Following up on my post from a few days ago on when to take the signal, and when to skip it.
Step back and think about two traders. They’re both trading a strategy based on new highs.
Trader A is a consistent losing trader.
But Trader B is crushing it, making consistent profits month after month.
But they’re watching the same signals and even trading in the same direction, so how can they get such dramatically different results?
There’s only one reason Trader B is outperforming Trader A.
And it’s not that complicated.
Trader B knows that all new high signals are not the same. Some have a high probability of succeeding, while others have an extremely low probability.
So Trader B knows which signals to skip and which ones to trade.
That’s the only difference!
He’s trading a more profitable subset of the original new high strategy – he’s better at filtering than Trader A.
Was Trader B born with an amazing, innate skill to magically know which filters to use?
Of course not.
But he has a much better process for applying rules to narrow down the new high signals (or any type of signal) to the subset with the most profitability.
He’s only watching the most profitable subset and ignoring all the others.
The next few emails in the series will focus on how you can get better at this skill.
Stay tuned!
-Dave
