In the previous article, I wrote about the necessity of robust education and a well-structured curriculum for successful trading. An excellent question to this statement would be — why don’t I buy a ready-to-use trading strategy? To answer this question, we need to conduct a “mental experiment.”
A man and a unicorn experiment
Let’s suppose that I bought a unicorn. I have no idea how a real unicorn should look like, and I have no idea how to verify that I purchased an authentic unicorn, and not just a horse with a horn glued to its forehead (I’m joking I’m not that dumb… or at least I hope I’m not). But let’s suppose that the seller was a good man like Theon Greyjoy, and he indeed sold me a unicorn. This fact already makes me lucky! What are the chances that you meet a person who would sell you a real unicorn at an affordable price? Pretty low, I guess. So as you have guessed, the chances that someone would sell a profitable trading system are quite small. And this is just the beginning of the problem.
Let’s come back to me and my unicorn. As I said, I have no clues about unicorns. I have no idea what they eat, what they drink, when do they sleep or do they sleep at all. I have no idea how to keep them and how to care about them. If one day I wake up and see my unicorn shits rainbow, should I panic or it’s ok? If unicorn digs into the ground or flies to the sky, should I start worrying or it’s just all unicorns routine? I don’t know. So whatever my unicorn does gets me nervous and anxious. I will always ask questions — is it ok? Is it normal? I will call the seller, spam him with stupid questions and 99% it will end like this:
“Can my unicorn sleep for a week?”
“No, dude, your unicorn died a week ago.”
You got the point. With no knowledge about trading, it’s highly unlikely that you can buy a profitable trading strategy. And even if you do, lack of experience and understanding will make your trading vulnerable. You won’t know what is normal, what is not, and when the strategy stops working. And it will, sooner or later. Markets change, and one system cannot work forever. Maybe it will stop working tomorrow, perhaps it stops working today, or it has already stopped working, but you just don’t know it yet. The dynamic environment requires an adaptive approach, and I think buying a trading strategy is no better than this (with no offense to Flex Tape):