Trading Truths for Traders
"The most dangerous man to any government is the man who is able to think things out for himself, without regard to the prevailing superstitions and taboos. Almost inevitably he comes to the conclusion that the government he lives under is dishonest, insane, and intolerable."
These trading truths are fun, but useless until you learn them through your own experience.
- Trading truisms are lies. If it were possible to implement, "Buy low, sell high" or, "Cut your losses and let your profits run" in any meaningful way, then more people would be making money.
- No matter where you go... there you are. Doesn't have anything to do with trading, you say? Think again, and think hard. If you are going to trade so that you can run away from your life or yourself, you are still going to find yourself right there next to you when you are trading, living that same old life. Successful or not, you will not be happy, because YOU will still be there. If you need to fix something, then fix it -- don't trade instead. If you want to trade, then trade.
- If 90% of traders are losing money, and those traders have common beliefs with respect to the mechanics and approaches to trading, then to adopt those common beliefs for yourself is to make the conscious decision to be a loser.
- Any trading system that is not 100% undeniably controlled by some mechanical means or fixed rule in every single aspect of its existence is judgemental in some way, no matter how small.
- Any system with a judgemental component will work better for the system developer than for some random person who buys it and puts it into action. The only way to profit from a system in the same way as the developer is to take the same signals that the developer takes, and exit when the developer exits.
- Any technical or fundamental indicator that generates good signals less than 80% of the time is unreliable and therefore useless as a standalone trading system.
- Most technical indicators generate good signals far less than 80% of the time.
- Most fundamental indicators generate good signals far less than 80% of the time.
- Greed will make you poor.
- If you experience an overwhelming emotional urge to take a trade because you are sure to make a killing this time, then you are experiencing greed.
- Impatience will make you poor.
- If you experience an overwhelming emotional urge to take a trade because you are sure that you are missing out on the perfect trading opportunity, then you are experiencing impatience.
- Patience! The opportunity that you perceive in the markets today will be there tomorrow as well. Were this not the case, then there would be little point in pursuing profit in the marketplace for any length of time.
- There may well be a grand, cosmic harmony behind market motion, but all the technical market analysts put together are not grand enough or cosmic enough to understand it, much less trade it profitably.
- A small sequence of consecutive winning trades is often all it takes to delude yourself into thinking that you have found a system that is guaranteed to make you rich.
- Asking, "How little can I get away with to start trading?" is asking for trouble.
- There is no one "Ultimate Trade". If there were, then after experiencing it you would be... done... regardless of the outcome of the trade.
- Never sneer at a losing trader. You are never safe enough from losses of your own to justify that kind of behavior.
- Begin to learn to trade before you trade. If you lose without understanding why, then how can you avoid future losses? If you win by accident, then how will you create a consistent winning strategy?
- Learn to trade by trading. A contradiction? NO. You begin the learning process before you risk real money. Once you are comfortable with how it should be done, then you use real money, and then you will truly learn to trade. Simulation is useful and good, but it will not create the insight necessary to achieve success.
- There is NO guaranteed way to make money. NONE.