Proven Trading Strategy Explained

Understanding the Essence of Successful Trading

To achieve success as a trader, it is crucial to comprehend the underlying reasons behind your actions. Without a clear understanding of your motives, how can you expect to attain favorable outcomes?

Success in trading is defined by a well-defined plan and a systematic approach. It entails following a structured framework that provides guidance throughout the process. The most effective strategies are those that are implemented in a methodical manner, minimizing subjective decision-making. This approach fosters clarity and consistency, both of which are paramount in gaining an “edge” - the statistical advantage of winning more trades than losing.

Recognizing the Significance of Historical Probabilities

Understanding historical probabilities is essential for achieving success in trading. By examining historical data, such as charts and indicators, we can identify price to indicator occurrences (what indicators are really used for) and establish clear conditions that have a high likelihood of recurring. This valuable insight spans back decades, offering a daily basis perspective with over 70% probability of a particular outcome.

Once these conditions have been identified and confirmed, you gain a significant advantage in the market. However, it’s important to note that entry conditions alone do not encompass the entirety of a successful strategy. Many aspiring traders make the mistake of relying solely on these conditions, overlooking a crucial aspect.

A truly successful strategy relies on the trader’s personal execution. Consequently, the notion that a successful trader would sell a profitable strategy highlights an inexperienced and misguided understanding of how strategies actually work. Even if you were to provide ten traders with a profitable strategy (comprising a plan and process), nine of them would likely lose money.

Why does this occur? Simply because anyone can learn a set of conditions, even a 13-year-old can grasp the conditions of a strategy. The real challenge lies in the implementation of that process, and this is where 99% of traders stumble (assuming they possess a proven strategy, as 90% of strategies out there lack sufficient proof). True proof lies in witnessing the strategy being traded consistently over an extended period of time, ideally 12 months or more, with the trader sharing trade details in real-time. Forecast and recap videos are futile and do not substantiate anything since positive results can be achieved in hindsight. Therefore, hindsight analysis is not a valid form of proof.

So why do so few traders succeed?

The Key Lies in Mastering Yourself, Not the Markets

The real difficulty in trading is not mastering the intricacies of the markets but rather mastering oneself. The trader’s mindset is the deciding factor, often neglected in their approach as they relentlessly seek the perfect “entry conditions.”

To fully realize the potential of a strategy edge, the process must be traded systematically and consistently, without deviating from the established plan. Unfortunately, only a few traders can maintain this discipline. Many succumb to fear and close trades prematurely when the market approaches the entry point. Others make the mistake of abandoning the process altogether after encountering a few losing trades, continuously seeking changes and improvements.

This lack of patience and discipline undermines the efficacy of the strategy since traders often take discretionary trades out of boredom, eroding their edge in the process.

Summary: The Path to Trading Success

  1. Confirm historical probabilities through the use of indicators and charts, as pure price action alone cannot provide this level of certainty.
  2. Once you have identified a daily directional bias with a probability exceeding 70% over a couple of decades, you possess a significant edge.
  3. Define repeatable and clearly binary entry conditions that align with the historical probability.
  4. Trade the process itself, rather than the markets.
  5. Maintain systematic repetition and keep emotions in check.
  6. Refrain from taking any trades outside of the defined process so you do not erode the edge by trading discretionary.

Be prepared to exercise patience, even if it means waiting for up to six hours for a single trade when day trading, or even days when swing trading. Are you ready to embrace patience? Multiply your expectations by 100, and you will be close to the reality.

Feel free to ask any questions you may have.

This can be the most accurate thing I have ever heard about trading, trading needs a calm and self aware mind.

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