The Deeper You Go, The More You Simplify

The paradox of nuanced simplicity

Audio available at the end of this post.

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Successful traders make their system appear simple.

Because to them, it is.

They have complete confidence in a few basic principles that work, and everything else flows from that.

But ask them to explain their system, and they’ll frustrate people by saying “it depends” — a lot.

How can something riddled with caveats and uncertainty feel simple?

The answer provides deep insight into the nature of expertise in a discretionary field.

Part 1: The beginner’s trap — fixation on output replication
Part 2: Beginner vs expert thinking
Part 3: Nuanced simplicity in action — lessons from TTRH guests
Part 4: The mechanism behind making more information simpler
Part 5: Going deeper by asking the right questions

When we first enter the markets, we usually seek a simple answer:

“Tell me what to do, and I’ll do it.”

Maybe you started as a trader who just wanted to be told what and when to buy. Or maybe, like me, you watched Qullamaggie streams, then dutifully built checklists based on Kristjan’s most salient, tangible comments:

• Surfing the moving averages

• Making higher lows

• Etc.

I created similar checklists based on David Ryan’s Market Wizards interview and Mark Minervini’s first book.

We’re drawn towards actionable, tangible information.

The more specific, the better.

This is understandable beginner behaviour. Tangibility aside, it also creates a comfortable feeling:

Certainty.

If we just copy a proven method, we’ll surely get the same proven results!

And so traders obsess over chart patterns, indicators, scans…

Anything (seemingly) quick and easy to action.

For example, what are some of the simplest, most tangible takeaways from Qullamaggie’s Chat With Traders interview?

• Breakouts

• ORH entries

• LOD stop losses

• Trailing with the 10 or 20 DMA

In summary: Kristjan’s techniques. The surface features you could easily copy, today, without thinking too much…

…and leaving you brittle as a result.

Here, AI offers crucial insight into the true nature of expertise.

Not because of its growing capabilities, or how it’s changing the game, but because it’s revealed what the real game was all along.

With AI-generated text, the giveaway isn’t em dashes or overused phrases that, let’s face it, AI learnt from humans.

The giveaway is subtler: that missing ‘magic’ from the end result. Something feels ‘off’ in the output — even if the AI followed the ‘instructions’ and replicated the surface-level features perfectly.

The cause?

A lack of in-depth understanding of why a technique works — and the consequent inability to select the right technique at the right time, or otherwise adapt to the context.

Without understanding the psychology of a technique, your foundation is wobbly.

And unfortunately, many traders operate in that very way.

They can recognise textbook setups, know a few entry and exit tactics, and look at a few indicators. But without knowing exactly how and why each of those (and other trading concepts or techniques) work, how will you:

• Know when — and when not — to use it?

• Make that technique more potent by optimising it for both the context and your personality?

• Understand the inner workings of the technique, so that when something breaks, you can diagnose and fix the problem?

• Find ways of refining the technique, and potentially come up with new ones?

Don’t just create something that looks right — it must also feel right.

The difference between competence and expertise isn’t knowing more techniques…

…but understanding the deeper principles that make techniques work, so that you can apply those techniques both with discretion and to maximum effect.

As an example…

What was really happening in that Qullamaggie interview?

The superficial focus on breakouts — with takeaways like the setup itself, ORH entries, etc. — may have hidden Kristjan’s deeper, main focus.

(Remember: it wasn’t his decision to discuss breakouts specifically.)

Qullamaggie’s own focus was on a foundational characteristic of bull market leaders: relative strength.

Tracking relative strength isn’t just about stock selection.

Process that information correctly, and you’ll gain insight into market health and cycle, themes, appropriate position sizing, and more — just by focusing on one simple concept: relative strength. What is screaming that it wants to go higher?

Alternatively, you can gain insight into all these different points by asking this single, simple question: where is money flowing to and from?

These questions represent ‘flexible thinking’ — processing multiple information streams through a single foundational concept, then deriving all other information from that.

Contrast that to the ‘checklist thinking’ typical of beginners.

Early on, you can’t help but go through situational awareness, themes, risk management, etc. separately. (Some traders even check them off on a literal checklist!)

When inexperienced, you can’t process all that information simultaneously — but that leaves you vulnerable to:

• Rigid thinking

• Missing nuance

• Feeling overwhelmed

And that’s before we get to creativity and adapting ideas to make them work for your needs and personality!

But flexible thinking is vital in a complex environment with many moving parts.

For example, you stop looking for setups…

…and instead start looking for (1) signs that a stock wants to move higher and (2) a low-risk way of entering that stock.

In practice, that’s often still a setup, but you’re thinking about it in a totally different way. You’re taking a few foundational concepts on which you won’t budge (like relative strength), then apply them via a range of tools or techniques.

And if asked to explain your system, you’ll make it sound simple — in spite of all the caveats and nuances — because of a deep understanding of the ‘why’. Through a deep grasp of the core principles…

…from which everything else flows.

I refer to this as ‘nuanced simplicity’.

Incidentally, this is how I write and edit. I apply a few basic principles in 100+ different ways. Technique choice comes down to pattern recognition — i.e. experience and intuition.

I don’t care for frameworks because, in my opinion, they’re not designed to bring out the best in people. They just elevate mediocre writing to ‘acceptable’ and increase efficiency on ‘good’ content.

