When looking into Trading and the financial markets I approached it with an investigative philosophy.
I wanted to know what worked, Why it worked and when it worked and why it worked when it worked and why it didn't work when it didn't work.
As I came towards the competition of my philosophy and ideology, I noticed that I started to become lax about the entire thing. Having developed a sufficient understanding and an ideology which is clear, understandable and applicable based on objective truth (What can be seen) rather than subjective opinion.
The problem with an investigators philosophy is the lack of responsibility for the knowledge discovered and/or organised after the investigation has been concluded.
It never occurred to me until recently and this is an entirely self evident truth of retail trading. That two people could use the exact same strategy, trade on the exact same assets and the exact same and achieve completely different results.
When you strongly consider this fact it is fascinating. Why ? Its because how they apply the strategy is different.
Here i'd like to delineate the difference between a methodology and a philosophy. In simple terms, a methodology is what to do and how to do it. A philosophy is the why you do it and why you do it the way you do. A philosophy consists of ideas, viewpoints and attitudes regarding the markets and the strategy.
A philosophy is thousands of times more important that the strategy. And when I mention Philosophy I would like to distance myself from the common self-help connotations of philosophy and its ideas such as "Manifestation" and "Affirmation".
The only true guarantee of security and success in trading is competence. Competence comes from understanding and certainty. Affirmations are a tool for the individual to indoctrinate himself into an believing something thats not true. Which is fine, as these things can become true, however it will leave the individual with an sense of insecurity as with affirmations most people do not fully understand the mechanism of why it "works".
Meaning they cannot tolerate divergent opinions without retreating into themselves and feeling like they need to justify their strategy when they encounter a philosophy or method of operating slightly different to themselves.
The inability to tolerate and allow different views is will prevent any true transfer or understanding of the wisdom or knowledge of others, as your compulsively trying to put your method of operation into the spot light to prove your own rightness.
Here is an aspect of the the philosophical differences between two people, the difference in their ways of operating (Doing an activity) however big or small. That leads to a difference in results. And here is the secret of the traders edge.
What do you do with a strategy ? you need to constantly refine it. That doesn't mean that you need to constantly add on more or new indicators or change your entire strategy. Sometimes new ideas and a new viewpoint itself can change your philosophy and therefore change how you apply your strategy and change your results.
There're two ways to refine your trading strategy and develop an edge. There's the quantifiable way. Which has to do with indicators, entry signals, use of timeframes etc. and the quali-fiable. Changing your ideas about the market.
Both of these have value, However, Always quantifiable trying to change your strategy has its limits. There's only so much you can change about a strategy before you end up with something that looks completely different than what you started with. and the worst part about it is that, it still may not work!
This is what some traders refer to as the cycle of doom, constantly trying to substitute one strategy for another. This has a very limited work ability.
However what has an unlimited workability is constantly trying to develop and adopt a better viewpoint, idea or attitude towards the markets. This by our definitions will improve the quality of your trading. This is how you develop and "Edge".
The ideas you have about the market are more important than the market itself. Having the wrong ideas about the markets will cause the markets not to work for you and having the right ideas about the market will cause the markets to work for you.
This could be an axiom in and of itself: The Ideas you have about the market are more important than the market itself.
Its as simple as that.
So what do you do with your strategy. You apply it and refine it. But what you do with your strategy is nowhere near as important as to how you develop your philosophy.
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