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Trading Randomness


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This article linked below is absolutely on point. You can't have confidence in any strategy unless you have tested it and it has shown proof of validity.

We all like to think we are good at spotting patterns, we all like to think we are quick to identify and label, we are all keen to pull that trigger, that's the only plan you need right? No, great for surviving in the jungle, bad for trading.

The truth is that as a survival tactic it's better to think you see a pattern and run away even when there's not really one there, it works for surviving in the jungle, it doesn't work for trading. Same for identification, that's a top, that's a bottom, that's a bull market, that's a bear, run away. It works for surviving the jungle, it doesn't work for trading. In trading you never realise the mistake until after you've pulled the trigger, and then of course it's too late.

So instead of 'off the cuff' decision making you devise one set of rules to govern every trade, fine, but to have the confidence to stick to it it must be well tested. 

Without validity there can be no confidence and without confidence we slide back into the 'off the cuff' calls.

https://traderfeed.blogspot.com/2019/05/trading-psychology-techniques-2-testing.html

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Back after a long break - howd'y folks!

Yes! I totally agree with this on casey and good post. I like this part a lot "Testing also tells you what doesn't work--and that can lead to a deeper understanding of hidden edges.  Sadly, there are many traders who insist that they will succeed in their trading through sheer passion and willpower."

Randomness is such a weird thing for humans, when what you REALLY need to succeed is consistency. It's tough because we're not robots but it's needed.

Think about saving. You're not going to get anywhere long term by saving £10. £20, £50 a day randomly but then spending random amounts of cash here and there. You'll be far better to know your out goings, and make consistent non-random savings each day.

Think about the gym. Randomness gets you no where. Consistency is the key and the way you know how to train better / more efficiently / hit your targets.

Same goes for trading.

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