Don’t Be A Sucker – Part 2

3 Jokes, 3 Binary Options Tradings that Suck

 

Evolution: some of us are not doing it right

 Remember, in the first part of this article, I talked to you about the evolution of a newbie. The fact is that nobody is born educated in the art of trading, but given enough work, I think anyone can become a trader in the real sense of the word. Well, you also need the right mindset and the reason why I am saying this is because there is a special breed of newbie that will eventually evolve into an idiot and once the years pass, he becomes more confident in his abilities, but in fact he has learned nothing. I will call this special character a “newbiot” because he remains a newbie, not knowing much about the mechanics of the market, with dreams of getting rich but he is also an idiot because he thinks that he is a seasoned trader just because some years passed since he started trading. The newbiot will always have an opinion about market direction or latest economic developments and of course, about every trading system, advising you on its performance or telling you what settings you should change to “fine tune” it. The problem is that once you start asking questions like: “Have you traded it, or at least have you back tested it for a fair amount of time?”, the newbiot gives a stupid answer like “No…erm…but I know it works.” …How in the world could he know if it works or what parameters I should change if he didn’t even try it? Usually this is my cue to start laughing…and walk away, remembering what a wise man once said:

 

“Never argue with a fool, people might not know the difference.”

Graphic Trend Analysis

 

Once a guy recommended me a system called “Graphic Trend Analysis” which requires me to visually look for a trend, on the charts. I was thinking it sounds good; I like systems that go with the trend. Ok, what’s next? Well, that’s it: I place a Call or a Put according to the trend that I visually identified. Somebody really dared calling this a system or strategy and another newbiot recommended it to me… Now what was I to do? Start arguing with the newbiot…no way. He already had a high regard of himself and he considered himself a seasoned veteran of the trading business. He knew something about the increased probability of a trade to be successful if the trend is on your side, but he didn’t realize that the “strategy” he was recommending lacked the basic ingredients of a strategy.

 

“If idiots could fly, this world would be an airport.”

Momentum

 

Sometimes I really feel like I’m in an airport, surrounded by idiot traders. They are the ones that fly around from system to system, every time having a “Eureka!” moment, thinking they finally found the Holy Grail of trading before they even tested it. A good example is “The Momentum Strategy” that is based only on the Momentum indicator found on the Meta Trader 4 platform and some candle formations, but the exact candle formations are not described. I assume we must look for continuation formations since we are required to go Long once the indicator goes past the 100 level and Short once it goes below the 100 mark. Although not much more information is provided, you can find the strategy here. The picture they present show a nice winning trade, and a newbiot can easily mistake it for the Grail, but let me tell you, I have seen the Momentum indicator “hugging” the 100 level and coiling around it so many times that I can’t count…so they should land their planes and come down to Earth.

 

“If we learn by our mistakes, some of us are getting one great education!”

Duke of York

 

Yes…some of us are getting a great education by continuing to make mistakes such as using a strategy like “The Duke of York Strategy”; To be honest I find it mind boggling to say the least. It’s much too complicated and you have to get the direction right twice; once when price is going up and once when it comes down, deploying Calls and Puts at four levels going up, one level at the top and four more levels when price is coming down… I would never attempt that. It’s not because I don’t consider myself a pretty good trader, but why should I expose myself to a risk that is not necessary. On the other hand, a guy attending the courses of the “Newbiot Academy” would definitely go for it just to show off to his friends and brag about how he is using complicated and risky strategies because… he knows his stuff…

 

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