Reflections and Things To Learn

I'm in the midst of reading a book called Market Wizards now, a very highly rated book which is considered a classic must read by many. The book basically consists of a series of interviews with several top traders. It isn't so much about trading strategies, but focuses more on their experiences, beliefs, psychology etc. Oddly, the more I read, the more reflective I became, it is as if a sense of burden and discontent just welled up within me.

Here's why - It seems that almost all top traders don't depend on technical analysis entirely. They have a very clear and strong understanding of the fundamental, political, and economic factors that drive prices. Things like interest rates, fiscal policies, commodities supply and demand etc. They're at the level where the markets they can trade are limited, because their funds are so huge that they can only trade in very liquid markets. Many have floor trader experience so they know how the big money moves, how to trade the news, how to run the stops of amateurs etc. They know how high frequency systems work and at which points of a chart they tend to kick in, because they're often the designers of such systems themselves. They are able to understand the correlation between various markets like bonds, currencies, futures, commodities etc.

So here I am, totally embedded in the belief that technical analysis is all I need, because price already reflects the decisions of all the market participants and factors out there. If that is really so, why are the top traders not pure chartists? Alexander Elder isn't, neither is Daryl Guppy. I'm not saying that pure chartists won't succeed, and I'm sure that there are many such people who have achieved great success. I'm saying that there is so much more, and in our quest to become the best traders, we shouldn't be content to just stick to technical analysis.

So anyway, I know that I'm still very new, and I probably shouldn't drown or confuse myself by trying to learn everything at once. Hence I'll still focus on technical analysis for now, and I'll keep at it until I can become comfortable and consistently profitable with it. When I've achieved that, I would want to expand my knowledge. These are some of the things that I would like to learn:

1. How the various markets affect each other.
2. How economic, fiscal, and other policies affect the various markets.
3. How huge institutions and market makers trade. I've heard enough about stops running, fake breakouts etc, I want to know how it actually works and how big players trade differently from the mass.
4. How high frequency systems work. Many of us just have this perception of them being some mysterious, super expensive money churning systems. It's almost like we're resigned to the fact that they're out there and we can't do anything about them. Why should that be the case? Why can't I learn how they work so I can be on their side and not against them?
5. How arbitrage works. I keep reading about this term but I know nuts about it.
6. For stocks, I would like to thoroughly study fundamental analysis. Once I'm able to profit through technical analysis consistently and have a sizable amount of capital, I would like to allocate a certain portion to invest in "undiscovered" stocks with good fundamentals. These are often cheap stocks with low liquidity that are avoided by chartists, but they're also the ones that can provide multiple baggers. If I can identify these stocks, I can apply technical analysis to hop onto them when they're breaking out of a long listless base, and know that I'm on the right track because they have great fundamentals to back the breakout with. Also, given several stock choices at any one time, I'll be able to select the ones which are most fundamentally sound.

These are just some of the things I would like to learn, hopefully a few years down the road. I will continually add to this list as I come across new things. I believe that trading, like all other crafts, should involve a lifetime of ceaseless learning. I hope that I'll never stagnate, and that every day I'll be a better trader than who I was the day before.