A great quote by Martin Luther King Jr states:
‘Knowledge is a process of piling up facts; wisdom lies in their simplification’
I’m a big believer in simplification when it comes to trading. And I don’t mean being lazy and not constantly researching, learning, testing and refining processes.
In many ways trading is a hugely complex and noisy business. The markets are flooded with so much varying opinion and conflicting market analysis. To the extent that sometimes I wonder if anyone really knows what they are talking about. And if they do, are they able to apply their knowledge towards developing a successful trading strategy. One that is consistently able to extract profits from a beast that to many represents nothing more than chaos in motion.
When I first started off trading all those years ago, I was under the impression that the more I learned, the more success I would have. In reality though, this was only half the story.
So if I was able to go back in time and offer trading advice to my younger self, what would I say?
Paraphrasing Martin Luther King Jr, I would have told myself that knowledge is wonderful. Yet simplifying this knowledge into a clearly defined strategy suited to my personality type, would be the key to my trading success.
And while I was at it, I'd throw into the mix a few more ‘Truth Bombs’ to my younger self as well:
- Accept you have no idea which way the market is going to move from one day to the next
- Never trade without a strict risk management strategy
- Stop being an Adrenalin junky and drop the ego
- Stop over trading and chasing wins
- Understand the art of correct position sizing
- Stop focusing on win rate and money
- Become an expert in assessing risk reward for every trade
- Stop staring at screens. Become an EOD trader - don’t give up your day job
- Spend more time with friends and family – never let trading take over your life
- Stay healthy, eat well, sleep, exercise, and maintain a sense of gratitude for what you have.
Would my younger self have listened? Maybe I should have added in:
Drop the arrogance!
‘Truth Bombs’ are rarely easy to swallow. Especially when you are young and feeling indestructible. The markets do have their own special way of humbling you though!