Finding My True Style


Apr 12, 2024By The Kaizen Trader

This blog post, like many was inspired by an interaction on twitter.

pen near black lined paper and eyeglasses

"Just do what suits you best" seems simple enough. Yet, as I've discovered first hand, aligning with our true capabilities is often the hardest part of our journey. For years, I was committed to a style of trading that, despite my best efforts, never truly resonated with my personality or strengths.

It has only been in the past 7-8 months that I've come to recognise this, embarking on a transformative journey towards a trading style that genuinely aligns with who I am: systematic trading.

The Early Days: Committing to a Path
Like many before me, I followed the advice commonly given in the trading community: pick a niche, focus intensely, and don't waver. Determined to succeed, I chose a trading path at the outset of my career and dedicated myself wholeheartedly to mastering it. This path was trading Forex with a semi systematic strategy, but with plenty of discretion to further apply, a style characterised by decisions based on current market conditions and intuition (but I had no intuition).

Despite making progress, my journey wasn't without its challenges. Doubts crept in, especially during drawdowns, casting a shadow over my achievements. Without historical data to back my decisions, I lacked the reassurance needed during these tough times. Was I truly skilled, or just lucky during favourable market conditions? The lack of  evidence to support my trading decisions underscored a fundamental misalignment between my chosen trading style and my inherent strengths and personality.

The Pivot
The realisation that I needed a change didn't come easily or quickly. It was a gradual process when conducting reflective journallling and trying to improve my C game (Thanks Jared). I came to the conclusiong that there might be another way of trading that could better suit my skill set. A very strict style of trading, with its reliance on predefined rules for all elements of the strategy. This offered a stark contrast to the more discretion-based approach I had been adhering to.

The transition was not instantaneous. Shifting trading styles required me to reevaluate my strategies, learn new skills, and most importantly, change my mindset. However, the effort was well worth it. I've never been more inspired or worked harder than I am now, with a trading style that truly suits me.

Why I Prefer Systematic Trading

The Pros
Reduction of Trading Errors - The transition to systematic trading has significantly reduced the number of trading errors I make. I haven't broken a rule, over-traded, engaged in revenge trading, or deviated from my planned strategy. This remarkable improvement stems from my trust in the data, fostering unparalleled discipline in my trading practice.

Liberation During Trading Sessions - Systematic trading has transformed my trading sessions into periods of calm and focus. With all critical decisions—what to watch, when and where to enter, how much to risk, and when to exit—made upfront, I can trade with a clear mind, free from the minute-to-minute stress that used to dominate my days.

Empowerment Through Historical Data - Having a comprehensive set of historical data at my fingertips allows me to reassure myself about what normality looks like for my strategy. It empowers me to understand my strategy inside and out, instilling confidence even during uncertain market phases.

Alignment with My Background - Data and structure resonates deeply with my personality and professional background. With a career foundation in data and experience in statistical, data-led sports betting arbitrage, this trading style aligns perfectly with my skills and preferences, eliminating reliance on intuition or opinions.

The Cons of Systematic Trading

Emotional Challenges Remain - Despite the structured approach, emotions still play a significant role. Drawdown periods are challenging, regardless of the trading style. The hours spent backtesting, coupled with the reality that 95% of tests may fail, can be mentally taxing.

Overwhelming Information on Strategy Research/ Backtesting - The vast amount of information and advice on the dos and dont's of backtesting can be overwhelming. Sifting through conflicting recommendations to find what truly works is a daunting task for any trader.

Risks of Backtesting - Overfitting and other pitfalls associated with backtesting pose significant risks. It's crucial to be aware of these dangers and approach backtesting with a critical eye to ensure strategies are robust and adaptable.

The Hard Truth - No trading style is easy. This realization is vital for anyone embarking on a trading journey. Like any other approach, systematic trading will test your resolve, patience, and adaptability. Understanding this from the outset can prepare you for the challenges ahead.

Advice for Fellow Traders
If you find yourself going in circles, seeing little progress, it might be time to adapt your trading style. Don't be afraid to explore and transition to a style that better aligns with your strengths and personality.

Remember, the goal is not to adhere to a prescribed path but to find the one that truly elevates your performance.

I want to make it abundantly clear - no style of trading inherently holds a monopoly on profitability.

From my experience, I firmly believe that every style of trading has the potential to be profitable. The pivotal factor is not the trading style itself but how well it aligns with your unique strengths, personality, and background. It's about discovering a style that not only enables profitability but also allows you to become the trader you aspire to be—confident, consistent, and in control.

The journey from discretionary to systematic trading has reiterated the importance of self-awareness, the value of aligning my trading style with my capabilities, and the transformative power of embracing change.

To those on a similar path, know that it's never too late to pivot towards what truly suits you best. The journey might be fraught with challenges, but the destination—a trading style that resonates with you—makes it all worthwhile.  Let this journey be about finding where you naturally excel, where your confidence is unshakeable, and where your trading strategy feels less like a constant battle and more like a natural extension of your own talents and insights.