Keeping It Simple and Scientific

Nearly twenty years ago, I had the privilege of meeting a remarkable Trading Academy instructor, Roger Best, who also became a mentor and dear friend. Roger isn’t just a teacher—he is a force of nature, passionate about imparting wisdom in his own unique way. One of his favorite lessons, one that still resonates with me to this day, was about the power of science and the importance of simplicity. “K.I.S.S.,” he would say with a grin that could only belong to a mischievous scientist on the verge of a great discovery, “Keep It Simple…” without hesitation nearly the entire class would shout, “STUPID!” Roger would pause, letting the tension build before delivering his punchline: “NO! In trading, it’s Keep It Simple… and Scientific.” 

The students loved it. We all loved it. And there was something about the way he presented this mantra that was so profound—but did people actually listen? Did they hear him? Did it stick? Even now, after all these years, I wonder how many people truly grasp the depth of what he was saying. How many understood that those words, as intuitively obvious as they may have seemed, carried the weight of mastery within them? How many took the time to write it down, print it out, and pin it to their wall or monitor as a constant reminder of the immense power of simplicity and science in trading? 

There is simple and there is complex, simple comes in two forms stupid and sophisticated and they live on either side of that mountain of complexity so many of you may be climbing as you read this. It’s your choice how you approach trading. It’s fascinating how easily we can start to believe Trading isn’t simple when things start going wrong and convince ourselves that trading is complex. No, trading isn’t complex, being human is complex. When you started, you wanted trading to be simple. The problem is, once you started to struggle, the real question became, are you equipped to handle adversity like a professional? Here’s a hint, if the first thing you do is make an excuse, whether you know you did it or not, simple has already flown out of the window. Do you know why? Because if something is simple and you find yourself failing, what would it say about you? But if it’s complex you give yourself an excuse, which certainly gets you out of having to take responsibility, doesn’t it? Just ask any teenager. But is that what you really wanted? No way. Or at least I’d hope you’d say no way! Simplicity is on the other side of excuses. Just let it go they say, but can you? To struggle and to stumble is inevitable but your hopes, dreams and money are riding on this, and heaven forbid, your ego! To have to face yourself and your weaknesses? Your relationship with money? Your fear? Your greed? Your need to learn the psychology and the behaviors of a professional trader? To become someone you might not yet be?  

Or maybe, as I’ve seen with so many highly educated smart people, is it the “if I can’t figure out trading, no one can figure it out, therefore it must impossible” belief that’s holding you back? Do you think it’s possible you may be overthinking what it takes to be consistently profitable as a trader? It reminds me of the movie Tin Cup when Roy MacAvoy was on the driving range and couldn’t hit a ball straight because he was overthinking everything. His caddie Romeo did a bit of magic, told him to double tie his left shoe, turn his hat around, you know, real technical stuff, and the next thing you know he hits the ball straight as a string and Romeo, (the great Cheech Marin) says, “well you’re fixed”. Roy asks, “that’s it?”  and Romeo kindly replies with “your brain was getting in the way”. 

THAT is what keeps trading from being simple. Being a person who needs coaching and behavior modification in addition to having rules that put the odds in your favor is where complexity lives and exposes the mess that needs some sorting out and that is a big component of what we focus on every time you come in for training as a student in our classrooms. 

And before we leave the simple side of our discussion, a recent article I read talked about how several large institutional trading firms require their traders to be skilled poker players, not academics and intellectuals. Why? Because poker isn’t an intellectual game, it’s a game of knowing the odds of the cards you’re dealt, which aren’t all dealt at once, and money management, also not all at once. Risk control and playing the odds with imperfect information. Trading is simple if you can let it be simple. Perception, please meet reality. Simple is just that, the market will either go up, down, or sideways; you will either be on the right side or the wrong side of the trade and you either managed risk (and your ego) professionally or like a novice. The difference is exponential between pros and novices, starting right there, with risk management, even if you had 50-50 odds, which you don’t even need once you learn to put the odds further in your favor allowing you to capture much greater reward in your trades. Do you realize that trading is as much about your ability to manage the risk, or the expenses of your business as it is about generating reward, which ought to be variable. Your ability to manage your P&L is simple and critical to your success. If you properly control your risk, you control the game, and that really is simple, unless you let emotion creep in!  

Which leads us to the “and scientific” part of K.I.S.S.! To be scientific means to use objective, not necessarily complete, data to make decisions, not emotion. Good luck telling that to anyone putting their own money at risk, right? Being scientific means being committed to keeping it real, not what your emotions or biases and other emotional filters subconsciously tell you. You have to learn to lock the “feels” in a little box until after your trading time is done. Easier said than? Done. That’s right. Controlling emotion is an action. It’s something you have to do, not just think about. Emotion is what fills the void in the absence of science. And emotion is really powerful. I’m sure you could agree to that, even if you don’t want to admit it to anyone else, could you admit it to yourself? That fear and greed, your hopes and dreams, the struggle to catch up, to get ahead, to protect what you have, to prove to the world that you can do this, your ego again, is so powerful that you may not even realize that these potentially controlling conditions are creating filters preventing you from being as successful as you’d like to be? So let’s get down to it. In the end, science is going to win out over emotion, despite everyone always saying, “the emotion of all traders is expressed in the chart.” This is true, but what we need to remember is the science of capitalizing on that emotion and not being the “experimentee” is the key to your survival! To understand that institutional traders don’t trade their own money and need to fill huge orders that don’t always get fully filled leaves a footprint behind, a footprint not of emotion but of intent, controlled intent, of driving, or being a part of creating the drive up, down, or even sideways with purpose, with intent, and a risk management plan and without a need to pay the mortgage or desire to tell their boss “I quit”. No, this is the footprint of success, the footprint of the few, who feed off of the market participants who “play with their paycheck on a Friday night” (as they say in poker), no matter how good they are at the rules of the game, and turn emotional when they’ve lost just enough to cross over the threshold of pain that throws science right out of the window, yet again. 

Not enough people can keep the emotion out of the trade and let it be about committing to the rules, keeping the trade scientific, quite possibly the most difficult challenge in trading. Let’s face it, there’s a lot at stake, isn’t there? For those of you who have invested the time, energy, effort, and financial resources necessary to actually be trained in a set of rules from Trading Academy and not just play the hope and a prayer game, or as many people would call it, trial and error, emphasis on error, magnified exponentially for those are chasing quick profits with big leverage asset classes. 

So, if you would, for your own good, print it out, in large enough font to get the message from the paper to your eyes and deep into your brain, and remember to KEEP IT SIMPLE, AND SCIENTIFIC! 

Todd Davis 
Chief Education Strategist, Trading Academy