Hey Guys, hope all is well.

Just another rant here about my recent experiences and realizations.

Apologize for it being a bit raw but I feel the message comes across and hope everyone can relate, no matter

your experience level.

System Returns

Ever notice how you backtest a system and once you run it live it almost always performs worse than the tests? You

expect and account for it to some degree, but it always seems to be a bit worse. There are always hidden

factors that are hard to account for that affect your ability to match system returns when trading live.

Example:

The best entries are the ones that go in your favor almost instantly, when you basically bottom or top tick an entry

so well that you cant even get filled completely. All of the best setups your system produces has the highest

probability of being a partial fill. Quantifying this effect is difficult and requires a ton of data and some sound

reasoning to estimate but in my experience you can slash any edge your system produces in half and expect

to realize that number when the system is traded live. I used to estimate I could retain 75% of my systems

historical averages even when considering fees, locates, slippage, partial fills. But another factor most of us

don’t consider is execution. The most difficult thing to do is closely matching a systems returns when trading live.

There are always mistakes, errors and logistical problems (no locates available when you need them, fat finger

mistakes, mental mistakes, over/under sizing, entering too early, covering to soon, bagholding a loss,

averaging up/down). Pretty much every action will negate your edge since it’s all based on emotion.

Ask yourself if you would do any of these when ahead vs behind on a position?

Most of us think averaging up/down to improve your cost basis is a good idea, but when you look at

the data you will see it’s not the case. Positions moving against the normal bounds of a setup reduce

edge almost to a negative, so you end up compounding bad setups by having huge size on them, which

also increases emotional decision making.

Every action you take in the markets should have a verified edge through large sample backtesting.

Every entry, every add, every cover, every little detail should have hundreds of data points backing it.

Prove that this course of action yields the highest return over time. The patterns in the market are

constantly repeating themselves, and within each pattern there are sub patterns. All of these patterns and sub-patterns

follow historical averages from range to volume to volatility in the aggregate. The patterns are completely random in the

short term, but knowing the historical averages will let you know if you are trading an extreme outlier or the norm for that

setup. That will allow you to gauge your position size and entry accordingly.

The data shows you that, on average, this setup will go up/down, by X%, Y% of the time. That is your edge. If you apply

the same entry point, the same stake%, the same exit/target, consistently without doubt, without hesitation, without ego,

without fear, without greed, without anything but the laser like focus of a professional, you will profit over the long run.

Finding edges in the market is no secret to be honest. There are plenty of profitable strategies/setups that are well known
and I believe most traders have a system that produces a long term edge. So why do most traders fail? Its from lack of execution, period.
I could give my system in its entirety to 100 people and maybe only 10-20 of them will be able to execute it properly and
profit in the long run. There are plenty of systems but few who have the discipline and focus to follow them religiously.

Every single thing that happens in the markets has already happened millions of times before.
People love to claim how “markets change” and certain patterns/setups stop working, bullshit. Its just excuses of losing traders
who need a reason to justify their lack of discipline.

No matter how many people try a strategy, the patterns never change. The patterns and edges existed before you started trading,
its like a law of the universe. And the reason they never change is because traders as a whole will always sacrifice their edge to
you from lack of execution.

I’ve sifted through so much data, systems, setups, charts, that I can take a certain entry point on a stock and find

an edge going long OR short. It all comes down to knowing the probabilities of every possible outcome and

executing your plan better than the person/algo taking the other side of your trade. Thats all edge really is, your
ability to consistently execute your plan better than the opponent.




Everytime another trader panics out, averages up/down,
makes any emotional decision, they are sacrificing their edge to you. Will you have the focus and discipline to take it?
Or will another trader executing at a level higher than you both come out on top?

Once you start to think in terms of probabilities, instead of absolutes, you truly see what is going on.

Once you have a database from tracking the patterns that suit your trading style you have all the confidence

to enter a trade without hesitating. I couldn’t imagine trying to trade based on intuition or level 2/tape reading.

I need to know the exact probabilities of every action I take otherwise I always pike out or mess it up in some way.

But how can you think that way without any data? Easy, track it yourself…

“That sounds like a lot of work bro, can you just tell me your strategy?”

This is where your desire comes in, how bad do you want it? How much time will you spend hand tracking the data,

setting up excel files, working out all the complex If(and(or)) formulas that drag on for miles. How bad do you want

to be in that 10% club? Every trader that comes to the markets thinks they will be in that minority, but why you?

What sets you apart? What is your edge? Until you can prove over a large period of time that you belong in that

group, assume otherwise.

Adding multiple strategies to your arsenal:

You guys know I’m mostly short biased and have been for years, but the last thing I want to be is a

stubborn bear. Refining short strategies and criteria over the years has basically shown me which tickers to

avoid as they have the highest spike% and parabolic potential, so much so that I have confidence going

LONG on these algo manipulated run-ups. Don’t let your bias or ego get in the way of trying opposing strategies.

