Apart from its ability to find information, Google can be used as a tool to determine peoples’ interests, which in turn, gives clues as to their “intentions.” And because people act upon the things that interest them, and ignore the things that don’t, we can extrapolate their intent, or how they intend to behave. For example, if you went to Google and searched for “position sizing,” the logical assumption would be that you wanted to find information on position sizing so that you could:
- Establish if it should belong to your belief system;
- Learn more about position sizing; and
- Incorporate position sizing in your trading.
If you had no interest in “position sizing” you would not have gone to Google in the first place to look it up. Likewise, if you had no intent of doing something with the information you were looking for, you would not look it up.
To validate some very bold statements I have made in my book “POWER TRADING FOR PROFIT,” I decided to do some research on peoples’ interests vis-à-vis their focus on “trade entry” and “trade exit.” Using Google’s AdWords’ “Keyword Tool” I looked up the two search phrases, which returned the following results:
While it is illogical for 83% of traders that searched Google to continually focus on entering trades, which makes them no money, only 17% of traders used Google to search on exiting trades, which is where they make or lose all their money. However, I am not surprised by these results.
I then decided to get a little more detailed and try to find out what interest traders had in the 6 Trading Elements illustrated below.
For the purposes of this analysis:
- Any search term designates an interest.
- I refer to traders interested in “Systems Entry” as “Losing traders” because getting into trades is simply not enough to be profitable.
- I refer to traders that are interested in ” Trading Psychology, Money Management, Trading Plans, Trade Execution, AND Trading Journals” as “Winning Traders” because they are incorporating MOST of the elements necessary for succesful trading.
- I assume that ALL Winning Traders would be interested in Systems Entry.
- I assume that SOME Losing Traders would be interested in Trading Psychology, Money Management, Trading Plans, Trade Execution, AND Trading Journals.
- Because Money Management covers such a broad spectrum of the world of finance, I searched on the term “Position Sizing,” which is THE critical component of trade money management, to identify those interested in Money Management.
- I know that “Position Sizing” for Money Management was the least searched term.
- I assume that ALL those that are interested in Money Management are ALSO interested in Trading Psychology, Money Management, Systems Entry, Trading Plans, Trade Execution, AND Trading Journals.
- I recognize that this last assumption is ridiculous but I wanted to increase the number of Winning Traders as much as possible.
I was horrified at my conclusions…
Based on my calculations, less than 2% of all traders are likely to educate themselves on ALL the six elements neccessary for successful trading. In other words, over 98% of all traders are setting themselves up for failure. While this is not a very scientific survey, I believe it fairly accurately represents what is of interest to traders, and this is not necessarily in their best interests.
Filed under: Philosophy , Finance, Google, money management, post trade analysis, technical analysis, trade execution, Trading, trading plans, trading psychology
