One thing you need to understand when starting out is that there is no study that ever confirmed that complex trading methods will give a trader any type of edge or any type of advantage over simple trading methods. I personally always try to use very simple methods that can be explained in a few worlds. If you haven’t read my views on simple swing trading strategies, you can find more information by going here.
Many years ago in the early 90’s, I saw an article in a trading magazine publication. It was about a trading competition and one of the traders who was doing well was using this very advanced method that was based on Gann or something with ratio theory, It’s been a while so I don’t remember all the details. Anyway I was intrigued by this and wanted to learn more info about this guy and his almost magical trading method. I did some research and found out he offered coursed for those that wanted to learn more about his theory. After a short call where he tried to patiently explain his style of trading, and between you and myself I didn’t understand one word he said.
I hired him for several courses to show me his style of trading. He traded using very difficult to understand method that relied on some mystic formula; it was not some simple system or method that I was expecting to see or was used to using in the past.
To make matters worse since this was the 90’s and there were no advanced computers that you could program algorithms into such as Trade Station or Meta stock. Even if they were out I wouldn’t know how to program them back then anyway.
I was very disappointed after finding out that it would take me over 2 days to figure out each set up and I had to make sure I did it right which would take several more hours. After I finally understood what he was doing, I realized that this magic method was nothing special. My risk to reward ratio was not that high and it wasn’t such an easy swing trading strategy after all. My simple methods outperformed this strategy each and every time.
Good trading methods need not be complex.
I stopped using this method after a few months before it put me to the poor house and started trading my old basic swing trading strategies that I have been using for years. My outlook got better and so did my trading. I was optimistic again looking forward to the next trading day.
I later found out this guru went out of business and quit trading all together a few years later. Last I heard he was putting together software to bet on race horses. Something I know nothing about and have no interest in.
The point I’m trying to drive home is simple: the complexity of a specified trading method will not yield better or higher profits. Don’t think for a minute that it will, there have been numerous studies and they all say that there is no positive correlation between the difficulty of a trading method and the profit or loss potential of such method.
My recommendation is to pick a simple strategy that you understand and use it till you feel confident enough with it. Make sure you understand how it reacts during losses and how it reacts during profits. You want to know the characteristics of the method you trade so that you can feel confident trading it.
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