How to Trade with Imperfect Information

Chartists are discretionary traders. This is true for those who have a CMT designation.

How can you define your edge if you are looking at the same charts everyone else is looking at?

Charts need to be interpreted. That’s discretionary.

You don’t have the same emotional makeup that your chart-teaching coaches have.

You don’t have the same life experiences that they do.

If you haven’t backtested your rules, you don’t know your numbers. What is the expected value of a trade that you put on in a head and shoulders formation?

It’s integral to know if you are trading too big or too small for the risk that you are willing to take.

What is your optimal bet size for any trade that you put on?

What is your risk of ruin?

Don’t optimize for share size or contracts…that’s amateurish. If you’ve come this far, you’re beyond the skill of many. See it through all the way to the pro level.

Forget tiers…

Most indicators are lagging indicators, they don’t give you trade signals for entries or exits.

Indicators are emotional band-aids and won’t relieve you of having to live with the uncertainty that we are traders must live with. We must make decisions with imperfect and incomplete information. That’s the world we choose to live in.

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