The investment industry is filled with complex terminology and busy charts. The name of the Wall Street game is to sell complexity. Often, new traders and investors confuse complexity as ‘a requirement for success in markets’. After all, it seems like that is what everybody is doing.
That in and of itself is a sign that we don’t need significant levels of complexity in our trading.
You do not need complex charts, indicators or data to make good trades or wise investments. PERIOD!
It’s so easy to get caught up in intellectual pursuits that take away from OR completely override the effort to make money in trading / investing. Many people think they are in the market to make money, but in reality other subconscious motives often take over.
People want to be right.
People want to make great calls.
They want to do things the hard or elaborate way in an effort to show superiority.
Interestingly, these are all reasons why strong trends tend to persist. Again, these motives are as much subconscious as they are conscious.
These motives DO NOT lead to superior returns. They just lead to busy work and painful losses.
Here’s a short and incomplete list of things you do and don’t need to succeed in the markets.
You DO NOT NEED:
- to have complex screens, tools or methods
- numerous technical indicators all in agreement to take a trade
- to spend all day in front of screens
You DO NEED:
- the ability to quickly adjust opinions
- fortitude to quickly accept being wrong
- the ability to find confluences of support and resistance and think uniquely about them
- quality information
What most people mistakenly believe is that complexity is needed in our INFORMATION INPUT.
What we really need is complexity in our THOUGHT OUTPUT.
You have to think in markets. We have to take the simple, key data points and think somewhat deeply about them and make decisions. It’s work most people just don’t want to do. Often times, people just want the complex data and research to do all the decision making for them.
Gosh, that would be nice wouldn’t it? I wish!!
Thanks for reading and trade ’em well!
Further reading from Aaron: 6 Investing Lessons From The Bill Ackman – Valeant Situation
Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.