Over the course of my time in the markets, I’ve heard quite a few assumptions that people make about simple trading for themselves. I cover many of these in Frequently Asked Simple Trading Questions [F.A.S.T.Q.] posts, but I thought I’d go through a couple of them here.
Many people subscribe to the silliness that says markets are irrational… random even. Remember this… all markets trend… on all time frames. Even chaotic data will exhibit trend behavior [see 46 second, silent video below]. If you can get inside the price behavior [correctly mind you] of your chosen timeframe properly, you can make money.
There are those who get into the markets looking to make “big” money overnight... And assume that the market is the right place to make that happen… again, quickly. Maybe there’s a big bill due… or maybe you want to take a nice vacation… buy a nice car [or whip as the young people say… or used to say]… To be clear, it’s absolutely possible to make money quickly... "overnight" even... but it's also highly unlikely that you will. That's just the nature of markets.
High Win % Required
If I see another super high win % trading "system" come across my feed, I may go crazy... again. Here’s another nugget for you… If your expectancy [difference between how much you make when you win vs how much you lose when you lose] is positive, it doesn’t matter what your win % is. I’ve made money with a win % as low as 19% over a given period, so I know this to be true.
There’s always a gang of assumptions that people tend to make about trading. Once examined closely, many of them crumble like dried out plants [that haven’t been watered sufficiently]. Don’t find yourself believing those mistaken assumptions as if they’re evergreen.