How Can Your Knowledge of Surfing Improve Your Trading Win Rate?

 

You know 2 things: 

  1. You don't surf when there are no waves

  2. You don't surf during extreme storm waves

A visual representation looks like:

 

And it's the same with trading.

What are examples of extreme storm waves? 

  1. Unemployment data, Rate change

  2. Hong Kong open, US Pre-market

  3. Market pace exceeds your skills

  4. Illiquidity

 

What are examples of no surf?

  1. Single-digit prints in short-term footprint

  2. Continuous spread greater than minimum tick size

  3. Inside-dominated market (market making)

  4. rotation at VWAP's


The examples are clear.

But unlike surfing both conditions hurt you.

So screen time teaches you to recognise and avoid them.

But perfect waves seldom occur in markets.

As shown in the image below, markets are mostly a blend which makes when to trade ambiguous. Right?

 

And in the ambiguity, you get hurt.

And because ambiguity is a constant you get hurt over and over.

What's the solution?

No, the real one?

Listen

The answer isn't trade set-ups.

And trade set-ups isn't another way of saying trading process.

 

You see

A real trading process navigates the ambiguity to locate and time entry & exit execution where:

  1. Risk exposure lasts for small windows of time

  2. and if the worst case is realised, the outcome is minor.

You know what's a common trading mistake?

Equating movement with opportunity.

 

You can hypothesise the market will do XYZ.

And watch it play out as you envisaged.

But trading it meant surfing extreme storm waves.

And so you had to sit it out.

A real trading process keeps you out of the movement that can potentially hurt you. While equally capturing sufficient movement to make trading worthwhile.

 

And relying on stop losses isn't how you stop getting hurt. Traders suffer painful account blowouts by death of 100 stop-losses.

Mastery is the implementation. The good news is it's a transferrable skill. Making continuing to suffer as a trader a choice and not your destiny.

 

Want more?

Mastery is a transferrable skill

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Experiencing trading problems?

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Adam Fiske