1.) Yes, discretionary traders must use simple methods because you cannot trade if you have analysis paralysis. In trading you are like an athlete, you need to see and act.
2.) There are no secrets, everything leaks out.
One method may have a great edge for three months or a year, but then loses money after that. If you were to back-test that method for 3 years you would say, hey, this has no edge, but for six months it was like printing money.
The people who were in on the "secret" from the beginning of the move most likely stumbled onto it. At first they are too busy to share their secret and besides, they don't think it will last. Then if it keeps working, some will start sharing it with their close associates or family/friends. Then when it starts breaking even or losing, some people sell the method to the general public. Finally when it is a confirmed loser, it leaks out for free to everyone.
So, the "secret" simple method is really only 5% of what you need to know. I think Larry Williams once said that you can use almost any tool successfully if the market is right. The rest is money management, personal psychology, getting comfortable with randomness and recognizing changing markets and exploiting them.
Hedge funds will run multiple systems that are optimized for different market conditions. If one starts showing profits, they throw money at it. Discretionary traders need to have that same flexibility.
If I were a systems trader, instead of trying to find the holy grail that works over a 5 year period (which might be impossible), I would optimize several systems for many market conditions and then run them all real-time and see which one is showing profits and start putting my money there.
Of course there is no guarantee that a new market condition will have any staying power. Conditions that last 6 months to a year (like the tech bubble or the 2008 swinging market) are rare.
Anyhow, thats my two cents worth.
2.) There are no secrets, everything leaks out.
One method may have a great edge for three months or a year, but then loses money after that. If you were to back-test that method for 3 years you would say, hey, this has no edge, but for six months it was like printing money.
The people who were in on the "secret" from the beginning of the move most likely stumbled onto it. At first they are too busy to share their secret and besides, they don't think it will last. Then if it keeps working, some will start sharing it with their close associates or family/friends. Then when it starts breaking even or losing, some people sell the method to the general public. Finally when it is a confirmed loser, it leaks out for free to everyone.
So, the "secret" simple method is really only 5% of what you need to know. I think Larry Williams once said that you can use almost any tool successfully if the market is right. The rest is money management, personal psychology, getting comfortable with randomness and recognizing changing markets and exploiting them.
Hedge funds will run multiple systems that are optimized for different market conditions. If one starts showing profits, they throw money at it. Discretionary traders need to have that same flexibility.
If I were a systems trader, instead of trying to find the holy grail that works over a 5 year period (which might be impossible), I would optimize several systems for many market conditions and then run them all real-time and see which one is showing profits and start putting my money there.
Of course there is no guarantee that a new market condition will have any staying power. Conditions that last 6 months to a year (like the tech bubble or the 2008 swinging market) are rare.
Anyhow, thats my two cents worth.
