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Systems Rather Than News

In trading there are two paths that a trader can follow – one is noise free and somewhat serene. The other is to be surrounded by noise in the belief that this noise somehow brings something to the trading decision. I have just quickly done a google search for the phrase Greek riots and google in its wisdom returned 8,710,000 results. My evening news is full of images such as the one below.

Source Boston.com

This is noise and it has an insidious effect upon traders – it completely distorts the trading process by interfering with a traders decision making process. If I were to absorb all of this noise I would come to the conclusion that markets were never going to go up again and that the world was going to end. Fortunately neither of those myopic and insular views are true.

This is a chart of the Dow and the two blue arrows represent the last two buy signals my index system gave – signals I took. I am now long the Dow and the Nasdaq 100 – on Monday I wll be long the S&P 500. The reason I am long is that the system says to go long and the system doesnt give a shit about images of people chucking rocks at one another like cavemen with shoes on. The system only cares about price which is the one and only variable traders should look to in order to make any decision at all. The rest is gibberish.

This is an update of chart I posted a little while ago showing the long term trend of the Dow – note this is the actual trajectory of the Dow not a predicted trajectory based upon noise. This is actually what is happening – it is not what you want to happen nor what you think will happen. This is reality – everything esle is an illusion of your own making.

I have no idea whether these new long trades will be profitable but both the Dow and Nasdaq trades are at breakeven after a two nights trade. So they are at worst free carry trades. They are at breakeven so quickly because I took the first signal that appeared on my system without sitting there getting my knickers in a twist over what might happen.

So get off your arses and turn the friggen television off.

 

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Comments

  1. Bill Davidson says:

    Hi Chris,

    What indices will your black belt index system be trading when it comes out?

    I like you article here, I am thinking that the more you can simplify your trading system the better a trader can perform when under pressure?

    Bill

    • Hi Bill

      I will be trading the following in no particular order.

      ASX200
      Dow/S&p500/NDX
      Hang Seng/Nikkei
      FTSE100/EuroStoxx50/Dax
      Plus any commodity/currency market that piques my interest.

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