Most people do not think of trading as a business in the usual sense - with customers to serve.
Instead, their metaphor for trading and investing is the Colosseum, where gladiators battle it out.
Fellow traders are seen as the enemy - someone to compete against.
This model of the marketplace can work - unfortunately, it requires a great deal of effort and stress. The trader or investor has to keep researching new techniques and edges to stay ahead of the competition.
Ultimately, in a head to head competition, the Wall Street pros - with their money, resources, and staff of "rocket scientists" and analysts - usually come out ahead of individual traders.
99% of traders lose their money.
There is an alternative investment model that can work for the individual trader - it will never become outdated, and it can cause your trading to become effortless and calming.
Before we discuss this model, let's talk about the difference between gambling (as in a casino) and speculating (as in a market). Gambling adds no economic value - it is simply a zero sum transfer of money from winner to loser. Speculation also involves a zero sum transfer of money from winner to loser, but it also provides economic value in the form of liquidity.
This difference has nothing to do with luck vs. skill or odds. A trader provides some liquidity even if he or she buys and sells at random.
What is liquidity? Let's pretend that a cereal company wants to lock in the price of wheat on a commodity exchange. The company's trader sees that wheat is trading at 100 cents per bushel.
If, when he tries to buy 1,000 bushels, it takes time for the sale to happen and he gets the wheat at 105 cents, then the market is not very liquid. On the other hand, if his order is instantaneously filled exactly at 100 cents, then the market can be said to be liquid.
Providing liquidity, then, is about regulating supply and demand in a market so that buyers and sellers can smoothly execute transactions.
Now, the Secret to our alternative trading model is to see your fellow market participants as your "customers". The "product" you are supplying to them is liquidity.
Your "customers" - collectively the market - will "pay" you with profits to the degree that you provide liquidity to the market place.
A trader maximizes his job of providing liquidity when he or she buys when there is too much supply and prices are declining, and sells when there is too much demand and prices are rising.
So, all you need to do to be a successful trader, is to buy low (into declines) and sell high (into rising prices). Note that this model is different than trying to guess about fundamentals, follow trends, or trying to out-trade other speculators.
To make this model work, you need to develop trading rules that progressively buy into lower prices, and then liquidate shares as prices rise. Your rules need to prevent you from buying whole positions up front. - in case of prolonged rises and falls. Instead, you need to scale in and out of positions.