You’ll keep praying for pullbacks and miss them and once you go “fuck it” and market buy, it touches every one of your wishful pullback levels as you exit and keep calling it a manipulated scam whilst it recovers above your initial buy level

^life of a new trader

Thread/

1/ If this is you: stop

I use three foundational pillars:

i. Data driven strategies
ii. Cognitive emotional control
iii. Managed risk

This is simplified, but abstraction works

Experience will show implementation of these pillars for you specifically - it’s very personal

i Data driven strategies

Take existing strategy

Quantify it, modify it, harden it with data, backtest etc

Understand why it (doesn’t) work(s)-> rules

Rinse and repeat, until you have a framework

Then continue/start trading small size and learn to apply (ii) and (iii) 2/

ii Cognitive emotional control

Emotions can only be mastered by being exposed to them

Understand how your brain and markets trick you

Using a data driven framework (i) is a good way to relatively safely expose yourself

Reflection leads to cognitive control of emotions 3/

Strategies can be simple and yet effective

Creating profitable strategies is not impossible, it’s the easier part

But without knowing yourself, your emotions and how your brain and the market tries to trick you, you will lose every single time 4/

iii Managed risk

Last but not least, trading remains gambling of some sorts

I like to call it making educated bets

Losing is part of the game

So the third pillar is to know how many times you can expect to execute losses before going bankrupt

Adjust your risk for this 5/

6/6 I understand this sounds incredibly simplified

But before diving in to any kind of complex system (bottom-up), many don’t realize the abstract foundation (top-down) behind trading

I always prefer a top-down approach and build from there

And these are my pillars