It’s also good to have both long/short strategies to help hedge your risk when markets are too one sided, this way
you can make money in all market conditions.

For newer traders I would recommend mastering a certain setup first before adding another. Once you master a
setup and know all the ins and outs, all the execution problems, all the logistical concerns, then you can find setups
within the setup from having such an extensive database.

Knowing your setup so well gives you massive confidence when entering a trade. You know this setup better than anyone
else trading it right now, this is your comfort zone, your wheelhouse, this is your edge and anyone taking the opposite side
of your trade is at your mercy.

Less is more:

Less really is more in trading. Less commissions, less opportunity costs, less locates, less stress,

less buying power tied up. Less LOSSES. The biggest turn around in my trading was actively trying

to avoid losses more-so than increasing winners. It’s kind of like a sports team trying to outscore everyone

while playing no defense. But as we know defense wins championships, and defensive trading in the markets

is the key to success. Not only mathematically by increasing win%, expected growth and compounding strength,

but also psychologically as less losers means less emotional liability and risk of mental errors due to stress.

IPOs, charts with no recent volume days, tickers with unreliable/unknown data, no clear support/resistance,

recent reverse splits, etc. It’s amazing how I would gladly take all these setups in the past without knowing

all the details. Now I can’t be bothered.

How have I reached this point?

Losses, Losses, Losses, Losses and more Losses. And the occasional win to help me rationalize the decision

next time…

Everytime I took something I “thought” was a good setup while my system disagreed, I would get hammered.

Constant lessons from the market telling me to stay in line, follow the system, this is your punishment for thinking.

Don’t think. DON’T Effn THINK. Turn your motherfucken brain off and follow the system like a monkey!

Yeah your ego is not going to like reading or saying things like this. But until you let go of that inner demon,

you can never succeed.

How it all comes down to Execution:

Executing a trading plan sounds easy but we all know is hard, really hard. There are times when you are

disciplined and in control. But there are other times when a ticker frustrates you, maybe something else in

your life is affecting you, maybe you didn’t sleep well, maybe you are down this month and want to force something.

It doesn’t take much to set you off balance and once that primitive hindbrain takes over, you’re toast.

Consistent execution of your backtested strategy with proper risk management is the ONLY way,

and let me repeat this, the ONLY FUCKEN way any of us will make money in the markets.

How and why do I have such conviction in making that statement?

Because I have tried to disprove that statement countless times over the years with my brilliant intuition and

tape reading abilities only to have the market smack me back into place with losses so bad it’ll make your

asshole pucker up the size of a decimal point.

But as painful as those lessons were, I’m glad I have finally come to terms with it. I no longer question

if I could make it as a discretionary trader, my ego has let go of that pipe dream.

I’m no longer afraid of myself as a trader.

Well how do I get to that point?

Easy, go blow up your first couple accounts then you might get there. Some traders might need to

blow up a few more times just for good measure. Then once more just as a final reminder.

Rational Mind: It took you this long and this many blowups to finally realize what you always knew to be true?!

Ego: Well I had to find out for myself bro, you know just to have some piece of mind.

Rational Mind: You dumb-ass, it will take forever to recoup all those losses…

Ego: Relax bro, you’re golden now, just leverage in 4x and get it all back!

Rational Mind: Do you want to blow up for the Nth time?

Once you get to that stage, and you will know, it’s the most satisfying feeling on earth. You finally are on the

other side, you don’t even feel FOMO anymore, taking a non system trade disgusts you, your focus is on

keeping your execution% as high as possible, not on the P/L. All the losses no longer bother you because

your potential is unlimited, you now have the keys to the universe…

Whoa, Whoa, Whoa! Hold on a second… All this renewed confidence has got you thinking again.

“Maybe I should buy this, or maybe I should short that, or maybe I should add to this and make even more!”.

“Getting there” isn’t the hard part, STAYING there is. Once you realize that you must follow the rules

religiously to make it you have completed step 1. But all it takes is one slip up and you’re back to your old habits.

Successful trading is a constant struggle. Your mind is constantly rationalizing taking actions that deviate

from the system. It’s a constant battle to keep yourself in check, focused, unemotional, and disciplined at all times.

Because if you slip up just once, you’ve opened the door, and that tiny little crack is all that’s needed to open the

floodgates and poof, 3 months of profits out the window in an hour. This happens to even the best, most

disciplined traders. All it takes is a minor lapse in judgement.

All of my trading experience has brought me to a level of ACCEPTANCE:

I ACCEPT the fact that I will never be a “great discretionary trader”.

I ACCEPT the fact that my flaws and inner demons will prevent me from succeeding without the

training wheels that are my system to guide me.

I ACCEPT the fact that I will need constant disciplining, conditioning and focus in order to execute

my plan consistently.

I ACCEPT the fact that I am always one mistake away from blowing up.

Once you no longer need the discipline to follow the rules out of your own volition, but from a

nauseating fear induced by the markets, you have made it.

But the real question is, how long can you stay there?

Just my two cents,

Kris Verma