Can you picture this scenario: A crystal clear chart pattern just leaping right at you; plenty of validation signals; clear entry and stop levels; then a fast move in your favor, and squeezing every last bit of profit from the position? Now that kind of perfect trade is what trading the markets is all about, right?
Well, it sure sounds great, but it’s not reality. At the very least, those are very few and very far between!
Let’s face it, though, “talking heads” or the all-too-clever marketing that’s out there does make perfection seem attainable…that is, if you spend thousands on whatever trading course for beginners, “black box” system, or software package they’re selling.
If you’ll allow us to be brutally honest for a moment, we Lazy Traders flat-out hate most uses of the word “perfect” when it comes to trading lessons. To this day, there has never been a perfect trade. Likewise, we as disciplined traders aren’t perfect—far from it—and we don’t have to be in order to make a living in the markets.
Actually, we feel strongly that the perfect trade isn’t even what technical traders should aspire to. It’d be much more productive to essentially delete most applications of the word from your mental bank, and these are a couple big reasons why we feel that way:
How does a trade work
Watch out for the (financial) sharks
Understand that you are a small cog in a larger machine
Each trade is actually a transaction between a buyer and seller, right? In that respect, it’s not unlike going to the store or shopping online, where one party agrees to pay a certain amount in exchange for something else. There is perceived value on both sides of the transaction, and that’s ultimately why the deal “goes down” in the first place.
If one or both parties were to change their mind and either the price goes up or the offer goes down, that exchange is likely dead, isn’t it? Well, the same principle applies here.
It’s sometimes hard to imagine because trading at home is such a solitary activity, but there must be two sides to the trade each time you hit that Buy/Sell button or else there would be no trade at all. Not only that, the market itself would cease to exist without the presence of both buyers and sellers, and who would ever want that for heaven’s sake? It’s the mere fact that every trade has a winner and a loser that helps justify why there is no such thing as a perfect trade. If everyone felt the same way about a particular trade set-up, nobody could trade it, and that would be a big problem!
It’s also why the market won’t always go your way regardless of the strategy you use. In trading, price action is all that’s absolute, or perfect. The constant interaction between buyers and sellers and the fact that both parties can’t be right at once means that you win some, you lose some, but there will never be that perfect trade just hanging around waiting to be exploited!
See also: How to Deal with Losing Trades
Like any successful trader, you focus predominantly on the execution of your strategy, and rightfully so. But do you really know who you’re up against out there?
It’s no secret that technology and the modern market environment have changed the game for traders across all markets. Now, we’re going up against computers, hedge funds, and big banks that have cutting-edge technology and billions at their disposal. These parties can—and do—exert influence over the markets. Now, it’s NOT to say that the “little guy” doesn’t stand a chance out there anymore. However, it at least pays to consider that the “smart trader” is usually headed in the other direction, whether by design, or just because they can. In an era of “flash crashes,” “black swans,” and who knows what else, crazy things happen in the markets that do seem to defy traditional wisdom.
There are plenty of varying theories about why this is—and perhaps that’s a topic for another day—but one thing is for certain: the perfect trade is even more out of reach on account of these powerful market forces that are infinitely beyond our control.
In all, “perfect” is a dangerous word when it comes to trading the news. It implies some kind of universality to the markets—like there’s just one way to trade them. It’s not like that, and fortunately so.
It’s all the individuals and groups coming together with their varying beliefs, trading biases, and strategies that keep the free-flowing nature of the markets alive, and that’s what we need to have happen if we are to go on trading at all.
If you do one thing, stop searching for some kind of “Holy Grail” or that one perfect trade. Instead, focus on executing your own proven trading strategy right down to the letter, or perfectly, if you must. That’s really the only productive use for perfectionism in patient trading, and that is much more likely to produce consistent profits than being constantly on the lookout for some unattainable “white whale” or perfect trade.