Seneca On Sticking To Your Trading Strategy

“…nothing hinders a cure so much as frequent changes of treatment; a wound will not heal over if it is being made the subject of experiments with different ointments; a plant which is frequently moved never grows strong. Nothing is so useful that it can be of any service in the mere passing.”

“To be everywhere is to be nowhere.”

– Seneca; Letter II

The great stoic philosopher Seneca the Younger’s wisdom is crucial to apply to both life and markets.

In Letter II, Seneca explains the importance of sticking to one pursuit at a time, spending time to truly develop it. Then only do you reap the benefits. Constant switching, as Seneca says, is “symptomatic of a sick mind”.

This is wisdom every new trader/investor needs to heed. At Macro Ops, the number one problem we see with traders new to the game is their inability to stick with one trading strategy. They constantly want to abandon their old strategy and jump to whatever shiny new indicator they just read about in some forum. This is a recipe for disaster.

Markets move in cycles. And so do investment strategies. There will be periods of drawdown, and periods of profits. To truly see if a strategy works, you need to let it play out through the entire cycle. A full cycle can take a half a decade or more to play out. Most don’t have patience to stay the course.

Too many traders want to switch strategies as soon as a single trade results in a loss. The loss makes them automatically think that their strategy doesn’t work. Here’s the thing though. Every strategy will have trades that fail. There’s no holy grail out there.

But this doesn’t stop investors looking for one. They continue to switch and run into the same problem time and time again. This only leads to more losses and a dwindling trading account.

The trick to avoid this fruitless switching is to fully understand your strategy.

Understand the average number of winners and losers you’ll have, and also the average profit or loss from each.

Understand what type of market environment your strategy performs best in.

Understand which types of trades have a higher probability of paying out and which don’t.

Fully comprehending these aspects of your strategy will allow you to know if something is actually going wrong, as opposed to a negative result that is just part of the total cycle. Then you can adjust and refine from there.

The next time you try to switch, ask yourself, did your old strategy really not work, or are you just failing to properly understand and test it?

 

 

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Brandon Beylo

Value Investor

Brandon has been a professional investor focusing on value for over 13 years, spending his time in small to micro-cap companies, spin-offs, SPACs, and deep value liquidation situations. Over time, he’s developed a deeper understanding for what deep-value investing actually means, and refined his philosophy to include any business trading at a wild discount to what he thinks its worth in 3-5 years.

Brandon has a tenacious passion for investing, broad-based learning, and business. He previously worked for several leading investment firms before joining the team at Macro Ops. He lives by the famous Munger mantra of trying to get a little smarter each day.

AK

Investing & Personal Finance

AK is the founder of Macro Ops and the host of Fallible.

He started out in corporate economics for a Fortune 50 company before moving to a long/short equity investment firm.

With Macro Ops focused primarily on institutional clients, AK moved to servicing new investors just starting their journey. He takes the professional research and education produced at Macro Ops and breaks it down for beginners. The goal is to help clients find the best solution for their investing needs through effective education.

Tyler Kling

Volatility & Options Trader

Former trade desk manager at $100+ million family office where he oversaw multiple traders and helped develop cutting edge quantitative strategies in the derivatives market.

He worked as a consultant to the family office’s in-house fund of funds in the areas of portfolio manager evaluation and capital allocation.

Certified in Quantitative Finance from the Fitch Learning Center in London, England where he studied under famous quants such as Paul Wilmott.

Alex Barrow

Macro Trader

Founder and head macro trader at Macro Ops. Alex joined the US Marine Corps on his 18th birthday just one month after the 9/11 terrorist attacks. He subsequently spent a decade in the military. Serving in various capacities from scout sniper to interrogator and counterintelligence specialist. Following his military service, he worked as a contract intelligence professional for a number of US agencies (from the DIA to FBI) with a focus on counterintelligence and terrorist financing. He also spent time consulting for a tech company that specialized in building analytic software for finance and intelligence analysis.

After leaving the field of intelligence he went to work at a global macro hedge fund. He’s been professionally involved in markets since 2005, has consulted with a number of the leading names in the hedge fund space, and now manages his own family office while running Macro Ops. He’s published over 300 white papers on complex financial and macroeconomic topics, writes regularly about investment/market trends, and frequently speaks at conferences on trading and investing.

Macro Ops is a market research firm geared toward professional and experienced retail traders and investors. Macro Ops’ research has been featured in Forbes, Marketwatch, Business Insider, and Real Vision as well as a number of other leading publications.

You can find out more about Alex on his LinkedIn account here and also find him on Twitter where he frequently shares his market research.