Adrian Reid warns that trading strategies that feel easy or emotionally comfortable are usually losing money. Your brain is wired to be a bad trader, so comfort is a red flag. Backtest rigorously before you trade.
Here's a dangerous truth about trading: the better something feels emotionally, the less likely it is to actually work. That one realization that things that are psychologically easy tend to not work is— I feel like this is a really powerful lesson, because if you're like, yeah, I, I really feel good about doing this, I really, I feel like, I think this is the right thing to do, I feel like this is the right thing to do, if this is all the anecdotal kind of emotional feeling, it's probably not the right direction. Why? Because sadly, humans aren't very good traders, right? All of us, we just don't— our emotional makeup just doesn't make us good at this. So that's actually a really good barometer. I find if I have an idea or an impulse and it feels emotionally really good, that's like a little warning sign, a little alarm bell that goes off for me now. Just like when you do a backtest and you see a really smooth equity curve, it's like, whoa, something's wrong, right? For me, when I come up with an idea that just feels like really— feels really solid, like it's going to fix things and make it better, for me, again, that's an alarm bell. I got to really test that well before I do that. If you want to go deeper, I've got more videos on topics like this on the Enlightened Stock Trading channel.
