Should you Shadow Trade From So Called Gurus?
A buddy sent me this and wanted to share…
“Ask yourself why would this person sell me their amazing
secrets, when if she is so good, she can trade and make
unlimited amounts of money? Answer: No one will ever sell
you the ultimate key to trading success, and if they did, it
would cost a lot more than you could afford.” – Kevin Davey
There’s something about human nature that, whether we realize it
or not, we all really like to herd around others both in thoughts as
well as in actions. More often than not, this is not to our benefit.
I am often asked especially by new members if the path to gain
more experience not to mention profits is to shadow trade – i.e.
the common practice of making the same trades or just
watching someone else more experienced as a path to learning
how to better trade or invest. My answer is that if you find it really
helpful, then be my guest. Most of us have gone down this road at one time
or the other primarily due to frustration, confusion over the market,
lack of patience, failure to believe in ourselves and abilities or just pure
laziness and/or some combination of all of these. There are very good reasons why the trading
advisory business is a billion dollar a year industry!If you engage in shadow trading, you must recognize and
understand that there are some significant problems in doing so. For one thing, most of us can’t find someone who trades in a manner that also matches our own strategy, personality and
goals. This results in inconsistent trading at best as we fight
against or only selectively follow some recommended trades. And, even if we can find a good match, then we often just pick up the same bad habits and faulty process of those who we try to
copy on top of our own weaknesses. Trust me – you already have
enough weaknesses that you certainly don’t need to add on top of
those you already have.Most importantly, the process of shadow trading itself can often
retard if not serve as a major obstacle to what you really need to
do to become truly successful in the markets. For many, it is ok to
do this to some minor extent especially those just getting started
and have no idea what they need to do to learn, but to really get
where you need to go, you’ll need to venture out on your own.
I have been reminded of that this week after a member forwarded
the following helpful commentary in which a trader explains why
so-called shadow trading can be so problematic. Here are some
of his key points:Trading by copying another trader may sound like a good
idea, but this only develops a reliance on copying as opposed to feeling empowered to find your own trades.
Shadow trading never addresses the skill of finding and assessing trades without the guidance of a moderator.
Market analysis is just as important as learning trade set ups, but unfortunately shadow trading often does not include learning how to read the markets. Without the ability to analyze the subtle nuances of the markets a trader will never be able to trade independently.Shadow trading involves trusting and relying on someone
else to make decisions for you. The decisions you make as a trader while trading develops your confidence and problem
solving skills.· New traders need feedback, but this is not available to shadow traders. When a trader is merely copying trades, they are not receiving specific feedback that they require.
Shadow trading only develops the ability to copy not think critically and develop their own opinions.
Trading is an art and a science. It isn’t enough to follow steps and expect success; there are nuances about the feel of individual markets that can only be developed with time themselves in the markets. Shadow trading will only develop a traders set ups (the science) but lacks the ability to develop the art.
I agree with these observations. Moreover, I appreciate that he is willing to share them as you will not find many out there willing to speak out against shadow trading because so many people sell services that benefit directly from the practice and/or have good friends that do. I know my comments against shadow trading in
the past have earned me numerous enemies. Recently another member of mine recently shared their personal story in which they admitted to shadow trading for just over 10 years and seeing very mixed and inconsistent results from doing
so. Upon my recommendation a couple of years ago where I highly encouraged him to stop subscribing to these services
(including to The Kirk Report even though I clearly don’t provide a shadow trading type advisory service) and instead just work and develop their own strategy on their own in complete isolation.
What happened in the time since? He has reported seeing far more success over the past year than at any other time. This is not just one isolated case as I hear this same story from many
and not just this one member. Therefore it is important to know that while shadow trading may fulfill some sort of basic desire (often not a healthy one if you stop to think about it), for most the
long-term disadvantages clearly outweigh the short-term benefits if any.
While there are thousands of websites, newsletters, services, etc.
that offer that opportunity to shadow trade, please understand that
shadow trading can take you exactly the opposite direction of
where you need to go – which is focused experience and practice
with a concentration on developing your own strategy that best
matches your personality and goals. Understanding this one fact
can mark a truly significant milestone in your development.
For many of you, this hurdle is the last major obstacle you must
overcome to be in the position to truly live up to your tremendous
Past Performance is not indicative of future performance