In order to profit in any market, in any financial market, in any financial instrument, you need the radical pursuit of truth. Trading requires the pursuit of truth – the radical pursuit of truth. But what type of truth are you pursuing? The statement “radical pursuit of truth” can mean different things to different people. When some people hear of it, they immediately think of fundamental value or intrinsic value of a financial instrument. Yet, when others hear that phrase they may think of conspiracies theories or secret organizations covering up the truth from you.
Well they are all wrong.
In trading you need the radical pursuit of truth of what will generate order flow and actually move the markets. Radical pursuit of what will generate order flow, that is what you need to do. Why? Because that is the only thing that will save your trades, cause your trades to go into profit, and ultimately profit from. The behavior of other traders will determine whether your trade succeeds or fails, and it is critically important to be constantly searching for the truth of what will compel those traders into action – into actually generating aggressive order flow.
The behavior of other traders will determine whether your trade succeeds or fails, and it is critically important to be constantly searching for the truth of what will compel those traders into action – into actually generating aggressive order flow.
Now you may say, what if the market moves because of irrational or non fundamental reasons – then isn’t that false and not truth? The only thing that matters is what will generate order flow and liquidity. If it occurs because of irrational, or non fundamental, or greed, or fear, or rumor – then so be it. So long as it generates order flow it is truth. Because that is what will determine your profit and loss. If an event is going to occur that is going to cause a huge mispricing for a few days, then you need to pay attention for it will move the market for a few days. If someone is going to move the market for a few days, that means it is generating order flow and thus is truth, at least temporarily. You cannot ignore what will generate order flow and move the markets, just because it seems weird to you, or because it doesn’t make sense to you, or because you don’t think it is true. You need the radical pursuit of truth of what will compel other traders to generate order flow. They other market participants are capable of moving the markets. Chances are, unless you are a big hedge fund, your orders are not going to move the market. Since you can’t move the market, you are relying on other traders to move the market for you. Therefore you need to figure out what will the traders who generate order flow perceive the truth to be. That is what matters. Even big hedge fund traders, after they finish entering a large position, require other traders to place substantial orders in the market, in order for them to just break even, let alone attain a profit.
I remember a very vivid example from last year. It was in May 2010 and I was looking to short the eur/usd. Rumors came out that the ECB was going to intervene to buy up EUR/USD or had already intervened to do so already. I immediately knew they had not actually intervened to buy eur/usd. I also knew that actual intervention was unlikely. That was my personal opinion of the situation. But as an order flow trader I knew that it did not matter what I thought. If I had followed my personal truth of the situation and shorted eur/usd I would of gotten stopped out when the eur/usd spiked up 350 pips based on the fear of intervention. It did not matter that I was right that intervention did not occur, and was not going to. The only thing that mattered what what the other traders who were going to move the market believed. I knew that the market was jittery and that intervention fears could cause some short covering, so I just stayed out of the market. In the end I did not short it, but my order flow mindset, and my commitment to the radical pursuit of truth of what will generate order flow helped me stay out of a bad trade and save a lot of money. Had I done it the other way and just shorted it based on solely what I thought the truth was of the situation, I would of gotten slaughtered. I had to decipher what the other market participants believed in.
A lot of traders try to avoid the truth, they try to avoid the real reasons why the market moved in their favor, or against them. Instead they place their hope on magical technical indicators that somehow, mystically generate huge orders to throw their trades into profit. As if a hedge fund is just waiting for a moving average crossover with MACD divergence to place a $1 Billion dollar trade. Billions dollars worth of order flow are not generated because of technical indicators. Figure out the true reasons why the market moves, and will move in the future and watch yourself attract more money in six months, then you have in the previous few years.
Your trade results can show up very quickly, especially if you are day trading. You can know whether you were right or wrong very quickly. Trading tells you whether you engaged in the radical pursuit of truth – of what generates order flow or not. Everyone, including myself take losses every once in a while. Nothing wrong with that. But I never waver from finding out what is truly moving the markets. I never waver from searching for the information on how the market is positioned, what it’s expectations are, and what will truly generate massive order flow to come into the market. I gave up on technical indicators, expert advisors, and hoping around from system to system on various forums a long time. Good riddance, for very few of them actually generated order flow. Most technical indicators, expert advisors (forex robots) and systems on various forums DO NOT engage in the radical pursuit of truth, and thus do not give you an edge and fail miserably.
But heh, you don’t have to believe me. Both Ray Dalio, and George Soros, two top hedge fund managers believe in the pursuit of truth.