The Tone of BS (Part 1)

When I first read this a few months ago, it struck me as a load of BS.  Today, I’m not so sure.  First, I will present the viewpoint.  Last, I will analyze it.

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The dreams of retail traders need to be separated from the secretive and real world of the institutions. [1]

The big guys have the capital, the skills, and the resources to investigate everything.  They buy, develop, and test hundreds upon thousands of trading systems.  They keep the profitable systems for limited periods before the cycle starts anew. [2]

What with the failing strategies?  Some are later published as best-selling books.  These make their way to retail traders and become the subject of excitement among people who wish to get rich quick.  The disappointment will later set in. [3]

Things are much different in the retail world than the institutional.  Retail traders have minimal capital, limited skills, and limited resources (e.g. time, patience, computer processing power).  Retail traders also have the huge, pie-in-the-sky dreams. [4]

It would hardly be out of the ordinary to find a promising mechanical trading system that worked very well for United States large capitalization stocks.  People would be happy and seeing green!  When tested on a foreign market, however, the waterproof system could fail dramatically. [5]

Was this a good or bad system?  Depends who you ask and whether they made/lost money, of course. [6]

Personally I prefer high-probability situations to trade in a discretionary manner.  “High probability” means technical convergence.  Many such examples exist. [7]

[a handful were then given here]

Seasonality is another powerful filter that will reduce exposure and improve performance.  Seasonality is still ignored by many. [8]

The easiest way for a trader to make money is to approach the markets in a simple manner and react to them. [9]

You may spend years of research looking for the Holy Grail and forget about the real markets and opportunities passed. [10]

Simple is Beautiful. [11]

Don’t be greedy:  look for better odds to gain than odds to lose and take whatever the market gives you. [12]

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Sleep on that for a bit and I will start to analyze in the next post.