The ‘Secret’ to Trading?

So we start our trading journey.

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First thing we look for are profitable strategies, systems, indicators and etc.

You embark on your journey finding the ‘Holy Grail’ of trading. You start studying Technical Analysis.

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Some will find it too broad and confusing, so they ask for the guidance of mentors.

Then you see your idol, you replicate their strategy or style, but then some of us will still be on the unfortunate side, wondering–why am I still losing money?


I’ll spare you the time and the wonder.

Strategies, indicators, systems are all tools. These gives us an ‘idea’ when to buy/sell.

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but of course, not all ideas have real value.

Example.

“Pare ganito yan kapag tumama sa 68.99%, bounce dyan chong”

“Kapag nag cross yang dalawang linya, 88 day at 69 day pwede yan buy signal yan”

“Ahhh most likely hindi na aakyat tong stock na to kasi nasa 5th wave ng kamatayan na to, wala tapos na olats na yan”

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“Uy may malaking Tilapia pattern buy na yan malaki upside”

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Familiar?

We see these ‘ideas’ everywhere, but how many of them are valid?

How do you know whether the idea really has value?


If I give you a strategy that looks really good and complex with all the colorful indicators and magic formulas, then I market it to different people and showcase the profitable trades. A lot of people would instantly believe. Seeing only the ‘upside’.

 

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Pun intended

People will optimistically try the strategy or the reco thinking they have found the magic. Only to see it fail on tough times.

Why?

1) Because they didn’t really back test the strategy themselves, and they didn’t take the time to deeply understand the roots and logic of the method. Blindly following something often leads to lack of confidence and failure.

2) When you get spoon fed with a strategy, even if it really is effective, the execution and risk management still lies on the trader.

3) We all have different personalities and dispositions, not all have the right discipline and patience to wait for the signals.

4) Much worse maybe the strategy was just built upon luck and didn’t really have a statistical advantage. A lot of systems are based on superstition.


You see, it’s not much about the complexities and the specifics of the system that makes you successful.

“Rather, it is your understanding and connection with your system that enables you to translate ideas into profitable trades.”

People are always on the look for the ‘magic’ formula. Basic human nature, every one wants it easy. Everyone wants shortcuts.

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They don’t realize that there is none, and the only magic there is… within yourself.

Even if we all trade the same strong system, we will still have different results. A lot of that can be attributed to the unique emotions, experience, and skills of each individual.


When you start to take things seriously, like try spending 2 years or more trading and studying all kinds of indicators and strategies– you will realize that a lot of things that are taught or believed by authors, traders, gurus can actually be omitted (disregarded).

So how do you know which ones do you need?


Back Testing

A strategy is only as good as the ‘statistical advantage‘ that it gives you.

Meaning, you need to verify how strong it is on a big sample size.

“Gaano ka ka-lupit sa span ng 1,000 trades?”

“What is the hit rate (%) of your system?”

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Some systems and traders only look good on easy times.

Then they collapse when the hard times comes in.

Almost everyone makes money in bull markets.

Then everything resets again, and you’ll see some faces disappear when the bear makes a visit.

This is a natural cycle, people who don’t cover their bases often take a big hit when times get rough.


Practice

Trading is like a sport. You need to perform day-in, day-out. And just like sports, in order for you to get better, you need to keep practicing.

Look at all the best athletes and competitors in their respective fields, do you think they got there because they went the easy way?

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Champions do not take shortcuts. 

Let’s say two samurais fight.

Who would win — A master with a low-quality sword? or a beginner with the best sword in town?

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By constant practice you will know whether the ‘weapon’ is indeed right for you.

You will only know how strong and effective a strategy is by going out there and trading it.


Refinement

Once you’ve found the right system for you. Now the fun (or hard) part comes in.

Trading is a never ending journey of learning.

There is no perfection in this endeavor because we are all bound by one principle that you have to respect.

That is ‘uncertainty’.

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You have to acknowledge that there are things that you will never know. The question is what are you gonna do about it?

The market has always been the same in the sense that it always ‘changes’

No matter how good you are, you will never know everything, you will always encounter mistakes.

The best traders are not perfect.

Rather, the best traders know what to make out of imperfection.

They focus on the things that they can control.

Your trading rules, patience, risk management are some of the key aspects.

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They are able to follow their rules with discipline. 

 

Everyone focuses on the upside.

The best traders ruthlessly focus on covering the downside.


Confident when right. Humble when proven wrong. Always eager to learn and improve.

Successful trading requires this certain balance.

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There is no end game. The journey is the reward.


The real challenge in trading is not about finding profitable ‘methods’ or ‘strategies’ — these are everywhere, can be googled and can be replicated from other people specially if you have a keen eye.

The real challenge lies in mastering thyself. Even if you have all the seminars, trading books, mentors, learning modules in the world, you won’t be able to execute progressively if your trading mentality aka. ‘psyche’ is frail.

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Your system is your weapon. A mere tool.

Remember.

‘The sword is only as powerful as its master’

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6 thoughts on “The ‘Secret’ to Trading?

  1. ryan

    dear sir,..,
    can you be my mentor..? im just an ordinary labor worker that wants to changes the life that i leave..i dont know about stocks..but if you could help me im willing to learn…more power..

    thank you

    Reply

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