Will Your Trading Strategy Stop Working If You Tell Other Traders About It?
If you browse around trading forums or listen to traders talk you will eventually hear that traders fear that their profitable trading strategy stop working if they talk with too many other traders about it. But do you really have to fear that other traders will destroy your trading opportunity if you don’t keep it to yourself?
Copying A Trading Strategy Isn’t As Easy As It Sounds
If we take these three requirements that need to be fulfilled in order to change the way an existing trading strategy works, we can talk about the fear of retail traders. If you find a trading strategy that offers profit opportunities, these retail trading methods are usually based on price action, candle patters, technical indicators or similar subjective trading tools which represent the first problem. Even if a trading strategy is profitable for you, it will be very hard for another trader to copy it. Trade entries, stop loss placement, trade management decisions, take profit strategies and so on are all things that are significant influencing factors and decide whether a trading strategy is profitable or losing. The first requirement would be, therefore, to make sure that all traders copy ALL your trades to 100%.
If your profitable trading strategy isn’t as easy to copy as a buy-and-hold method, your trading strategy will not stop working.
Retail Trading Is A Drop In The Ocean
The second problem is that it will be very hard to tell enough traders about your trading strategy to impact the markets. Especially if you are a F&O trader, this will be an impossible task. The daily market trade volume of the stock market on average is 4 lakh cores, which is a 4 with 6 zeros. Although there are no hard facts about the share of retail trading, in 2014 the share of retail trading was calculated to be at 10%. So even if you find a way to tell all retail traders that exists and make them trade exactly the same way as your trading strategy suggests, it won’t be enough to significantly change the markets. Your other possibility would be to find hundreds of famous scientific researchers with a good reputation that would need to publish articles and research papers and so sharing your trading strategy with a bigger crowd.
Even if you find a way to make all the retail traders in the world trade the exact way as you, it will not be enough to impact the markets.
Don’t Mistake Changing Markets With Other Traders Destroying Your System.
It is true that markets change over time. The reason for this is that prices move because of political and geopolitical events, fundamental developments and because the financial players trade their opinions and expectations. Therefore, if any of the variables changes, the way prices move changes. And inevitably, this will also have a direct impact on the way your trading strategy works. It is a trader’s responsibility to track all possible statistics about his/her own trading performance to spot potential weak spots and changes in market behavior. But, don’t mistake evolving financial markets with the end of your trading strategy caused by too many traders trading the same way.
Conclusion: Don’t Waste Your Time Worrying About The End Of Your Trading Strategy. If you find a profitable trading strategy, don’t be afraid to talk to other traders about it. Collaborating can be a good thing and you may find other traders with similar trading methods that you can exchange ideas with and thus even increase the performance of your system. Furthermore, and even more important, don’t be so scared that your trading strategy might stop working so that you try to capitalize too fast and start taking too big risk and increase trade size to ‘get rich quick’. The markets will be here next year, in five and in ten years and so will be your profit opportunities….!