Dan Trader

Learning to be a trader.

[Dan Trader @DanTraderOM]

@DaniCaps4 Enhorabuena tocayo. El trabajo con el tiempo siempre se recompensa.

[peoplewish @Peoplewish]

TL;DR: Edge is a repeatable advantage that produces positive expectancy after fees, slippage, drawdowns, bad fills, boredom, fear, greed, and the operator’s best attempt to screw it up.

But here’s the part people don’t want to hear:

Just because the system has edge doesn’t mean the trader does.

ED + GE = EDGE

ED = Effective Design
The setup. Entry. Exit. Sizing. Risk. Market filter. Rules.

GE = Good Execution
The operator’s ability to follow the damn thing without drifting, flinching, improvising, revenge trading, oversizing, panic selling, or moving the goalposts.

And GE > ED.

By a mile.

A system that works on paper but falls apart in your hands is not your edge.

It’s a theory.

Same as having the best nutritionist, trainer, and health protocol on earth while never actually following the plan.

No execution.

No result.

Why learn to putt if you can’t get to the green?

Why pay for a gym membership you never use?

Why keep trading a system you constantly override?

Hope?

Fine.

But hope is a helluva drug when it never gets replaced with execution.

At that point, it’s not conviction.

It’s a crutch.

This is why people attempt to automate.

Not because automation magically creates edge, but because it removes the weakest, sloppiest, most emotional part of the system:

The operator.

Edge is not just the procedure.

Edge is the procedure plus the operator’s ability to run it without deviation.

Most people are obsessed with finding a better system.

Most people need a better operator.

[Dan Trader @DanTraderOM]

@pedma7 Hey @pedma7 I don't know if you didn't see this tweet and the explanation and added.

[Dan Trader @DanTraderOM]

@pedma7 How do you allocate capital across multiple strategies running on the same account? Right now I allocate capital based on risk-adjusted returns, but I still run into an issue.

[THE SHORT BEAR @TheShortBear]

ASK ME ANYTHING!

Unanswered questions, unclear statements, charts, trading rules, psychology, risk, sizing, strategy, the Market Wizards chapter, the 2020 run, the run since, anything.

I’m thinking of writing again on Substack, a few deeper posts per month, similar to how Burry started writing again.

I want the first essays to answer the questions people actually care about the most.

So reply with the one question you would want me to go deepest on.

The best ones, perhaps with most likes to show interest will become the first ones answered.

https://t.co/VMTviDewLu

[Dan Trader @DanTraderOM]

@pedma7 So the main issue is that fast strategies can dominate allocation over slow strategies even if the edge of the second ones is higher or more stable. How can one mitigate this?

[Dan Trader @DanTraderOM]

@pedma7 The problem is, competition for capital between strategies becomes tricky. Capital becomes path-dependent (the first matters), this can create instability in allocations even if signals are unchanged. Correlation spikes can reallocate risk away from well-funded strategies.

[Dan Trader @DanTraderOM]

@pedma7 I believe you use some type of risk budgeting with volatility targets and thresholds for triggering rebalances. This combination usually means you first scale the whole portfolio to a target vol, and then apply a leverage constraint like max gross = 1.

[Dan Trader @DanTraderOM]

@pedma7 This way higher frequency strategies can monopolize capital, starving lower-frequency strategies.

[Dan Trader @DanTraderOM]

@pedma7 Splitting capital per strategy seems suboptimal because Strategy A may need more capital while Strategy B is underutilizing its allocation. But if B later generates an entry signal while A is already using that capital, you may end up blocking B’s execution.

[Dan Trader @DanTraderOM]

@daytradingzoo I have something similar but never fully trusted the models yet

[Dan Trader @DanTraderOM]

@sergidown Cuando el pez crece más que el estanque se acaba ahogando

[THE SHORT BEAR @TheShortBear]

There are 100x more people living in mediocrity because they were told they couldn’t than those who used that same doubt as fuel to rise.

“You can’t” isn’t guidance.
It’s usually projection, confession.

The spiral starts when people who never took the chance try to protect themselves from discomfort.

Watching you attempt, and possibly win, forces them to confront their own inaction. Your ambition can trigger their inferiority, so they try to shrink it.

But here’s the truth most overlook:

The biggest achievers in the world are often those who faced the highest levels of adversity, and turned it into work ethic, resilience, and relentless output.

Even envy, misunderstood and mislabeled as purely negative, can be one of the most powerful driving forces when redirected toward growth instead of the negative jealousy.

Most negativity pushed onto you isn’t about your limits.
It’s about someone else protecting theirs.

The strongest resistance often holds the greatest fuel potential.

Greatness doesn’t come from avoiding adversity.
It comes from pulling back the curtain, stepping through it, and using everything you find on the other side.

The world is a web of push and pull mechanism designed by our drive to conform to social norms.

[Dan Trader @DanTraderOM]

@ZimtraTrading @malvira88

[Dan Trader @DanTraderOM]

@edu_trades Ser agresivo en los días buenos es una de las cosas que más me cuestan

[Dan Trader @DanTraderOM]

@DavidSmallCaps Muy buen libro

[Dan Trader @DanTraderOM]

@kycefn I see, thank you for your response. Really appreciate it