The Trading Mistake 99% of People Make (Tom Basso's Secret Profitable Trading System)
Apr 4, 2024
auto_awesome
Legendary trader Tom Basso discusses the importance of developing a personalized trading strategy, tailored to individual risk tolerance and time availability. He shares insights on all-weather trading, self-assessment, and the value of understanding oneself to make informed decisions. Tom emphasizes the need for adaptive indicators, dynamic position sizing, and staying present in executing trades like a sniper.
Develop a personalized trading strategy tailored to your unique profile and circumstances for long-term success.
Manage risk through extreme diversification, hedging, and blending timing indicators for improved returns and stability.
Rebalance your portfolio strategically to enhance returns relative to risk and ensure long-term performance.
Deep dives
Creating a Personalized Trading Strategy
Developing a trading strategy tailored to your unique profile, capital, skills, and personality is crucial. This strategy should consider your risk tolerance, return objectives, and trading style. Avoid duplicating other traders' strategies and focus on creating a plan that aligns with your individual circumstances. By customizing your approach and avoiding blind replication, you can enhance your trading effectiveness.
Attacking Risk and Extreme Diversification
One effective way to manage risk is through extreme diversification, aiming for non-correlation among portfolio components. Explore different markets and sectors to find assets that move independently, reducing overall portfolio risk. Additionally, strategies like hedging, short-term trading during sideways markets, and blending timing indicators offer approaches to mitigate risk and enhance returns.
Filling Potholes in the Trading Process
When facing drawdowns or market potholes, develop strategies that complement your existing ones to stabilize equity curves. Analyze past performance to identify weaknesses and create logic-based solutions to address downside risk. Test new strategies with appropriate position sizing and automation where possible, ensuring they contribute to a balanced and diversified trading portfolio.
Rebalancing Enhances Return to Risk Ratio
Rebalancing one's portfolio is emphasized as a crucial strategy to improve return to risk ratio. The speaker stresses the significance of rebalancing, asserting that it consistently boosts returns relative to risk. By maintaining a structured approach and refraining from predicting market movements, individuals can enhance their portfolio's performance through effective rebalancing strategies.
Utilizing Multiple Strategies to Mitigate Portfolio Risks
The discussion delves into employing a combination of strategies to mitigate portfolio risks effectively. An example is provided where a diversified growth stock portfolio is paired with a timing model for S&P 500 futures to counteract market downturns. By combining complementary strategies that respond differently to market conditions, investors can soften the impact of significant market fluctuations and enhance overall portfolio stability.
π Get your FREE 115-page Ultimate Trading Guide: https://traderlion.com/POD-UTG
π Next-Generation Stock Screener: https://traderlion.com/POD-DV
π¦ Follow us on Twitter/X: https://traderlion.com/POD-X
π TraderLion Masterclass Courses: https://traderlion.com/POD-TLU
π° Free Trading Academy: https://traderlion.com/POD-TLA
In this video, legendary trader Tom Basso challenges the conventional wisdom of blindly copying other traders. With almost 50 years of experience, featured in Market Wizards, and known for his calm, methodical approach, Tom shares why developing a personalized strategy perfectly aligned with your profile is the key to long-term trading success.
In this video, you will discover:
β’ Why you are unique: Understand the critical factors that shape your individual strengths and weaknesses as a trader.
β’ Tailored strategies: Learn how to craft a trading strategy that fits your unique risk tolerance, time availability, and capital.
β’ All-weather trading: Explore Tom's methods for navigating bull, bear, and sideways markets to minimize risk and maximize returns.
β’ The importance of self-assessment: Tom emphasizes the value of understanding yourself to make informed trading decisions.
About Tom Basso:
Tom Basso is a seasoned trader with almost 50 years of experience. He's known for his calm demeanor and consistent profitability. Tom's insights have been featured in Market Wizards, Trend Following Mindset, and his latest book, The All-Weather Trader.
Don't miss this opportunity to learn from one of the industry's most respected minds!
Follow Tom Basso on Twitter/X: https://twitter.com/basso_tom
Tom's New Book: https://amzn.to/3Botpw4
Enjoy the Ride Research: https://enjoytheride.world/
Enjoy!
- The TraderLion Team
Timestamps:
00:00 - Tom Basso - The All Weather Trader
04:58 - Why Copying Other Traders Doesn't Work
09:31 - How You Should Approach Trading
11:50 - Create a Personal Inventory of Yourself
14:48 - Tom's Objectives & Personal Inventory
18:34 - How to Develop Your own Complete Trading Strategy
23:01 - What an All-Weather Trader Must Do
24:28 - Attacking Risk Vs Avoiding Risk
28:04 - Timing Indicators Tom Uses
33:05 - Extreme Diversification & Stock Correlation
37:18 - Sideways Market
41:47 - Adding New Strategies
45:02 - Rebalancing Positions & Strategies
47:32 - Mental Side of Trading
49:00 - Never Trust Social Media Predictions
50:37 - A Personal All-Weather Plan
52:10 - Filling Your Strategy Potholes
55:10 - Limiting Drawdown by Sizing Hedges Correctly
56:24 - Independent vs Dependent Strategies
58:34 - Balancing Discretionary vs Systematic Trading
1:00:07 - Increasing Robustness in your System
1:02:39 - How Strategies Change Over Time
1:06:32 - Automated Trading Advice
1:09:22 - Secrets to Mastering the Mental Side
1:12:50 - Advice for New Traders
Get the Snipd podcast app
Unlock the knowledge in podcasts with the podcast player of the future.
AI-powered podcast player
Listen to all your favourite podcasts with AI-powered features
Discover highlights
Listen to the best highlights from the podcasts you love and dive into the full episode
Save any moment
Hear something you like? Tap your headphones to save it with AI-generated key takeaways
Share & Export
Send highlights to Twitter, WhatsApp or export them to Notion, Readwise & more
AI-powered podcast player
Listen to all your favourite podcasts with AI-powered features
Discover highlights
Listen to the best highlights from the podcasts you love and dive into the full episode