Why New Traders Choose Not To Understand Their Trading Strategy

By Jeff Kum | 28 December 2017

Here is my thought, some seniors trader that I have met always emphasised that we need to do backtesting, to know what is the edge of our strategy. It is essential to see it, but when I read some of the posts about trading/investing in social media, most of the new trader posting their trades and a picture of their chart with fancy indicators and ask ‘what do you think?’, In my opinion, by posting your strategy on social media will not help them to pursue useful knowledge due to different traders had a different experience, different views and different approach. So my answer to them is I don’t know what it thinks and the market will not even bother what I think or what the others think of your strategy!

New traders always ask for confirmation (which I mean the group of young & new traders that already had some knowledge but still struggling), but I think they can get the confirmation info from the backtesting instead posting their one particular trade with the all-new fancy indicators. By backtesting their strategy, it will reveal whether their approach will work in the long run or not but more importantly, they will have to admit when they realised their plan is not going to make them money and by accepting the fact, they will rework on their strategy. This process will be tedious and annoying because it is a cycle, you had to do it again and again. Once you were able to find a stable and potentially profitable strategy, you will be facing more problem which I will have to explain in a lengthy essay, so you will have to rework your plan again, and the process is ongoing, it will never end.

New traders are not lazy, they are eager to learn but struggling. They choose not to understand it by themselves because they try to avoid the reality, reality that you had to disagree with yourself and to accept that you are wrong at some point and you need to change. The fact is that you will be more understanding of yourself and you are afraid of facing it. You don’t want to admit it, and you try to find someone else and hope they tell you what you want to hear.

The senior can only guide you to the path, but you had to walk thru it…..

Here are some additional point at below from pick from the book ‘Market Wizard’ as a support of my view:

1. Personal feelings and opinions are far less accurate than markets… – William O’Neil

2. Do you still talk to other traders about markets?
Not too much. Over the years, it has mostly cost me money. When I talk to other traders, I try to keep very conscious of the idea that I have to listen to myself. I try to take their information without getting overly influenced by their opinion. – Michael Marcus

3. I can always tell a rookie trader because he will ask me, “Are you short or long?” Whether I am long or short should have no bearing on his market opinion. Next, he will ask (assuming I have told him I am long), “Where are you long from?” Who cares where I am long from. That has no relevance to whether the market environment is bullish or bearish right now, or to the risk/reward balance of a long position at that moment. – Paul Tudor Jones

4.Do you use the opinions of other traders in making trading decisions, or do you operate completely solo?
I usually ignore advice from other traders, especially the ones who believe they are on to a “sure thing.” – Ed Seykota

If you want to read more content, I strongly suggest you to buy the book! You are welcome to comment below.

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