KISS Traders
  1. Stock Traders’ vs. Stock Investors' Roles in the Marketplace
  2. Decision-Making Methods: Informed, Uninformed, Intuitive
  3. Informed Traders: Fundamental Traders, Technical Traders
  4. Swing Traders
  5. Buy and Hold Traders
  6. Value Traders
  7. Trend Traders
  8. KISS Traders
  9. Momentum Traders
  10. Range-bound Traders - Break-out Traders - Channel Traders
  11. Options Traders
  12. Options Seller Traders
  13. Day Traders
  14. Pattern Day Traders
  15. Intra-Day Traders
  16. Intra-Day Scalp Traders
  17. Introduction to Stock Trader Types
  18. Contrarian Traders
  19. Active and Passive Traders
  20. Futures Traders
  21. Forex Traders
  22. Online Stock Traders
  23. Pivot Traders
  24. News Traders
  25. Noise Traders
  26. Sentiment-Oriented Technical Traders
  27. Intuitive Traders
  28. Price Action Traders
  29. Price Traders
  30. Detrimental Traders
  31. Unsuccessful Types of Stock Traders
  32. Conclusion

KISS Traders

A KISS trader realizes that the most profitable trades are often those that are the simplest to spot. This type of stock trader recognizes that despite its simplicity, it is the smartest type of trade because it produces the greatest profits.

KISS is an acronym for the design principle "Keep it simple, Stupid!"

The stock trader who adheres to this principle must be aware that it does not mean throwing out all the technical analysis and indicators but to simply (as it says) keep it simple.

Occam's Razor states that one should make no more assumptions than needed. Put into everyday language, it says, “The simplest explanation is the best”.

The principle is often expressed as “Entia non sunt multiplicanda praeter necessitatem”, or "Entities should not be multiplied beyond necessity".

Applying the principle

This principle can be applied to nearly every facet of life and trading, and is positively correlated with experience. The more you know about any subject, the quicker you will be able to find elegant and simple solutions.

A KISS trader, therefore, applies the KISS principle to the world of trading and investing. Complicated trading strategies and technical analysis, although sometimes psychologically appealing, can be very counterproductive to the bottom line. As in most things in life, simple is truly better when it comes to trading strategies.

Bear in mind that a strategy is not just about entry points. A good trading strategy includes multiple things such as what and when to buy, where to place stop loss orders and when to take profits, risk management, position sizing, expectancy, etc. A KISS trader usually has good discipline in regard to selection and application.

An example of a simple trade by a KISS trader

Apple Inc. (Nasdaq: AAPL) - Hourly chart. As you can see from the hourly chart below, this stock trends very nicely. By simply focusing on price action, support and resistance levels, volume, trend lines and chart patterns, it is quite easy to trade this stock profitably.

Prior to this chart there was a breakout to the upside, then a reversal bounce following, which would have provided an earlier excellent point to enter this stock. By using simple deduction and analysis it is easy to locate a low risk entry point for this stock. This chart provides a trade that can last for several months. The exit point was signaled after a trend line break as outlined on the chart.

 

Different opinions help a KISS trader

Markets are made because people have different opinions. This is how it should be. If everyone thought the same way, believed the same things - there would be no markets. For example, in the futures markets (basically a zero sum game - but not quite), for every buyer there is a seller. This means that KISS traders are trading their beliefs against the beliefs of those who disagree with them. They know that, as KISS traders, their beliefs are correct if their position is making money.

What is correct? Who is correct? The answer is simple. The markets are correct. If KISS traders are underwater in their positions and in the hold and hope mode, they are not listening to the markets.

The answer is simple for a KISS trader

A KISS trader learns to respond, rather than react. If price is going up, it is going up and that is that. Go with it and continue with it until it stops going up. If price is going down, go with it until it stops going down, according to the direction of the adopted trading strategy - such as put options.

Conclusion

A professional trader is constantly learning and testing new trading techniques. A good lesson is that the more sophisticated the techniques, the worse the results may be. Using complex fundamental analysis, quantitative algorithms, and many varying technical indicators all at once in their trading methods usually ends with the same result - losing money!

This is where KISS traders usually have the advantage and the most profitable trades, as they have the ability to spot the simplest trades.

Momentum Traders

  1. Stock Traders’ vs. Stock Investors' Roles in the Marketplace
  2. Decision-Making Methods: Informed, Uninformed, Intuitive
  3. Informed Traders: Fundamental Traders, Technical Traders
  4. Swing Traders
  5. Buy and Hold Traders
  6. Value Traders
  7. Trend Traders
  8. KISS Traders
  9. Momentum Traders
  10. Range-bound Traders - Break-out Traders - Channel Traders
  11. Options Traders
  12. Options Seller Traders
  13. Day Traders
  14. Pattern Day Traders
  15. Intra-Day Traders
  16. Intra-Day Scalp Traders
  17. Introduction to Stock Trader Types
  18. Contrarian Traders
  19. Active and Passive Traders
  20. Futures Traders
  21. Forex Traders
  22. Online Stock Traders
  23. Pivot Traders
  24. News Traders
  25. Noise Traders
  26. Sentiment-Oriented Technical Traders
  27. Intuitive Traders
  28. Price Action Traders
  29. Price Traders
  30. Detrimental Traders
  31. Unsuccessful Types of Stock Traders
  32. Conclusion


RELATED TERMS
  1. Value Investing

    The strategy of selecting stocks that trade for less than their ...
  2. Sector

    1. An area of the economy in which businesses share the same ...
  3. IRR Rule

    A measure for evaluating whether to proceed with a project or ...
  4. Profit and Loss Statement (P&L)

    A financial statement that summarizes the revenues, costs and ...
  5. Golden Cross

    A crossover involving a security's short-term moving average ...
  6. Warrant

    A derivative that confers the right, but not the obligation, ...
RELATED FAQS
  1. What is Fibonacci retracement, and where do the ratios that are used come from?

    Fibonacci retracement is a very popular tool among technical traders and is based on the key numbers identified by mathematician ... Read Full Answer >>
  2. What is a derivative?

    A derivative is a contract between two or more parties whose value is based on an agreed-upon underlying financial asset, ... Read Full Answer >>
  3. What is after-hours trading? Am I able to trade at this time?

    After-hours trading (AHT) refers to the buying and selling of securities on major exchanges outside of specified regular ... Read Full Answer >>
  4. What is the formula for calculating EBITDA?

    When analyzing financial fitness, corporate accountants and investors alike closely examine a company's financial statements ... Read Full Answer >>
  5. How do I calculate the P/E ratio of a company?

    The price-earnings ratio (P/E ratio) is a valuation measure that compares the level of stock prices to the level of corporate ... Read Full Answer >>
  6. How do you calculate return on equity (ROE)?

    Return on equity (ROE) is a ratio that provides investors insight into how efficiently a company (or more specifically, its ... Read Full Answer >>
Hot Definitions
  1. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  2. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
  3. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
  4. Discouraged Worker

    A person who is eligible for employment and is able to work, but is currently unemployed and has not attempted to find employment ...
  5. Ponzimonium

    After Bernard Madoff's $65 billion Ponzi scheme was revealed, many new (smaller-scale) Ponzi schemers became exposed. Ponzimonium ...
  6. Quarterly Earnings Report

    A quarterly filing made by public companies to report their performance. Included in earnings reports are items such as net ...
Trading Center