“You can’t go back and change the beginning, but you can start where you are and change the ending” ~ C.S. Lewis
Do you have more chances of doing the perfect trade when your signal is based on a moving average crossover or when it’s a combination of Vega, Gamma, news in Iran, and what Marvin987 just tweeted?
Can a dumb person trade for a living?
Are you too smart to trade? Do you need a PhD to develop your edge? So many questions….
If you’re on Twitter, you already saw that meme.
I believe there’s some truth in it. To make $ in the stock market, either you’re brilliant with a good combination of ego/humility or you’re the guy on the left. If you’re the guy in the middle, I have bad news for you.
Leo published another banger on his Twitter feed last Thursday.
I mean why would you want to find an answer for each move into the market? Are you looking for a reason to not enter? Are you looking for an excuse? Are you looking for a reason why you lost your trade? In other words… are you being a pussy?
There are literally some of the most successful traders that walked on earth that use moving averages as their main indicator. Yes, a moving average. Listen to some of the old CWT podcasts, a true gold mine.
Why ‘simple’ work?
Great question, I’m glad you asked!
Simple works for a very simple reason. If you reverse engineer what trading really is about, you’ll find that execution is at the heart of trading. If you execute poorly, no matter your Risk Management or your Edge, you won’t make money. In other words, you need a Framework, an Edge, a strong Risk Management policy, AND a clean Execution process.
I’m not a big fan of acronyms, but here’s a simple one to remember: FERME.
Framework
Edge
Risk Management
Execution.
“But Retail, I thought you said a dumb person could be a trader. All of this sounds complex..”
Yes and no. It will be as complex as you make it. You need an edge, but how complex does it need to be? You need a framework, but how complex does it need to be? You need… ok, you got it.
How do we link simplicity and execution?
For those of you who trade, it’ll sound obvious. For those who don’t, but aspire to trade for a living, one day, listen.
When you execute a trade, there are millions of ways to fuck up that trade, but only one way to do the perfect trade.
What to do with this information? Take a minute to think about this sentence, and what it means, in practice.
Do you have more chances of doing the perfect trade when your signal is based on a moving average crossover or when it’s a combination of Vega, Gamma, a news event and what Marvin987 just tweeted?
The triumph of simplicity
Unless you’re one of these macro gurus on Twitter who makes a living out of selling complex newsletters about things that may or may not happen months from now, the answer is no.
Do me a favor and keep something in mind. Forever. 100% of people lie. Even more on Twitter (yes, it’s possible). Complexity and fear-mongering sell.
Simplicity and boring talks about building a framework don’t. That’s just how the human mind works.
If your chart looks like a painting, give it a try. Get rid of (almost) everything.
You don’t need the DOM or T&S to make $. One of the best trader I know, Metaal, has a fairly simple approach. Lucky for you, he’s one of the next to be interviewed on The Statistical Edge.
There’s someone on Twitter (that I respect and is probably very smart) who always posts super complex stuff. It sounds very smart, but personally, I wouldn’t advise you to do stuff like this. You don’t want to compete with HF & quant teams. My 2c.
I unfollowed him a long time ago. Again, nothing against that guy, it’s just an example of what I would avoid if I wasn’t making $ consistently.
Keep it simple, because yes, a ‘dumb’ person can trade for a living.
For those of you who attended my seminar a couple of weeks ago, you saw that my setup is pretty basic/boring. No need for more.
On a separate note, I wish you a Merry Christmas. Thank you for reading this newsletter. Thank you for your shares, comments, and time. I love it here and I have big plans for 2024. I want each article to be the best article on whatever topic I’ll pick. It will be a good combination of personal experience and actionable (non-financial) advice.
📚 If you missed it, here are some of the last/best articles:
📈 What’s coming up:
Dead Dreams, Part II
How I Trade (10h+ of video)
One setup to rule them all
3,000 Thank you.
Retail C.