Enhancing Trader Performance by Resolving To Keep Trading Simple

*****David Blair, The Crosshairs Trader, is a blogger/trader/educator who does a wonderful job of sharing research on elite performance and how it relates to trading. Below is his latest post for the SMB trading community.***** — Editor’s Note

As we kick off the new year I thought it would be fitting to suggest a trader resolution designed to enhance trader performance. It is a simple resolution to understand but a difficult one to master. The resolution? Resolve to keep the trading process as simple as possible. In fact, I believe your trading process should be so simple that even a caveman could understand it. I would hazard to guess that most all professional traders believe that successful trading boils down to having and following a very simple set of rules. For, you see, trading is not difficult; it is the trader who makes it so. Here are a few professionals who share their simple thoughts on the simplicity of the trading process.

John F. Carter: “It is important to remember that there is no need to spend wasted years looking for complicated setups or the next Holy Grail. There are very simple setups out there to use. Some of the best traders I know have been trading the same setup, on the same time frame, on the same market for 20 years. They don’t care about anything else, and they don’t want to learn about anything else. This works for them, and they are the masters of this setup. They have nothing else coming in to interfere with their focus.” (p. 31, Mastering the Trade: Proven Techniques for Profiting from Intraday and Swing Trading Setups)

John Murphy: “My work has gotten better due to simplifying my approach.” (Simplicity Sharpens Skills)

Clifford Bennett: “While there have been some spectacular front-cover traders, the ones who amass fortunes year after year tend to stay in the background. At the very least, they display a simple and down-to-earth approach to markets if they are ever interviewed.” (p. 117, Warrior Trading: Inside the Mind of an Elite Currency Trader)

Dennis Gartman:Keep your technical systems simple. Complicated systems breed confusion; simplicity breeds elegance.” (From Dennis Gartman’s Trading Rules List, Rule #12)

George Angell: “One observation I’ve made over the years, which is especially notable on the trading floor, is that everyone who truly succeeds is a specialist. Unlike the novice trader, who may dabble in as many as a dozen different futures contracts, the professional floor trader is identified with just one kind of futures and one specific type of trading…moreover, the professional is identified by his specialty-scalper, short-term trader, spread trader, or whatever. He does the same thing every day.” (pp. 10-11, Sniper Trading)

Marcel Link: “Systems should be kept as simple as possible. Overdoing things doesn’t make a system better; on the contrary, it can take away from a good system. Trying to make a system too complicated with too many indicators and variables is a common mistake with some traders: some of the best systems are the simplest. As a rule of thumb, a system should fit on the back of an envelope and be easily explained so that someone can understand what every indicator does and every rule does. Otherwise it’s too complicated. Always remember the old adage ‘Keep it simple, stupid’ and you’ll be okay.” (p 249, High Probability Trading)

Mark Douglas: “What you want to do is become an expert at just one particular type of behavior pattern that repeats itself with some degree of frequency. To become an expert, choose one simple trading system that identifies a pattern, preferably one that is mechanical, instead of mathematical, so that you will be working with a visual representation of market behavior. Your objective is to understand completely every aspect of the system-all the relationships between the components—and its potential to produce profitable trades. In the meantime, it is important to avoid all other possibilities and information.” (pp. 208-09, The Disciplined Trader: Developing Winning Attitudes)

Adam Grimes: Traders mistakenly believe “that complexity will lead to better trading results. Simplicity is often better than complexity.” (p. 9 The Art and Science of Technical Analysis)

Brett N. Steenbarger: “There is much to be said for keeping trading logic simple.” (p. 255 The Daily Trading Coach)

Paul Whitfield: “You simply have to get out of a bad stock quickly. You simply have to respect the market rather than fight it. You simply have to know your limitations. And you simply have to keep it all simple.” (IBD)

David Blair


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Steps to Mastery
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