Success in Trading

Success In Trading

The truth about mythical traders and their secret trading systems

 

Many people likes this stories about mytical demi-god traders with a holy grail that appears for a limited time and then disappears as smoke. Tales tell us that those traders had it's own secret system which made tons of money. Well, those are a nice stories, but the truth is far more boring ...

Obviously incredibly good traders do exist. But they had to invest a lot of years to learn before making money. And that have almost nothing to do with a secret system.

Acquiring the trading skill: learning, practice and experience

Why people take almost 10 years of university and practice as a resident in a hospital before being a doctor and at the same time they are convinced that they will win money just buying some black box to trade Forex or trading a strategy taken from ForexFactory?

You cannot expect to succeed making a heart surgery after seeing a video, the same as you cannot expect to succeed trading just buying an Expert Advisor.

The most intelligent people in the planet (including myself 😛 ) is playing in the trading business. Period. There is no business that attracts more a sharp mind than trading. What makes you think that a $99 EA will take the money of the IQ 180 teams of traders around the world with many thousands of hours of experience and put that money in your pocket?

The reality is that the silver bullet is not in the system at all. In fact, I believe there are very very few unknown long term exploitable inefficiencies.

Requirements to succeed in trading

In my opinion, to succeed we need to:

  • Understand the markets. This means spend many hours every day during many years studying. You can play the market before, but you will inevitably loose money. There is not a shorter path.
  • Understand statistics and have a deep understanding of statistics for every system we trade. At least basic knowledge is essential.
  • Understand the trading systems. It is simply not possible to win in the long term without this understanding.
  • Understand who are the players in the markets, at least the 4 main ones, forget about the fallacy of the two sides: buyers / sellers
  • Understand demand / supply
  • Have an exit strategy for each system we trade
  • Understand risk. This topic is very deep and essential, probably the most important factor to succeed.
  • Understand themselves and uses a trading system that fits with their personality

So, as a conclussion, I would say that successful traders deeply understand themselves, the markets, their systems and applies a strict risk management... And has many thousands of hours of experience. Automated trading don't make this easier at all.