Need a Nanny and Don’t Want to Learn Trading Yourself? - Tough Luck
Why I don’t give trading signals and why you shouldn’t follow tips, ideas, trades, and opinions anyway.
Most of us want to be the best and have the best, but when it comes to putting in the “work,” we always resort to shortcuts. We want to lose weight — give me a pill or a 3-minute workout I can do from the comfort of my bed. Has that ever really worked for anyone?
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In trading, things are no different. Sure, one can get lucky and strike gold while occasionally playing with some coin or stock. Still, the odds are overwhelming that these lucky individuals will inevitably give all that money back to Mr. Market and then some. Easy come, easy go.
When browsing through social media, one tends to notice a pattern. The big accounts, especially on Twitter, attract a particular type of followers.
Yes, “followers” is an appropriate word to describe the people who want to be told what to do, when, and how to do it. They don’t want to think. They don’t want to learn. They want none of that — just the money, please, and thank you very much.
“Entry, stop loss, target, Sir?”
The consequences of appealing to such a crowd are entirely predictable. The one giving out advice or “trading signals’” gets blamed for every loss they incur.
” Mi Familia! You made me lose money! I lost money following you; you don’t know shit! I want a refund! You’re just a large account moving the market with your followers to make more money. You keep changing your mind.”
The “influencers” collect some clout and an occasional grateful soul, but one experience dominates the other. Talk about an ungrateful crowd; oh my. Nein danke!
This parasitic relationship has so many problems that one could write a book without being done. But alas, I’ve decided to mention a few of the most significant issues with giving out trading signals. Let’s get into it.
The ultimate fallacy
Here’s the fact that no one wants to hear, but it is the truth and nothing but the truth. I believe the truth shall set us free, so here it is.
No one knows shit in this game, and that goes double for everyone who makes money with predictions.
- No one knows what the market will do!
- No one knows where the price will go next!
- No one can, with any certainty, predict the future!
The people giving tips know this. They might even scream it at the top of their lungs, but there’s no one willing to listen.
People cling to the power and seduction of “an expert” and have this insatiable need for certainty and predictability. Unfortunately, while I understand the impulse all too well, it doesn’t exist in this game.
Some people have good track records of predicting trends, reversals, and price movements. We all fall into the flow of the market from time to time.
We all get lucky. Mistaking that for actual knowledge of foresight is a problem, though. Sooner or later, your luck runs out. There are times when we really see, feel, and hear the market, but there will inevitably come a time when all that will go through the window, and we’ll end up being wrong. It’s just the nature of this particular beast.
If you believe that just because someone is smart, wealthy, and successful and has a good track record predicting the market, they know what the market will do in the future, you’re a fool.
Imagine 100 traders and analysts making predictions. It is almost guaranteed that some will be right. One or two might even have a lucky string and correctly predict the last few years of price movements.
At the same time, the majority will usually fail in their predictions. We only notice the wins in this scenario, not the losses. It’s like Instagram posting. Yes, my Instagram looks like I’m this world traveler adventurer, but the reality is that I spend 99% of my time sitting at home in front of the screen, just like most of you.
There are, of course, legends among men, the few bright individuals who have beaten the odds for decades. Still, ask them, and they will tell you that while they’ve seen some good plays and trends, they have missed or failed at least as often.
But it doesn’t matter because they know how to capitalize big on their winners and contain their losses to a minimum. All we see is their success, not the path that led them there.
Risk and trade management
Risk management makes all the difference to any trade idea, signal, whisper, or system. The trader or investor that gave you the trade idea will have the knowledge and experience to:
- Manage his risk properly in case he’s wrong.
- Take profit at some point.
- Change his mind if things go south.
- A system built around the trading idea, a way to make money even if he’s not right all the time.
Most retail “followers,” however, will have none of that! In fact, they tend to get angry when they see these traders manage risk, cut their losses, or, god forbid, flip their bias.
Alas, that’s the game. Marrying any idea in trading is suicide. The market doesn’t care, and it will eat you alive.
If their posted trading idea doesn’t pan out, they will have closed the trade with a slight loss and move on. Most followers will mindlessly hold on to their position until they suffer a significant loss or liquidate their account. And then complain about it on social media.
The first rule of trading or investing is — always manage risk!
