Aspiring traders should be more concerned about the discipline to continuously optimize their core strategy. Settling for something you haven’t tweaked the hell out of, is the source if your “discipline” issue while trading. Its not you per say, its the fact that you don’t trust the strategy. Rightfully so.
Stop being lazy and develop a strategy for a couple of years. Do this until you’ve answered most of your questions and developed solutions for most of the reasons behind losses. The foggy, doubtful cloud should be mostly gone before you go live.
The word here is develop folks. Not read somewhere and adopt as is. In this game there is no such thing as a credible source, other than hands on backtesting. Track records and status should mean nothing to you. You should test every single potential solution you encounter, regardless of the source. Filtering what you spend time on by source may seem like you’re being efficient but you’re actually decreasing your probability of success, a number that was low to begin with.
Take an idea you came up with, in trying to solve the reason behind a particular loss, and backtest it going back decades. Document the consistency results and repeat this process with every new idea that pops into your head or you read somewhere or someone else shared with you (regardless of who it was), all in an attempt to improve your strategy. Then combine the highly consistent concepts in chronological order based on the question they answer or objective they complete. For example the concepts that determine trend direction go before the ones that identify optimal entries. Once you have created something that you can’t google, you’re heading in the right direction. Does this mean I have to be creative? Yea you lazy bum.
Improve means make more accurate, precise, comprehensive. This is how you backtest. Some individuals are so lazy they trick themselves into thinking they don’t know how to backtest, or worse, they convince themselves that theres no way that level of effort is what it takes. They truly believe any old “profitable” strategy should work for them. But wait, how the hell do you know if a process is profitable without thoroughly backtesting it? You don’t. And once you backtest it you’ll naturally devise ways to improve the tool, so you see, theres no way around it. You must become a developer.
This is why the reason behind your desire to be a trader has to be extremely motivational. The research and development phase is tedious and seemingly endless. If you don’t want it bad enough, your resulting lack of work ethic will prevent you from realizing how essential backtesting is. If you’re staring at your trading workstation and you’re not backtesting, what is it that you’re doing exactly? Backtesting is your job, for the first couple of years at least. If you’re not working on an original strategy, you’re wasting your time. Its not about reading trading books, even thats a waste of time next to backtesting original ideas. Seriously.
I’m tired of inexperienced individuals spreading this popular misconception in the aspiring trader community. They read some Mark Douglas and suddenly they’re an expert. Dont read Mark Douglas, you’re not on that level, you mismanage your precious time by doing so. Prioritize effectively by spending 95% of your time backtesting your strategy for consistency and making improvements as you go, reserve 5% for motivational thoughts, the core reason behind your sacrifices.
R&D is the hard part of becoming a trader and it sets you up to trust your strategy and have a chance at conquering your performance psychology when you do start trading live. Skip the R&D phase and you would have to be a freak of nature to succeed. If the research and development process does not come natural to you, you may not have what it takes. Theres no shame in that. You should only feel ashamed if you do have an aptitude for this and are being a lazy bum.
Until you’ve developed a strategy for at least a couple of years, you don’t get to talk about live trading psychology.
I can be direct because I’ve been there. I’m expressing the kind of tough love I had to show myself when I first got into this business. Are you here to play games, or are you dead serious and want good advice? The truth hurts but works.
Some will shell up, critique and be offended by this post. Others will take inspiration and appreciate the honesty. The people that cannot handle the truth will stay where they are. Those that get inspired will capitalize on the opportunity to do some real work and move forward. One thing is for sure, anything is possible through hard work and dedication.
I also address these misconceptions in Finding successful forex strategy
We don’t count on luck.