Here’s a question I get repeatedly in some form from new traders.
I don’t want to reinvent the wheel – can you just give me a strategy that’s working?
It’s a surefire signal that the trader hasn’t yet internalized the mindset required to be successful.
Traders who become successful realize at some point along the way the fact they felt the urge to ask that question was literally what was holding them back.
That’s the turning point – when they finally give up relying on someone else and build a process for creating their own trading edges.
And yet I still see traders looking for the smartest person in the class to cheat off of and get the right answers for the exam.
That might have worked for them in high school but it will get you nowhere in the stock market.
I recently came across more evidence that this is true.
A friend of mine sent me an academic paper that should convince you beyond any doubt of your path to success.
The paper is titled “Finfluencers“.
Researchers from Berkeley and LSU examined financial tweets from people with various numbers of followers.
They measured the performance of a hypothetical portfolio that followed the advice given in social media from various influencers to determine which ones had real edge and which ones were spouting nonsense.
The researchers categorized the influencers as “skilled,” “unskilled,” or “antiskilled.”
Skilled meaning their recommendations had some amount of trading edge, unskilled meaning they had no edge, and the most interesting: “antiskilled” meaning they have “negative edge” – i.e. you’d be better off doing the opposite of what they recommend.
You might have guessed that skill is pretty rare on social media.
But you probably didn’t guess the most important conclusion from the paper.
The more followers someone has on social media, the more likely they are to be antiskilled.
Think about that.
The more successful someone is on Twitter, the higher the likelihood they’re spewing nonsense.
And importantly it’s not just random nonsense, but there’s a slight edge in literally doing the opposite of what they recommend.
When you’re ready to start lining your own pockets instead of some Ferarri-driving trading guru with antiskill, reply and let me know.
