KING - KING as a trading philosophy

Over the last few days, literally last week, I was asked pretty much the same question, namely what is KING based on.

One of these questions came over Twitter (see below), the other arrived by e-mail with a few more questions.

If you take even a cursory look at this site, you will certainly notice that it is chock full of information, so the answer to this question is definitely there already, probably approached from more than one angle. There is quite an amount of information about KING and trading e-mini futures in general already on this site, so much so that this site richness has even been noted by visitors to it (see also here). It may actually be too much for some, but I feel better about providing more rather than less information.

I don't mind answering questions like that, though I may sometimes refer people to the KING FAQ that contains answers to most relevant questions about KING. It is also a rather general question, and so an answer to it may not be particularly enlightening.

In fact, I distincly remember a somewhat similar question to the one I want to answer here, namely: "what exactly am I doing" and the fellow asking it meant my trades.

Well, I even answered it in this article. I never heard back from him, and I was not really expecting to. I was pretty much sure he was looking for some simple (or rather simplistic) answer, as many wannabe traders do.

Now, what is KING based on then?

KING is a discretionary trading methodology that uses patterns based on indicators and price action.

I did answer it on Twitter (see also above), but the tweet I replied to has quickly been removed by its author for the reasons that I have yet to comprehend; that's about it as far as short answers go. But there is much more to KING and you cannot describe it in just one sentence. In fact, it's a whole trading philosophy.

Here's how.

KING is not a system (unlike George IV) and I like to distinguish between these two things in order to avoid giving the potential KING students a wrong impression of what to expect from it. You cannot become a very good trader by relying on trading systems (by which I mean mechanical systems that can be used only in a rigid, predetermined way), because most of them are too simplistic and often leading to gut-wrenching drawdowns. KING is not about some fancy, "magic," "state of the art indicators" because I don't think that you need any indicators beyond what is already out there and, most of the time, freely available.

And yet these two things, often of extremely dubious quality, are being routinely pushed on the public, with quite predictable consequences.

You need new ideas, not new indicators, and the best ideas are the out-of-the-box ideas. As such, they are often hard to accept. To put it in other words, most people follow the herd thinking there's some safety in it, but actually it's the total opposite. There is always resistance to new ideas, but new ideas are the only thing that can give you an edge. A new way of doing things or looking at things, a new approach, ideally not too easy to encapsulate in the form of yet another indicator; that's what you really want.

KING's approach is completely different because it does not try to reduce trading to systems or indicators. The markets are too complex for simplistic solutions like that to work well and to handle them effectively you simply need to embrace this complexity. That's KING's approach and its philosophy in a nutshell.

You may think that it is hard to handle complexity. Well, that may be the case, but that does not mean that it's impossible to do so. In fact, humans are particularly good at it. Walking is a rather complex thing to master and yet even babies can do it. It just takes some time (months, at least). Driving a car is also a complex, multitasking activity, but it can become very easy after just a few months of practice. How about dancing or figure skating? You think any other species is as talented as humans? And yet, we so often forget about it.

You don't learn how to drive or how to walk using a "system" or a bunch of indicators. You may use extra wheels when learning how to ride a bike, but that's a temporary aid and eventually you get rid of it. Usually after a few weeks, at most.

Mastering trading is no different from mastering walking, swimming, or driving a car provided you focus on the skill. Because that's what you really need to master in order to be a competent trader: a certain skill.

That's another piece of KING's philosophy. Becoming a successful trader is about developing a certain skill, which also means that you need to be a discretionary trader. After all, walking, swimming, or driving a car all require you to rely on "discretion," meaning they require you to be flexible. Without this flexibility, you cannot do these things well.

While indicators are useful, they are there to guide you and not to make decisions for you. They are your aids, just as extra wheels mentioned above can be, and should not be treated as any more than that. You are the one to make decisions and you can do this well. The more flexible you are and the more trust you have in your abilities, the better these decisions will be. Hence practice is the key because only through practice you can develop the skills and the trust in your abilities to handle the market complexity.

The next trading frontier seems to be the neural nets. They have been around for a while now, but they are still far from excellent. Your own neural nets (aka "brain") are still better compared to the artificial ones, and can become really good with training, so why not use them? People who settle for trading systems instead of developing a trading skill are shortchanging themselves. It may take more time to develop this skill than to learn how to operate a trading system, but it also pays off big time in the long run.

You may be able to do so much better than you think it's possible, at least with KING.

I did not know what to expect when Katherine asked me to mentor her. I was very surprised how well she did. "Stunned" would be a better description. At first, I thought she was a freak of nature, an incredibly talented trader that may happen but only very rarely, but only a few days into the first KING mentoring session, I had to change my mind when PP and Dick (now Dirk) were able to produce similar results. The second mentoring session also revealed a super-trader.

Now I have no doubts that more people can be phenomenally good traders, but my influence on their decision to become ones stops here. The first KING students had much less evidence how good KING is (only Katherine's excellent results), but that was already good enough for them.

Posted on March 23rd, 2016.