Choosing the right stock or market is choosing a proper trading vehicle.
What this means to me:
Choosing the right stock does not make me a trader or guarantee success in the markets. The universe of stocks is large and some have tendencies to gap or move in certain ways that are not helpful or counter to the ideas behind a mechanical trading system.
What this belief gets me into:
I need to know what sort of movement my trading systems are designed to capture.
I need to know if the stock tends to move in a disjunct or smooth manner.
I need to know if the stock has the liquidity or volume to me to trade to meet my objectives.
I need to know if the stock fits the price movement pattern sought by my trading system.
I need some degree of confidence that the stock (market) will exist for the duration of my trade.
This helps me limit my choices of trading vehicles.
I could spend too much time considering which stock rather than how to trade.
Part of designing a trading system must include determining what the requirements are for the stock or market.
Making sure I have tools to examine how a market moves.
What this belief gets me out of:
Ascribing winners or losers to stock selection.
It can keep me from trading markets that don’t fit my system requirements.
Considering how my psychology fits into selecting stocks.
Considering how well my tools for choosing the market work (Do I understand them and am I using them properly?)
Limitations of this belief:
There could be more markets to trade than my span of control will allow me to follow. I may be overwhelmed by the choices. Choosing the right market does not guarantee I will follow my trading rules.
Utility of this belief:
Understanding the way the markets I trade move and elements of their fundamental structure is useful to being a trader.
This belief seems to only be a partial viewpoint. It needs more refinement or clarification. Both sides of this equivalency statement are very broad. I feel like I haven’t captured what I’m trying to say or need to say with this statement.