Ignore the Talking Heads: Build a System That Works
Most people are stuck in a mental trap Orwell described in the book 1984…
Doublethink.
Remember the Party slogans?
“War is Peace
Freedom is Slavery
Ignorance is Strength.”
That’s doublethink in action. Holding two contradictory ideas as true because some authority figure told you so.
And let’s be real: it’s alive and well today. As long as an "expert" in a suit says it, whether it’s CNN, Fox, CNBC, Bloomberg, whoever, most people eat it up. No questions asked. Most people don’t want to figure things out for themselves. Being told what to do feels safer, more comfortable. Whether they’re actual traders or just pretending to be, appearances are enough. Confidence is king. Throw on a suit, speak with authority, and you can lead the masses wherever you want.
Want proof?
Look no further than the Milgram experiment.
People will follow directions even against their better judgment because they believe the person in charge knows better.
The Trading Trap
Here’s why this matters: when you first start trading, you fall into this trap.
You think these so called experts know something you don’t. And if you could just figure out their secret sauce, you’d never lose again.
But that’s a lie.
Nobody, no talking head, no hedge fund manager, nobody, is right all the time. Everyone’s edge is different, and success in trading isn’t about being right all the time. It’s about managing the game.
Be wrong small, and be right big.
Let’s break it down:
If you lose 1% on your losing trades but average 5% gains on your winners, you can be wrong more than you’re right and still come out ahead.
That’s the game. Small losses, big wins.
Find Your Own Edge
The takeaway? Stop looking for someone else to tell you what to do. Build your own edge. Create a methodology you can execute over and over again.
Because at the end of the day, the only person who can lead you to success in the markets is you.
A Few Edges I Learned Early On
Here are some of the key lessons that shaped my trading approach early in my career:
1. Volatility Doesn’t Equal Trends
Most traders assume that high volatility means big trends, and low volatility means no trends. But that’s not always true. You can have strong trends in periods of low volatility and frustrating ranges in periods of high volatility. The market doesn’t owe us consistency, it just does what it does.
2. Diversification Is About Correlation, Not Quantity
I learned from Ray Dalio’s concept of the “Holy Grail” that diversification isn’t about owning a lot of things, it’s about owning the right things. A portfolio of five uncorrelated assets can be more effective than a portfolio of 50 assets that all move the same way. True diversification reduces risk and improves returns, but it requires understanding how your assets interact.
3. Cycles Drive Everything
Market cycles are critical to understanding price action. Whether it’s Martin Pring’s phases (Accumulation, Markup, Distribution, Markdown) or macroeconomic cycles like Reflation, Recovery, Overheat, and Stagflation, knowing where you are in the cycle helps you align your strategy with the market environment.
For example:
Reflation: Bonds perform best.
Recovery: Stocks shine.
Overheat: Commodities take the lead.
Stagflation: Cash becomes king over time…
Every phase has a playbook and you just need to follow it
.
4. The Wyckoff Method: Smart Money Leaves Clues
Wyckoff’s Accumulation and Distribution theory taught me that smart money (institutions) is always moving in and out of positions. During accumulation, they buy while everyone else is scared. During distribution, they sell when everyone else is euphoric. Price and volume patterns tell the story if you know how to read them.
5. The Edge is in Execution
All of these ideas are worthless without execution. At the end of the day, it’s not about knowing more than everyone else, it’s about doing what works, over and over again. Your edge is what you can repeat consistently. For me, it’s about staying small when I’m wrong and letting my winners run when I’m right.
6. Bonus-Follow the Trend
Trading isn’t about being right all the time. It’s about playing the probabilities, keeping losses small, and letting compounding work in your favor. That’s the game.
Trend following taught me that the market rewards simplicity. Trends persist longer than most expect because they’re fueled by emotions and institutional flows. The key is to stay in the trade as long as the trend is intact and exit when it reverses.
This means:
No predictions, no ego: just follow price.
Use trailing stops to protect gains while giving the trade room to breathe.
Trust the process, even when it feels uncomfortable.
The hardest part? Sticking with the trend through pullbacks and ignoring the noise. But when you let the winners run, they often make up for all the small losses and then some.
The market doesn’t care about opinions or appearances. It rewards discipline, adaptability, and a willingness to act on what’s in front of you, not what someone else says it should be.
For more on where I think markets are headed…
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Bonus: I wrote this about oil today.
Looks ready to buy…