That enormous profits should have turned into still more colossal losses, that new theories should have been developed and later discredited, that unlimited optimism should have been succeeded by the deepest despair, are all in strict accord with age-old tradition. Benjamin Graham A trading philosophy is something that cannot just be transferred from one person to another; it’s something that you have to acquire yourself through time and effort. Richard Driehaus The essential element is that the markets are ultimately based on human psychology, and by charting the markets you’re merely converting human psychology into graphic representations. I believe that the human mind is more powerful than any computer in analyzing the implications of these price graphs. Al Weiss Opportunities change, strategies change, but people and psychology do not change. If trend-following systems don’t work well, something else will. There’s always money being lost, so someone out there has to win. Gil Blake, New Market Wizards |
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rssCore Philosophy
“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…