Trading is not a puzzle, it's a game
I’m a terrible chess player. I just got into it over the past year. I only play against the computer, which has ever-increasing levels of difficulty. When I first started, I was really terrible. Today I’m still pretty terrible, but I’m way better than I was. I can consistently beat the computer avatars that used to absolutely trounce me. I’ve improved.
When it comes to finance and investing, it’s hard not to come to it thinking that it belongs in the realm of intellect or big data - that it’s ruled by quants, math, computers, and really smart people.
By and large that’s probably true in the institutional world - if you worked at some high-tech hedge fund or a big bank. But trading is different.
When it comes to trading (and perhaps even more so day trading) it’s also easy to slip into this mindset - endless indicators and ratios and signals. It must be some complex code that everyone is working off of, right?
In short, most come to trading thinking that it’s some kind of puzzle or code to crack. This is why traders try a long list of indicators, changing and tweaking the parameters and timeframes, always looking for something to jump out at them.
This is the ‘holy grail’ mentality - and it comes from a misguided belief that the way to market success is found somewhere in the data. If you just play around with variables long enough, eventually the money-printing machine will reveal itself.
Unless you’re Jim Simons, this isn’t how you’re going to find success. Trading is not a code to crack. It’s a game to be played.
Back to chess (and leaving aside the fact that yes, chess is pretty quantifiable and computers run the show now) - I haven’t studied the game or learned technique or anything like that. I’ve just enjoyed playing. And I’ve now played hundreds, perhaps thousands of games. And I’m a lot better than I was.
This is, in my view, how trading works. That’s why there is no substitute for experience, trial and error, failures, and mistakes. You should learn from others, you should read lots of trading books, you should study strategies and setups. But in the end there is no substitute for actually TRADING.
This is why I firmly believe the cliche that you could give a new trader a time-tested profitable strategy and they wouldn’t make money with it. Strategies don’t make money - traders make money.
Trading is not a code to crack - it’s a game to be played. There is no get rich quick scheme, because trading doesn’t have cheat codes. It’s much closer to learning how to surf or learning a musical instrument or a sport - there’s endless nuance and context.
Yes, there are certain fundamentals to trading success which you have to learn - how and why markets move, how to manage risk, etc.
But in the end, it’s a game that you have to play for a LONG time to get good at. It’s disheartening to those starting out who thought easy money was just around the corner. But to anyone committed to it, it should come as a relief.
Keep playing, keep trying, keep failing and showing up. The more you play, the better you’ll naturally get at it, same as any other skill or pursuit in life.
The best part is, this skill can provide for you and your family for life. To me, that always sounded like a pretty awesome skill to learn.