Thread by @theBuoyantMan

If someone has a reliable, successful strategy, they won't share that with anyone. It's not in their best interest to share.

It is very hard to find decent strategies that
- work after little bit of optimisation
- aligns with your trading preferences
- suits your psychology

One must also iterate through testing various systems to arrive at one that's usable.

So, if someone is selling you a system, in all honesty, question their intentions, and question the reliability of the system. It's highly likely that the system doesn't work.

If it works, they can scale up and make more money, they can manage other people's money also.

Or, they can take the strategy to one of the prop trading firms (for ex: Tower Research) and use firm capital to scale up with a profit sharing arrangement with company's infra.

While the system's usability depends on how scalable it is, it's also in the best interest of the system creator to avoid crowding of the strategy. The more people use the system, the more and more slippages you'd experience. This is more applicable to intraday systems.

So, if someone says they have a superb strategy and sells it for 10k or 1L or whatever, don't believe the hype. It's better to completely run away in the opposite direction, you'd at least save money and heartburn in the process.

Remember, if the system works and you make profit, you're fine, you have paid your dues for it. But if it doesn't work and you make losses, the person who sold the system isn't going to return your money or compensate for the losses.

Especially in the financial markets, stay away from anyone who doesn't have skin in the game, anyone whose compensation isn't tied to your best interests. Conflicts of interest exist in the financial markets in a very nuanced manner. It's hard to find out where they exist.

But once you find out

- the investment advisor who only recommends you a stock without having it in his portfolio in the recommended allocation
- the fund manager who doesn't have his own money invested in the fund (or has a very little %)

- the mutual fund distributor who keeps churning your portfolio for his fees
- the system seller who sells his system for a fixed amount
- the workshop trainer who runs a workshop, but doesn't trade the method he/she teaches

all these are people without skin in the game.

And, in financial markets, you must try and actively avoid such people. Instead, look for the following:
- IA whose portfolio mirrors what he advises
- Mutual fund advisor who maximizes for as little churn as possible and keeps your best interest in mind

- A fund manager whose predominant net worth is tied to the fund you're invested in
- A mutual fund where a large portion of company's own funds as well as management remuneration is tied to the performance of their funds.

These are skin in the game scenarios.

Be aware of such scenarios and actively recognize and differentiate the wheat from chaff. It's hard as a beginner to do this, but as you learn and think about who has your best interests in a transaction, you'll arrive at the answer.