Never Confuse Brains with a Bull Market

 📈 TRADER PSYCHOLOGY

Never Confuse Brains with a Bull Market

Ray Dalio, the multi-billion dollar hedge fund manager, has always claimed his risk parity portfolio was 🌩️ “weatherproof”. But the truth appears to be that he simply rode the 30-year bull market in bonds for all that it was worth. Now that bonds are essentially a state-run enterprise of the Federal Reserve 🏛and bond/stock correlation no longer exists 📉 neither does the “brilliance” of Dalio’s strategy.

There's just no greater schadenfreude than watching a billionaire hedge fund manager suffer humiliation in the arena of public opinion 💸, but let’s be real - on our best day of trading none of us will ever make more money than Dalio spends on having his shoes 👞 shined.

Still, Bridgewater’s troubles confirm the fact that there are no brilliant traders, just lucky ones because success in trading is a function of one thing and one thing only - marrying your strategy 💍to the market regime 📊

We all hate to lose and are always looking for the Holy Grail 🏆 of permanent profits, which is why most of us never find any. ❌

The fact of the matter is that losses are not only natural, but a necessary part of the market. If we made nothing but profits the market would adjust in such a way (regime change) as to make sure that we would incur only losses going forward. 🔄

And that’s really the key. The idea is to always probe and prod your strategy and make sure it’s in sync with the dominant market regime. Most importantly, traders should never fall in love 💔 with their strategy because all strategies are only as good as the market they are in. 📈

Old Wall Street traders used to say, “Don’t confuse brains with a bull market.” 🐂 We as traders need to never forget that our success is not a function of our brilliance but of our ability to trade in sync with the current market environment.