When Your Strategy Undergoes the Baptism of Fire
“One way to make more money investing is to have good habits. But
another is to simply get rid of bad habits…. Bad habits need to turn into Good
habits over time in order to become a successful long-term investor.” – James A.
You can see the attached image… The kind of scenario in the chart is no longer a rare occurrence in the markets if you have been in the market for years.
And you can see James Altucher’s quote above.
We often tell professional traders to use stop loss and cut their losses: But they won’t listen.
We always tell pro traders not to use big lot sizes per trade and not to overtrade. Even 0.1 lots are too risky for 1000 USD: But they won’t comply.
We tend to beg trading gurus to test their trading idea for at least 4 months or better, for up to one year or more, so that they can see how their trading idea can withstand all market conditions (including black swan events): But they will never obey. NEVER!
Why would you trade a demo for only one or two weeks and then go live? Why would you use your live accounts as a guinea pig project?
Your strategy will occasionally undergo the baptism of fire and 95% of floored. Can your strategy survive adverse market conditions?
I have seen a trader being moved from one prison to another, because of losing clients' money. After he came from prison, his trading habits show the same thing that led him to jail in the first place.
I have seen traders with many years of experience, still blowing accounts, because they tend to trade the way they did in the past, owing to undisciplined psychology. Give them another chance again? They will blow the accounts again.
Some are heavily in debt because of stubbornness.
Pros who have destroyed numerous accounts over the years would be seen begging people here and there, for funds to manage money. And if you ever give them any chance again, they will blow the new funds.
Most experienced traders have mental problems.
Why would you keep on doing what is putting you into problems?
Your trading results show that something is wrong with your brain, and you need to find solutions before it is too late. The markets can ruin one’s life if one proves too stubborn.
As for me, I am a trading idiot.
I am a certified, pathetic, and intercontinental idiot.
This is the reason why I don’t risk too much per trade… My position sizing is very conservative and that has worked well for me. I don’t blow accounts.
Because of my stupidity, I tend to test a new strategy for at least one year, and I have seen how my super strategy can withstand all market conditions and I am happy.
I don’t argue with the markets or rely on hope. I know the market is opaque and the next movement cannot be predicted.
Since I am a compound fool, a universal fool, I use optimal stop loss always and I even cut some losses before the stop is hit. I let my profits run.
My foolishness has enabled me to reach financial freedom because I have a strategy that can withstand all market conditions (developed from over 15 years of experience). It can make money in all market conditions. The strategy is the simplest strategy I have ever seen because even a moron like me can trade it (and a monkey can trade it). It suffers minimal drawdowns in adverse markets and bounces back quickly.
I not only survive the kind of market condition in the image above, but I also jump back quickly and make money within a short time, owing to my stupidity.
And on the other hand, wise, intelligent, and sensible traders are blowing accounts.
Doing the right things pays (cut your loss and risk very small), and permanent success is possible.
Make money in bull markets, bear markets, sideways markets, and during unusual, unexpected events.
I am a living witness.
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