“The essential element is having a core philosophy. Without a core philosophy you’re not going to be able to hold on to your positions or stick with your trading plan during really difficult times. You must fully understand, strongly believe in, and be totally committed to your trading philosophy.”

– Richard Driehaus

 How does one confirm an effective core philosophy? Here is one simple test. Imagine a wealthy businessman — a friend of the family perhaps — will give you $5 million to manage upon reasonable convincing, over the course of a light lunch, that you have a viable strategy for profiting in markets.

Without notes or power point, could you sell this person on your methodology, explaining in plain English what it is and why it works?  Could you confidently defend against devil’s advocate criticisms?

If the honest answer is “no,” work hard on making it “yes” and your core philosophy will emerge…