Forex Myths: Simple vs Complex Strategies

Since I started to learn trading, I heard a lot that "I should keep it simple!". Maybe all of you are familiar with this sentence, but what this really means ?

Based on a healthy trader plan, beginner or not, the right way to start trading a new strategy or system, is to test it on demo for a while, before jumping on the real money account.

So, lets say you are a beginner and learned already the "simple" tools like Trend Lines, Support/Resistances, Channels and Moving Averages. You started by paper trading (history), you tested it on live (but demo) and you decided it's working great. And you started real money account trading with these tools. And it's working. Whats the next step ? Are you gonna stay with this trading style ? From my personal experience, I don't think so.

First of all, it's human nature, to "complicate" things. Second of all, you can't use only the above mentioned tools, forever. Because you will notice is not working all the times. And you will start to wonder why. That is a crucial moment for a beginner trader, because they will jump fast to the  conclusion, that is not working so they will think of changing it completely, with something new and different. Which is wrong, sometimes. Maybe you didn't learn it well, so all you need is to stop trading it on real, go to demo again and don't come back to real, until you will find out what went wrong. Also, you can add other advanced tools to filter your fake signals.

Therefore it doesn't matter if your strategy or system will work or not, you will change/upgrade it, all the time. But the main question is still: How simple you should keep your trading style ?

For those of you that studied my course and/or attended my live classes groups, try to remember that time, when you joined advanced level class. You were starting demo trading for beginners lessons and tools, already, while you were doing paper trading (history) with the intermediate level tools and strategies. Also, when you completed the intermediate, you started to use those intermediate level tools, on live, but still demo. On the next step, you started to use, the advanced tools for paper trading again. But your live trading portfolio already contain beginners and intermediate level tools. And ofcourse, when you finished the advanced level class, you started to use on real, the beginners and intermediate level tools, while you were still practicing demo, the advanced ones.

If you will try to remember your basic charts, from the beginning, you will all notice those tools "looks too simple", for you, now. That is because, many of you are advanced traders right now. And probably some of you, already using the advanced tools, on your real money account.

This is the most logical cycle of learning: getting familiar with the basics, practicing it and using it profitable, in the end.  By working like this, after many years, you will notice a big difference in your trading style, because even advanced tools, are simple for you, today. 

The real problem is when you think, you already reached the advanced level, but you didn't took the right steps and you are using it wrong, even the basic tools. This could happen if you are having a lack of patience in your learning curve.

Simple vs Complex Strategies

By keeping your trading style as simple as can be (efficient), doesn't mean you should stop learning. In trading learning will never stop. It shouldn't. That doesn't mean, that you should try all the possible ideas of all the traders around the web, either. In my point of view it means you should always look for new ways of improving your systems or your trading style. Because you will try to maximize your profits. You want to be more efficient. And since there is no perfect system, you will always try to explain yourself those bad entries signals, exits, etc. This is why we keep the trading journal, right ? Those marks, chart examples and questions, will help us to become better traders, eventually.

Could you ever go back to your previous "simple" tools ? Should you ?

In my way of seeing it, it's not likely to do it. Because when I've decide it to go on real with that tool or system, it means I've tested it for months. So I had a good reason to proceed with it, on the next step: the real trading. Same steps, for upgrading it (adding new tools). So, there's no point for me, to make it simple than that, anymore.

Conclusions

I think this common saying "keep it simple!", is good, mostly for the beginners, due to human nature of complicating things, when they shouldn't. Because in that moment, many think a complicated chart is better. But is not, for them. That's why we say about their charts that looks like "Christmas Trees", when they add tens of oscillators and indicators, that will make them more confused, than helping them. That it is wrong, indeed.

But because some people will remember this sentence, later on, when they reached the advanced level, they will stop learning, thinking "Hey, I should keep it simple!". Which in my opinion is wrong, again. You will never become pro trader like this. You will remain a beginner forever.
(e.q. Remember when you saw my charts, initially ? Remember all you questions about ? How about now, when you already drawing it, almost like me ? Would you stop developing, now ? Would you go back to your "simple" charts, again ?)

Well, ofcourse depends on what do you expect from your trading activity. But don't you ever think, that using only few simple tools, you will have profitable results forever.

Therefore, I think this is a misconception, for most of the traders, beginners or not. In my opinion the right saying should be: "Keep it simple, according to your level!".  And as advanced level trader, don't you ever think "Simple is better!", as long as you know well and you tested properly your "complex" strategy or system.


Best Regards,
^^_Lord_Ice_^^