Sometimes the best way to improve in something is to know what NOT to do.
Especially, if everybody ELSE seems to be doing it.
And that’s what we’re going to talk about today…
So, after the previous post on the first proven way to lose money fast, called ‘Living in the dreamland of backtesting equity curves’, here’s another one that catches traders out:
#2: Following and consuming all the obsolete, publicly available trading ideas – and ignoring everything ‘unknown’
There’s one thing that surprisingly even very smart traders are missing:
Most of the publicly accessible trading information does not work anymore.
Or it doesn’t work well enough to use practically.
Even the information you find in books.
Yes, a few books still do have value and do help improve your trading. Like Van Tharp’s ‘Definitive Guide To Position-Sizing’ book (and I’ll get back to that later).
But these are very rare exceptions.
The majority of information (especially on the internet) is crap…
Dangerous crap that will very likely lose
That’s why this information is “shared” for free.
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Because their value is ZERO, and in most cases, they’re obsolete already.
Quality concepts and solutions are very rarely shared on the internet for free. Or cheaply in books.
That’s the truth I had to learn myself.
Yet, the paradox is:
Most traders still LOVE re-engaging into this free, but obsolete and zero-value information. The same information everybody else seems to be following too.
Let me give you an example:
There is a specific reason, why I mentioned Van Tharp’s ‘Definitive Guide To Position-Sizing’ book. It’s one of the very rare exceptions (and not a cheap one). But this book is a true game-changer, with cutting-edge, out-of-the-box ideas. That can SERIOUSLY push your trading to new levels. And I’ve been recommending this book for years (without making any commission from it).
Yet, very few traders have ever purchased or even read this book.
Even traders I’m in very close touch with and keep recommending the book to for years. They still do not own the book (while I’m already successfully using some of the concepts in my hedge fund).
Because it doesn’t talk about the “cool” stuff that everybody else talks about: Indicators. Software. Latency. Coding.
It talks about “boring” position sizing. (Which, in fact, is a mind-boggling powerful way to completely transform your trading).
I admit it took me quite a long time to get through this book, and to be able to detach from all the old-fashioned thinking I’d been exposed to. And to start seeing everything from a new angle and finally getting the true value of that book.
Yes, it was “too new and different” at that time for me too.
But, it was one of the first steps to start abandoning the obsolete fallacy of the “if everybody else seems to be doing and following something, it must be important, and if something is “too different”, it’s probably suspicious”.
This shift opened my eyes and taught me, that:
To become a successful trader, you need to start abandoning what everybody else seems to be doing, following and consuming – FAST. And start doing something completely different.
After I finally found the ultimate confidence to go my own way, all of a sudden new and cutting-edge trading solutions started flowing almost effortlessly.
Like my Market Internals applications. That helped me reduce my drawdowns tremendously and even helped Max to take out 3rd place in the World Cup Trading Championship in 2017.
Or, the unusual, unorthodox ways to Smashing false breakouts, that my students have had enormous success with. (Read “Student case study (1/3): Surgeon revives a dying trading strategy”, “Student case study (2/3): The SFB way to more robust strategies”, “Student case study (3/3): Improving a trading strategy by +114.40%”).
Or, ground-breaking Dynamic Position Sizing techniques.
From my experience, following the “generally known and accepted” in trading doesn’t work anymore.
That’s the truth – at least my truth.
Fresh, new ideas and approaches are what is winning.
If you don’t want to stay behind, quit the “generally accepted and known” and start opening up to the new and unknown.
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