SCOTT WELSH TRADING BLOG

Out of Hiding

Out of Hiding

Sept. 8, 2021

When working with high-performance athletes, strangely, one thing becomes clear.

Most people prefer to hide.

That’s not necessarily a criticism. Hiding is a good strategy. Hiding works.

It’s the King’s head that gets chopped off, not a follower’s.

The person in the pack is safe. And safe is good.

But, assassinations aside, hiding doesn’t get us anywhere.

For athletes, it means never quite trying as hard as they can.

It means missing a big tournament because of an “academic assignment”.

It means throwing temper tantrums as soon as the going gets tough.

It means goofing around when it’s time to be serious.

All of those excuses (and others) are just ways of hiding.

I didn’t really lose because I didn’t really try.

Not being on the hook is comfortable and cozy. But nothing extraordinary happens from cozy.

While many teenagers in my program found comfort in hiding, a few did not.

And those that put themselves on the hook did amazing things.

How did they do it? How did they get on the hook?

They made a decision to get started.

But this type of decision is not up for negotiation. This decision means doing it and never looking back.

That’s a big step. And not one most people want to make.

Deciding on a trading system is even more scary.

Dedicating money to trading leaves us open for ridicule on the internet and criticism from family and friends.

How could you risk all our money on stupid trading? Don’t you know no one beats the market?

It’s much easier to hide.

I trade for fun. I like to try a bunch of different systems.

Trading that way is safe and cozy.

But, again, it doesn’t get us anywhere. And what if not getting anywhere isn’t acceptable anymore?

What if we want to get started? What if we want to be on the hook?

It’s a big decision. It deserves some serious thought because there’s no going back.

Once a decision is made, a decision that matters, there’s no more discussion.

So, how do we do it?

Here’s an easy checklist.

One, pick a system that works on long-term charts. There’s more power in long-term systems and less fake backtesting shenanigans.

Two, look at data over many years. If it’s worked for a long time in the past, it will probably work a long time into the future.

Three, don’t break new ground. Don’t do something revolutionary. Do something that’s been around for decades, centuries even.

What’s a famous example of all-time great trade?

How about Warren Buffett buying KO (Coca-Cola) in 1988?

  • Coke has been around for 129 years.
  • When Buffett bought it, it was trading around $2.45.
  • It’s currently at $56.74.
  • Before he bought it, it had grown from $.05 in 1962 to $2.45 in 1988.
  • A body in motion tends to remain in motion. For a long time.

Buffett used a long-term view (forever), had data going back many decades, and bought something old (not new or revolutionary).

Can we do the same with a trading system, if we’re willing to be on the hook?

Yes.

We’ll take a look in the next Newsletter.

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Disclaimer:
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.