Today's Quote: “By three methods we may learn wisdom: First, by reflection, which is noblest; Second, by imitation, which is easiest; and third by experience, which is the bitterest.” Confucius

There are several good books out there about trading that should be on every trader’s must read list. If you were forced to choose one and only one, the only possible pick would be “Tools and Tactics for the Master Day Trader”. We are going to run a series of excerpts from the best selling book for the next series of lessons. Now in the words of the master trader himself, Oliver L. Velez…

It is human nature to desire comfort and certainty. We are brought up to want it, worship it, and go after it. In fact, much of our lives are spent biting, scratching, and arduously thriving for it, usually under the guise of something else. For instance, we think we want education for ourselves and our children, but a much closer look reveals nothing more than the desire to be secure. We do not typically look to education as a beneficial end. Rather, we approach it as a means to an end, and that end is safety, certainty, and security. Isn’t the person who works long and hard hours at a job he or she hates doing so because of the desire for certainty? In some ways, almost everything we do is connected to the desire to feel secure, safe, and certain. Yet interestingly, certainty can never really be had in life. And when we turn our attention to the market, that near perfect mirror of life, we find that statement to be even truer. The truth is, certainty is predicated on a myth. Why is that you ask? Because, certainty can only come into being when the future is fully known, and we’re sure we don’t have to tell you that we, as humans and traders, have not been afforded the benefit of knowing the future. Sure, we can guess what tomorrow holds, and at times be right. But we can never be sure of being right. So, in a sense, the search for certainty is a futile attempt that will invariably lead to frustration and disappointment. We find that far too many traders are looking for certainty in the markets, and that is why there is such a large number of them that are frustrated and disappointed as they move from one service to the next, from this guru to that one. Instead of wanting to be traders, these naive individuals secretly harbor the wish to be fortune-tellers and tea-leaf readers. They don’t seem to recognize that all we can really hope for is a superb ability to assess the odds of being right. Good traders are really probability specialists. That’s all. They don’t ever know. But they’ve learned to live with that.

The desire for certainty is a trap into which many traders continue to get caught. But it must be realized that certainty can never be found in life, nor can it be found in the stock market Every trader must learn to accept the fact that we can never be certain of what the future holds. Once this truth is accepted, the trader will undoubtedly experience a great lift. Why is this? Simply because the search for certainty carries with it a heavy burden. It is a fruitless activity from which there can be no rest, for it will never end.

Oddly, it is believed that certainty, if achieved, would bring about clarity and peace of mind. But, paradoxically, peace and clarity of mind can only come into being when one realizes that certainty cannot be achieved. Certainty is an unattainable myth. Tomorrow can never be “known.” The only thing we can do is acquire a few tools and techniques that are designed to help us assess the odds of what tomorrow may bring. That is our only course, and that is what we help you accomplish in the second half of this book. Those who learn to seek good odds will be well on the way to becoming professional traders. Those who seek certainty are inviting upon them a future that is wrought with failure, disappointment, and dismay. Seek better odds, not certainty.