Episode 5: Entries & Exits

Whenever I have these sayings like that, I, I think they're really good at the time I say them.

But then later, when you-- especially when you preface it like that, I was just, uh, wondering if I'm gonna still like it, and I still like that idea.

So yeah, you should definitely, uh...

I think one of the turtle questions was, a trader should love their losses.

Mm-hmm.

And, uh, the answer, of course, is yes, because it's part of the system.

Mm-hmm.

And so you should love everything about the system, uh, the good and the bad, because the losses actually help, you know, preserve capital and keep you in the game.

So, um, we should, uh, have confidence in our strategy, in the systems, the trend following systems, because we've done a good back test, and we really wanna use that as the cornerstone and rely upon that back test and have confidence that, um, you know, days and months, weeks and years may not turn out the way we want them to all the time.

But over, we're looking at this from a, a long-term point of view, many, many years in the future, and we should have confidence that, uh, if we've done that good back test, and we should rely upon it and be confident to do all the trades that the back test, uh, that the system asks us to do, uh, because of we already have some evidence that at least it's kind of worked in the past.

Um, things can change.

We may need to evolve and change things in the future, especially the entries and exits.

Uh, from my point of view, they have definitely changed since 1983, um, and gotten sort of, uh, longer term.

Mm-hmm.

And that's really one of the big lessons is, uh, today's trend following is looking at a look back of, uh, nine, nine to 12 months usually, and, uh, not a, not a shorter term strategy that I learned in the, in the '80s.

Mm-hmm.

And, and in terms of how you got in in the '80s and, um, why you got out, we'll talk about that in a little bit.

Um, in terms of scaling and versus the single entry, single, single exit right now approach is, is something I wanna discuss as well.

But just in sticking with this idea, again, learn to love your trading system a little bit.

I hear what you're saying as far as, uh, losses.

Learn to love the losses.

I remember when I interviewed you one time on the Schwab network, I had talked to you about this learn to love your trading system idea, and you kind of, um, equated it or s- you presented it as sort of, uh, uh, your trading system is like, a lot like your child.

You love every aspect of your child, right? I mean, yes, there's some, there's some things that may need a little fine-tuning or there are certain things, certain qualities that you're, you're, you know, that need a little work, but, but it's, it's, you know, you don't pick and choose what you love about it.

You, you love everything about it.

And, and that was...