In pretty much any documentary, video or article about trading, someone always says that a trader is "pitting themselves against the very best in the world".
Boy, that sounds really challenging doesn't it? It sounds fucking epic, like the lone Frodo and his journey to destroy the ring... But the reality is, for pretty much everyone, that statement is total bullshit. You are not against the best in the world... You are not even against the worst in the world... you are only against your own character. You are only trading against your own preparation, or lack thereof.
It wouldn't matter if Albert Einstein were on the other end of your trade, because trading is about risk management and probabilities over a long period of time. If you enter a trade and it moves against you, it doesn't matter why it moved against you at all. The only thing there is to trade, is price. Sure, there are giant banks that can place trades that move the market, but that still has nothing to do at all with the challenge you face internally and whether or not you have a plan to follow with a long term edge. Price is price is price, and you must take full responsibility for your actions as a trader.
Are there really smart people out there who also happen have the power to manipulate the markets in their favor? Yes. Does that mean you are "Pitted against them"? No. If they move the market against you, then your risk management will protect you and make you profitable in the long run. If they move the market in your favor, then your risk management will tell you when to exit your trade at a profit. And you will be profitable in the long run.
There are no enemies in the market. Period. No one is out to get you, and even if they feel like they are out to get you, they can't because you are alone. The anthropomorphizing of the market into this evil genius monster out to get you is just bullshit. You alone decide when to enter, and you alone decide when to exit. And no one is responsible for your success or failure but you. Just because traders like to talk about taking the "Dumb money" out of the accounts of other traders when we take profits doesn't mean there is any real validity to it. We are all going to win some and lose some. The only real difference is that the "Dumb money" has no plan and no risk management in place to survive a losing streak, sometimes not even their first trade. That is what makes it dumb money to begin with, not because we are taking profits.
Think of it this way; Casinos have a long term edge. They deal strictly with quantifiable risk models and know exactly how much of an edge each of their games has over the long run. They can tolerate handing out jackpots because they know it is literally the cost of doing business. If no one ever won a jackpot at their casino, [Trading] volume would dry up and they would be out of business. When someone wins a jackpot, it's the best advertising event for them, because the allure of winning will attract other patrons. In the casino where the odds are fixed and predetermined, does it matter who sits down at the table? Does it really matter who owns the casino or who is dealing? No, because the numbers are the numbers. It's you versus the numbers, not the monsters or the geniuses or the clichés.
However, as easy as it might seem to make a profit as a Casino because of the long term edge, it is still very important to assess risk. Lets take a simple game of roulette for example. One type of bet you can place on the board is a simple black or red bet. The wheel itself has 36 alternating red and black number slots and 1 extra green zero. If you were to consistently bet that the ball will land in a black number slot your odds of success are 48.65%. That's an almost 50% chance of winning with each spin of the wheel.
One who had the capital to trade a Martingale risk profile, (Where each loss that is incurred causes the player double their risk) would eventually see the ball land in a black number slot on the wheel. If your pockets are big enough, you will never lose at this game. The problem is, the casinos know this and can mitigate this risk by instituting one or both of the following: A minimum bet size that is pretty large, requiring ridiculous capital to constantly double the bet size, and a Maximum bet size, which is far more protective. The player could no longer double his risk at a certain point.
Risk assessment, and management are the key things to surviving and thriving. The beautiful news is that you can be the casino when it comes to trading, but it starts with thinking long term. You can determine the maximum bet size and limit your drawdown in any one particular game. You can even lower the bet size when the odds are not in your favor or close your table for the time being altogether. You don't have to payout a giant jackpot to attract participants to stay in business either, there are and will continue to be plenty of poorly managed home based casinos that can't help but do it.
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