Some traders also actively manage their positions.
You don’t get to see everything they do that makes them profitable. Whatever their approach, I’m pretty sure they haven’t revealed it in its entirety. So you and I can never identically play the same markets, trades, and periods.
Execution is essential in trading. I’ve had plenty of brilliant ideas and even some uncanny predictions but have rarely found a way to make money from them.
Dependency
You’re not learning anything if you rely on some trader, expert, or influencer to guide your every move in the market.
You’re dead in the water when they stop feeding you their information, which is only a matter of time.
The fact is that while you may get lucky and make some money following other people’s trading ideas, you’ll never become a good trader yourself this way. You’ll never learn the necessary skills and lessons. You’re just wasting time.
Responsibility
Relying on other people to guide your every move, make all the trading decisions, analyze the market, and so on also frees one from personal responsibility. But that is not a good thing.
Far too many people lack the sense of personal responsibility in life and simply ease into the eternal role of the victim.
It’s never their fault. Everybody is against them. When something goes wrong, they always conveniently find someone else to blame.
This is the way of the loser, a codependent baby, a complainer, and if you ever want to become successful or proficient at anything, the first thing you have to do is take control of your life and, with it, your destiny into your own hands.
- You need to learn to make decisions using your own reasoning and stand by them.
- You must learn to take responsibility for your choices and accept whatever consequences they carry with animosity.
- You need to learn to fail, lift yourself up, and try again, this time stronger and wiser for the experience.
None of which is possible if you relay that responsibility to others and blame them for all your troubles. By copying other traders, you give them control over your life and trading results. That is no way to trade, and it’s no way to live!
By choosing to be a follower of trading ideas, you also admit that you do not believe in yourself. You don’t believe you are smart enough, good enough, capable enough to figure this game out yourself. You’re giving up before you even begin.
Trust and confidence
When you are trading ideas or systems that you don’t understand and haven’t adequately tested, you’ll struggle with confidence and will never be able to reach the full potential of any system.
Traders need to understand and trust our trading systems and ourselves because there will be plenty of adversity, and we will be thoroughly tested.
Times when nothing seems to work. Losses upon losses are eating up our accounts. Strings of failures in the market that will sap your will to live, much less to trade and risk your money over and over again.
Trading can be simple but never easy. Without trust in your capabilities and your system, you won’t be able to persevere through tough times.
If you must follow, then at least learn.
If you follow experienced traders, learn from them. Dissect the trading ideas from your favorite “guru.” Ask them questions. Study their moves. Learn to think as they do. Play with their systems and test them out yourself. Adapt their strategies to your personality, time frame, market, and findings.
- Why did they open this trade?
- What did they base their ideas on?
- How did they “know” what to do?
- Why did they set a stop loss here and take profit there?
- What is their mental process and reasoning like?
We can all learn from one another.
Don’t just follow their lead. Question everything and learn as much as you can. The internet, even social media, can be a gift if used properly. We have all this information at the tip of our hands, and we get to interact with people we would have no access to otherwise.
Don’t waste this opportunity by kissing their asses and blindly copying their trades, but try to get inside their head. Find out what makes them as good as they are. Take their ideas and make them your own. Improve on them by testing, practicing, and trading.
I have zero desire to share my trading ideas in real-time or to try and predict the market.
The clout, while tempting, is a double-edged sword. I have a sneaky suspicion that the EGO boost would do more harm than good to my trading. Besides, I’ve been humbled by the market, even when I was most confident in my predictions. I honestly don’t see any benefit in doing so, not for you and not for me.
I want to pass on what I’ve learned, spare new traders some pain, and focus more on what I find to be the most critical part of trading, such as trading mentality, dealing with stress, managing risk, and general guidelines that have helped me in my trading.
Picking a profitable system is relatively easy. Even the most basic ones can be wildly profitable in the right hands. And even the most sophisticated, perfected systems will be useless if you can’t execute them like professionals.
Being a good trader is so much more than just the act of opening and closing trades and being able to analyze the charts.
You have to grow into this role, which takes work. Most of us are works in progress, constantly improving and adapting to the market.
One day, I hope we’ll be able to look back and remember fondly the struggles that forced us to become the best versions of ourselves. Until that day comes, we show up, do the work, learn, and improve.
Good luck out there, friends.
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