Are You Making Your Trading Too Complicated?

I never did like my best friend David’s ex-wife.  I don’t know what it was about her that rubbed me the wrong way, but out of respect for our friendship I never mentioned anything to him while they were together.

Eventually, after twelve years of marriage and one child, she decided that she wanted a divorce.  It wasn’t because my friend had cheated, or failed to provide, or wasn’t a good father, it was that according to her, he had “changed” and had become “distant” in the previous two years.

When I heard the news, even though I did not like her, I tried to stay objective and think back two years to see if I could remember any specific event that might have caused the change in my friend’s demeanor that she was claiming.

He didn’t have any job changes or any trouble at work that I was aware of at that time.

I couldn’t remember any issues with his son back then, who had always been a good kid.

And though not a rich man, his finances were always stable and he was reasonably comfortable in the best upper-middle class sense.

Oh, wait a minute….maybe it was when he found his older brother dead on the bathroom floor at his parents house in the middle of their family’s Thanksgiving celebration?  Hmmmm….yeah, that could have been it.

David’s older brother Brian was a miracle baby who was plagued with serious heart troubles from birth and was never expected to live past childhood.  However after numerous surgeries that left him with a collection of scars across his chest, he had not only survived but thrived, becoming a school teacher and living as normal life as anyone else; until one fateful morning.

As generations of family and friends talked and laughed at his parents house, looking forward to Thanksgiving dinner later that evening, Brian excused himself to use the restroom.  About twenty minutes passed before somebody asked, “Where’s Brian?”

A casual search began to turn slightly more tense when it was realized that he was still in the restroom.  After knocks on the door and no response to the panicked “Brian, are okay in there?” question, my friend broke the door down, only to find his brother lying on the floor…dead.

He tried frantically to resuscitate him, but it was too late.  He was gone.  The coroner later found that Brian died instantly which he described as “just like flipping a light switch off.”

I don’t know about you, but that could put me in a “distant” state of mind.

Problem is, his ex did in this situation what she always did in every situation; made it more complicated than it needed to be.

I once went to dinner with the two of them and both she and I ordered a garden salad. The salad came stacked in layers; bed of lettuce at the base, then tomatoes, sliced carrots, onions, radishes, and on the very top peak, mushrooms.  It was served “dry” with the dressing on the side in a boat.

I don’t like mushrooms so I took my fork, lifted them off, and put them on the side of my plate.  David’s ex apparently didn’t like them either, but she chose a different, more complicated solution.

Holding the plate up as if it was radioactive and with a look on her face like Mike “The Situation” Sorrentino had just peeled his tank top off after a particularly sweaty workout, wrung it into a glass, and asked her to take a swig of it, she looked at the waiter and said, “I don’t like mushrooms.”

So now the waiter had to take it all the way back into the kitchen, pretend that they were making a totally new salad (when in all likelihood they were probably just doing what I did), and then bring it back out with the requisite genuflecting apology.

Complicated….!!!

The best part though was that as she was in mid-digust and handing the plate back, she glanced over at me and saw me simply moving my mushrooms to the side.  When our eyes met I admit I did give her my best “what a complete idiot” look.

So after sensing some “distance” from my friend following the annoying fact that his brother checked out without warning during a family function, did she do the simple thing which would have been to talk to David about it, and find him some help if he needed it?  Nah!

Instead she began a two-year affair with a married father of three (with one on the way), whom she described as her true “soul mate,” which apparently translates as “one you go down on in a car parked in back of 7-11 after you drop your kid at school.”

Complicated…..!!!

Every day I see new and even experienced traders who try to make trading more complicated that it needs to be, and their P&L suffers because of it.  They use multiple monitors, multiple programs, and a half a dozen or more indicators, 99% of which are all based on price and volume.

Complicated….!!!

I don’t begrudge those who are successful with complex setups and strategies, but for the vast majority of us who are not running the quant desk at Goldman Sachs, simple is better.

Some of the best traders I know only use one or two monitors at most and focus on price, volume, support/resistance levels, a few core patterns, and perhaps an oscillator thrown in for confirmation.  After that it is all about proper sizing and trade management.

If your trading returns are less than you hope for, the first thing you should do is strip down your system to the basics; price and volume.  Then look at your indicators and studies to see if you really need them all or if they are just causing you distraction. Check out of all the patterns you trade, and determine which ones show the highest reliability.

Then throw the superfluous things away and keep only what you need and what works.

And remember that the money you make in the markets is no more valuable if you make it in a “complicated” way than if you make it in a “simple” way.

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  • Had to come back to this post more than a week later because it just nails it … great story… keep it simple ..keep it relevant…and ruthlessly disregard the rest … both mumblings and people 😉

    • Hey thanks Tony, appreciate it.

  • firstimer

    What was relevant in your post was only about 6 lines. Rest of it was only distraction….. Complicated !!!

    • Ironically complicated you mean….

  • Guruprasad V

    Complexity helps academicians because they only know how to talk but not walk the talk. Likewise if a trader speaks about so many stuff he would be regarded as a intelligent guy even though he doesn’t make a dime in his trading. I recently heard Gibbons interview with Michael Covel, in which he explained how one of his friend knows everything related grain markets, but was a great failure. Simplicity is the winning strategy. Those who doesn’t understand this are simply cheating themselves for their own ego.

  • Very well written and great story bclund! Great reminder that the simpler we keep it the better of we might find ourself. Tx for sharing

    • thanks for reading…

  • carl_sf

    a great story/illustration and great reminder – thanks

    • Thanks, and thanks for reading the blog.

  • mickeydee

    it took you four paragraphs of BLAH BLAH BLAH to tell us to KSS? And please stop trying to be altucher…one altucher is one altucher too many already…

    • Sorry, too late, I just officially had my name change to Brian Altucher Lund…..

  • ppearlman

    price and volume. like rhythm and melody.

  • Jeff Cheesman

    simple is also more reliable and easier to evaluate

  • Pingback: Thursday links: simple is better | Abnormal Returns()

  • Akmed Currymaker

    Damn homie….i cant think about trading after that story.

    • I know, what a downer I can be, huh? LOL.

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About Brian Lund

Great father. Good friend. Decent writer. Lacking husband. Solid drummer. Sometimes funny. Often A-hole. Terrible poker player. Too smart. Punk rock. Work in an ice cream shop.

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