By Paul Nieto

Who is the competition? Why can you succeed? Why are you loosing? Below are some of the more general inversting types of people you are competing against for gains. Which one are you? Are you willing to change?

People looking for a fast easy buck

            Uninformed people

            Lazy people

            Gamblers

            Majority destined to fail

People who do not feel the real pain of their loses

            Those who are inexperienced and are trading with and inheritance

            401k and IRA investors that are ignorant of the markets and consequences

            In denial - People convinced of “holding for the long term”

Hedge fund mangers hedging trades

            Many hedging trades fail, as that is what they are by nature - a hedge.

They hope not to profit but place the trade “just in case” (Billions of dollars)

People tying to fill an emotional or life need

            Traders looking for excitement, fulfillment or self worth.

            Those who should be finding fulfillment is some other part of life

            Gamblers

People that are downright greedy

            Both successful and unsuccessful traders

            Many can be prone to impulse trading.

Discretionary traders

            No system – no entrance, exit, selection, or risk management systems

                        (The downfall of most traders)

            Have too flexible of a system – just a set of ideas that fluctuate

            Sometimes follow a system sometimes do not

            Trade on emotion

            Trade on news

            Trade on tips

            Believe that they have superior intuition

            Large portion of public

The news followers/the herd

            Follow the herd – Wall Street Journal, CNN, Moneyline etc…

            Prone to knee jerk reactions – Discretionary traders

            Trade on emotion, not logic

            Prone to either excess fear, greed, or both

            Generally indecisive

            Expect good advice from reporters who never traded a single futures contract!

            Hope to find some holy grail of investing

            Are star-struck by media “superstar” fund managers

            Large portion of public

            Mediocre success and/or unsuccessful 401K, IRA, & non IRA Investors

Professional Fund managers

            Educated professionals

Some talented

Some not talented

Some crooks

Some honest                

            Handicapped by benchmarks

            Sacrifice absolute returns for quarterly benchmark scores

                        Must conform to their investors risk fears, limiting upside potential         

                        Conforming to customer’s not understanding drawdowns as part of game

                                    Smaller draw downs = smaller upside runs

            Some paid by expenses

Some paid by total performance

Successful Individual IRA, & Non IRA brokerage account Investors , including those who have succeeded staring with almost nothing  (Minority)

            Use full self-directed brokerage accounts

            Can buy almost any security on NYSE, AMEX or NASDAQ

With few exceptions

            May be involved with Commodities, currencies, etc

            A few years of experience

            Willing to learn and dig deep

            Willing to accept and analyze new ideas

            Not necessarily above average intelligence

            Have a system 

Trade on logic, not emotion      

            Disciplined, follow a system

Willing to work hard at learning. Do whatever it takes

Realize drawdowns are part of the game

Analyze risk.  See “safety” as an abstract concept

Guard emotions on upturns as well as downturns

Don’t let opinions and prejucices interfere with trading

Do not need to argue their case or prove they are right

Are not using the market for adventure or self worth

Know exactly why there are there – to make money

Do not trade on tips

Realize there is not Holy Grail of investing

Extremely diverse differences in education, IQ, and occupation

Only average intelligence necessary, sometimes slightly below average

Make no excuses                     

Accept full responsibity for bad trades, and analyze their mistakes

Mediocre success and/or unsuccessful 401K, IRA, & non IRA Investors (Majority)

            Have a very limited number of investment choices

            Believe they know more than they actually do

                        (Anyone with an extra $20,000 suddenly thinks he is an investor/trader)

            Never read a book on Dow theory

            Do not understand a balance sheet

            Can’t comprehend technical analysis

            Never managed a full self directed brokerage account

            Systematically deposit into market based on time periods not price

                        (Better than no system at all)

                        (Better than total discretionary trading)

Are seldomly involved in Commodities, currencies, etc.

            Do not understand the markets but toss in money anyway

Duped by institutions into believing the buy an hold myth

Do not want to think or make decisions for themselves

            Expect someone else to do it (think and trade) for them

            Believe someone with little vested interest will actually be of good help

            Get depressed during market downturns. Feel good on upturns

            Always blame the economy, the market, or something other than them selves

            Not willing to work hard at learning beyond their day job

Believe myths of “superior intelligence” and that traders are “born” not taught.

Dream of the big success and good retirement but never actually work toward it

Spend more time making a car purchase than they do choosing an investment plan

Experts on sports, morons in the on the markets

More time planning 1 vacation than analyzing/adjusting market capitol in 7 years

Content with 9 to 5 job and do not want to put in much extra effort afterwards

            Would be best off finding good money manager.

            Often too risk adverse to go with a the best

Follow the news. Believe the news. Believe Government statistics.

Believe the common “Wisdom” of  Finance & Social Institutions/conventions

            Do not question traditional beliefs and wisdom.

Give overdue legitimacy to “experts”

Seek superstar fund mangers. Are star-struck by media “superstar” fund managers

Think like the herd

            Trade on their opinions and prejudices

Hope to find some holy grail of investing

Want safety. Want security

            Have excuses

Defend their excuses

Do not take full 100% responsibility for failures