Trading Secrets

If many of the posts on this blog read like something you have seen before in countless trading books and forum postings, it is because there is very little that is original in trading. So, sorry to disappoint you, you certainly won’t find any amazing trading “secrets” here that can’t be found anywhere else on the Internet or in a book.

If many of the posts on this blog read like something you have seen before in countless trading books and forum postings, it is because there is very little that is original in trading. So, sorry to disappoint you, you certainly won’t find any amazing trading “secrets” here that can’t be found anywhere else on the Internet or in a book.

Actually as a rule I don’t think there are any major trading secrets left – if there are any secrets they are more likely to be related to short lived opportunities (such as insider trading opportunities). However, having said that, working with more mundane approaches to trading certainly has helped a number of private traders get out of the rat race, so it should suffice for the rest of us.

Many hedge funds claim that they have “secret” methods that enable them to gain an edge, but I doubt that it is the case. I often think they have some twist on some well known method, and the “secret” is just market spin doctoring to get you to invest in their fund. For example, the ill fated Long Term Capital Management (LTCM) fund claimed that they had a secret risk free way of harvesting money out of the market cooked up by their Nobel prizing winning gurus. Their “secret” was nothing more than a new twist on exploiting arbitrage opportunities between long dated bonds. Their real secret was the use of marketing spin to get investors with deep pockets to sink money into their boutique fund.

If you have read “Way of the Turtle“, there is a fascinating story about trading secrets. Curtis Faith was one of the original “turtles” who participated in the trading experiment where Richard Dennis had a bet with his colleague that he could take 23 average guys off the street and teach them to be great traders. The bet was basically that great traders are made and not born (i.e a classic nature vs. nurture argument). The turtle name came from the analogy that you should be able to grow traders like they breed turtles in Singapore. When Curtis participated in the exercise, despite being one of the youngest and least educated in the group, his performance was far superior to that of the others in the experiment. One of the other participants in the group got extremely angry that Curtis outperformed him and believed that Richard Dennis had favoured him by teaching him some “secret” which he didn’t share with the rest of the group. When all the dust had settled, it was discovered that there was no extra secrets taught exclusively to Curtis. Curtis was simply more consistent in following the same set of trading rules and pyramided his way into winning positions.Please think twice before you buy into some product that promises to share some “trading secret” with you. I can guarantee this is not the case and the marketing spin doctors are just trying to suck your cash out of your pocket.

Macrotactics is a blog devoted to recording a part time trader’s journey into the world of trading currencies. In my day job I work as a manager in an Information Technology company. I live in sunny Queensland, Australia with my wife, a cat and a baby on the way. I have been banging my head on this trading thing for at least 3 years now and the deeper I dig into the topic of trading, the more I realise there is to learn. Trading for me has

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