Refried Garbage

Posted by on Jan 26, 2018 in Be a Trader | 0 comments

Investing Platitudes and Shallow Advice

Working to improve one’s ability to be a winner covers lots of space but here is one that I feel is a key notion to understand.

You can search google and post the question in any trader’s chat room and you will not get the correct answer to the question: “what are the biggest mistakes traders make?”


Note: New traders receive trading basics (i.e. book recommendations, issues to consider/avoid, Holy Grails exposed, broker recommendations, wise background reading, websites to absorb/avoid). These insights give new traders needed confidence.

95% of the answers you find are platitudes and tripe. In the top ten of rehashed garbage are

1. Letting Losses Mount
2. Failure to Implement Stop-Loss Orders
3. Not Having a Trading Plan or Sticking to One
4. Not fully learning one method
5. Shirking Homework

They all ring of profound common sense but beg the question resulting in dodgy answers.

The biggest mistake traders make is impatience, that opportunity only resides in the current moment and they need to act and act now. This fear of missed opportunity is so much part of our psyche, it is the most used sales tactic in the trading industry. So while you hear the trading legends preach patience, it is unheard of “mistake” in the google search results or industry propaganda.

Another way of seeing this chink in one’s trading armor is the chasing of the equity curve. There are many different ways of saying this like, “changing your trading strategy after 5 losing trades in a row” or “engaging a system only after it has hit 5 winners in a row.”

As a rule, anytime a decision that is based on emotions, it should be avoided.

It is also unwise to optimize a strategy when it is a drawdown. When I hear of a market system not doing well, I go back, I pull up a few of my previous workspaces to see how they are walking forward in time. But what is most critical here is to see what TEM rule it is trading well after- by looking at the rules inputs for Agro and Blocked plus a look at the two indicators to demarcate the technical events dates when they caused the technical event.

It is about rational solutions. I am not saying TEM is perfect but it is way better than average and 1000% better than greed or fear-based rules.

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