Profitable Trading - Tom Hall

2019年1月24日

CASINO MINDSET

Casinos consistently generate billions in revenue per year in what many individuals believe is luck.
Casinos don’t exists because of luck, they understand that over a series of events, the odds are in their favour.

As a financial trader you must become the Casino and understand that you will hit drawdown and period of losses, however if your continue to execute your trade plan your profitable edge will play out over time.

Remember, you have no control over when the markets will provide trade opportunities, you do however have control over your capital.

STAND BEHIND YOUR ANALYSIS

Do you experience a feeling of excitement or dread once you execute a live position?
If yes, there are a number of reason why these emotions would be present.

The first is you either have not backtested your strict entry rules, or have no idea what the historical results have produced.
By not knowing your numbers will inevitably cause emotional and impulsive behaviour as you continuously ask yourself whether or not you have a profitable strategy.

The second is your risk is far greater than what you are comfortable losing in relation to your account balance or net worth.
By minimising your risk allows you to have a clearer outlook when approaching your technical / fundamental analysis.

Third, you begin to second guess your technical / fundamental analysis, this could be present because you have viewed a more experienced traders analysis and their thesis was the opposite to yours, alternatively your simply not confident in your ability to read markets.

My advise, analyse the market with a clear and objective approach.
Once you execute your position, sit back and let your profitable edge play out over time.

THE HOLY GRAIL INDICATOR

There are hundreds of trading strategies that provide a profitable edge in the market, so why do traders struggle to become consistently profitable?

Novice traders enter the financial market with the illusion there is a golden indicator that will solve their financial problems.
I’m here to tell you the holy grail indicator doesn’t exist, in-fact implementing an indicator you have not backtested could expose your entire account balance to failure.

Building a profitable edge trading strategy requires significant hours of backtesting and preparation, implementing indicators that provide additional confluence to your thesis.
The more confluence you can build in a small trading zone the higher the probability of success.

Once you have generated a confluence based trading strategy that you are confident to implement, it’s key you fight the consistency and greed demons.
The ability to stay consistent when your strategy enters drawdown comes from the confidence you have in your backtesting data, if you have no historical data of your strategy, how can you build trust and confidence when things are not going to plan.

The greed demons kick in when your strategy is providing some healthy returns, the thought process of a novice trader is to increase risk in the anticipation of retiring quicker than expected, the experienced trader knows that this is simply a period where a strategies profitable edge is playing out, knowing a small drawdown is just around the corner.

Fighting the consistency and greed demons can be the difference between success and failure.

WINNING / LOSING

There is no such thing as winning or losing in a game that has no end, there is only ahead or behind.
Finance is a never ending marathon that requires stamina, just because you’re ahead today does not mean you can’t be behind tomorrow.

- Tom Hall