small speculators. Take for example the sub prime news, you can be rest assured the big banks and smart speculators were aware of it months in advance and had already acted on that information.
The other more interesting thing about the market is that it offers varying degree of opportunities to different set of speculators for same time period, depending on their skills and methodology. That is why rather than focusing on the markets you should focus on the methods. The markets are not controllable, but your methods are. None of the methods I use like Episodic Pivots, 100% plus, IBD200, or Earnings breakout changed during or after the market correction. Post correction the same method continue to bring opportunities to table. A significant one time effort in putting together a structured and well defined method can pay you long term dividend. I watch with great fun, how traders flirt from one methodology to another. Putting together your conveyor belt of ideas once is the key. You can tinker with it a bit but the structure should be in place to bring opportunities to you on daily basis.
If your method differs depending on whether it is Monday, Tuesday, or Wednesday, you may simply have no methods. Or your method consists of running 32 different scans, probably you have no defined method and no way to prioritize market opportunities. Or if your method gets influenced by what you read or what Buffet does, or what Soros does, or what some growth or value manager puts in his portfolio, you have no method of your own. Even worse is if you are following someone else who follows such half baked approach. Lot of activity is not a profitable strategy. Worse is if you are paying for following such person.
Just defining one method in detail and following it day in and day out can help beat the market noise. Choice is a big problem in the markets.Few want to define and trade one method. Every week I get emails from people wanting to learn one of my methods in detail.My message is same just master one method thoroughly and see the results for few months , then go to another. It is my experience so far that 99% within two or three weeks are in search of new method or get excited by something else and go chasing after a new method and new opportunities. It takes around six month to master one strategy., if you do not commit that much resource to a method, you seldom find good results. Brownian motion is a big problem for unsuccessful traders.
Later I will have more on "Why choice is a big problem"