The fast track to trading success goes something like this:
- Find a successful trader
- Find out what he does
- Duplicate the results for yourself
And guess what?
This won’t work for you.
Why?
Because successful trading depends on your beliefs – not the trading system.
EXAMPLE:
Trader Ed won’t trade an hour before the Reserve Bank of Australia’s (RBA) interest rate announcement. In fact, Ed won’t even trade the day of the announcement – he always takes this day off.
But Trader Barbara, she loves trading the RBA announcement, in fact she scalps the announcement just about every month on the 5 minute charts.
So who’s correct? They both are…
Barbara believes the RBA announcement is an opportunity, so she takes it. And Ed believes it is a trap – so he avoids it.
Trading gurus can get you into trouble when they tell you “this is the best way to trade” – because once you drink the cool-aid, you are likely to change your beliefs, and adopt your guru’s beliefs about the markets.
What’s wrong with doing this… especially if it works?
The problem pops up once the guru’s approach runs into a drawdown, and that’s where you’ll come back to your own tightly held beliefs.
You see, we trades are emotional boomerangs… we get very excited by new approaches to trading that seem to make sense, and then – when the weaknesses pop up, we revert back to our original beliefs and abandon our guru’s approach.
This is where most traders get stuck – constantly finding a new trading system, trading it for a while, suffering through an unlucky patch, abandoning the system, and then searching for something more closely aligned to their beliefs, etc.
Here’s the problem with this, you’ll never achieve true trading mastery unless you stick to one system.
Every system has a weakness, and once that weakness rears it’s ugly head (in the form of a drawdown) you’re likely to abandon ship… unless you trade a system that precisely fits your beliefs about the market.
In the next post I’ll share a quick and dirty way for you to identify your trading beliefs so you don’t go down the wrong trading system rabbit hole.