The ‘aha’ moment comes when you stop fixating on people’s actions…

…and start studying the thinking behind those actions.

If you’re going to copy someone, copy their process:

• How did they arrive at those actions?

• What sorts of questions do they ask?

• What was their deliberate practice?

As Marios Stamatoudis puts it: reverse engineer the minds of people you admire. Become a “mechanical engineer”, not just an “operator” — particularly not of borrowed ideas.

For me, ghostwriting and collaborative stacks offer invaluable tools for getting insight into how top performers think.

Even my style of note-taking gives me that insight — because I never just regurgitate someone’s words, but dissect and reassemble them, helping me adopt the person’s thinking patterns (like the earlier insight about Qullamaggie’s focus on relative strength).

That study method won’t work for everyone — but it works for me. I intend to elaborate on how I use writing as a study tool in a future stack.

Let’s look at two recent examples from TTRH guest posters:

1. Risk management with Theo Gustincic.

Risk management is the ‘poster child’ of a foundational trading concept.

At first, we learn to keep losses small.

Separately, we learn about position sizing, situational awareness, and other ideas, not necessarily connecting them with risk management at first, and certainly not to the point where we have difficulty separating the concepts.

At least, that was what collaborating with Theo Gustincic taught me.

Theo made me realise a foundational trading concept — not through what his words explained, but through what they were missing.

The stack topic was how to identify and handle different market environments.

So, when I glanced over his first draft, I felt some confusion at why it mostly discussed capital preservation.

Not ‘touched on’. Mostly.

When I read his draft more carefully, trying to understand Theo’s thinking behind the words, so I could figure out how to communicate his insights as clearly as possible, I realised what was happening. (And shared it in a tweet at the time.)

To Theo, market environment and risk management are so ingrained that not only does he naturally interlink them…

…by addressing one, in his mind, he’s automatically also addressing the other.

If you’re analysing and adapting to the market environment, you’re also managing your risk.

That just wasn’t obvious to the casual observer. And to a former technical writer (me), this caused structural problems, which I knew I’d have to somehow fix without killing Theo’s voice. This meant retaining that interconnectedness, while clarifying the connection.

To many readers, the core takeaway was the most tangible aspect of his stack: his annual market review. To me, it was realising that, with a discretionary trend-following strategy, identifying the market environment is, to a large extent, risk management.

But the advanced trader simplifies their cognitive processes, while catching more nuance, by asking themselves:

How much risk should I be taking in this environment?

To answer that simple question, both capital preservation and situational awareness come into play.

Partly related, I knew my discomfort with aggressive trading had been holding me back. Part of what helped me correct that mistake was realising that it’s simply the other side of playing a good defence — i.e. another aspect of risk management.

If you’re always protecting your downside without ever truly pressing the gas when ‘all stars are aligned’, what’s the point of even taking that risk to begin with? You’re missing out on all potential reward!

(This does NOT mean I’m advising you become reckless.)

2. Watchlist management with Clement Ang.

Collaborating with Clement generally gives me deep insight into foundational topics.

His latest guest post was about watchlist management — a much-requested topic that gets comparatively little discussion. Maybe it’s not ‘sexy’ enough. Or maybe it seems low priority compared to other topics.

But a watchlist isn’t just a set of trading ideas.

(Even if certain trading services may package their watchlist that way. Content creators like to make what they sell as tangible as possible…)

The reality is that watchlist management is your “funnel” (Clement’s word choice) to various concepts that rank higher on most traders’ lists:

• Situational awareness

• Finding relative strength

• Market cycles and rotation

• Identifying and tracking themes

Once again, by asking certain foundational questions — ‘how is my universe of stocks performing?’ — you can formulate nuanced answers…

…thereby processing a lot of relevant information at once.

For this stack, through the various points he covered in his draft, Clement showed us just how much information.

As to the ‘behind the scenes’ on this one, Clement produced an unfinished first draft, then asked me to take a look and suggest how to expand the content. (Which explains the note before the part on thematic watchlists.)

This wasn’t so much writer’s block, as just not knowing what more anyone can say on the topic — isn’t the rest just obvious? (Not to everyone!)

The more interesting discovery (for me) was when I edited Clement’s completed draft.

Just reading his writing was insightful.

But I didn’t start to truly understand how Clement thought — in particular, how the various pieces of the puzzle fit together for him — until I interacted with his writing. Until it became time to preserve his voice while enhancing the content.

And the key insights I gained from that exercise became the conclusion of that stack.

Over time, you accumulate information — and want to put it all to good use.

The reality is that you aren’t, as they say, ‘keeping’ or ‘making’ it simple…

You’re perceiving it as simple(r).

Josh Waitzkin captured this perfectly in his book The Art of Learning:

“you start with the fundamentals, get a solid foundation fueled by understanding the principles of your discipline, then you expand and refine your repertoire, guided by your individual predispositions, while keeping in touch, however abstractly, with what you feel to be the essential core of the art.

“What results is a network of deeply internalized, interconnected knowledge that expands from a central, personal locus point. The question of intuition relates to how that network is navigated and used as fuel for creative insight.”

Objectively speaking, that “network of deeply internalized, interconnected knowledge” isn’t simplicity.

But what makes it feel simple is how it “expands from a central, personal locus point”.

Again, successful traders make their system sound simple, because to them, it is — no matter how much nuance is actually involved.

That’s because everything flows from a handful of foundational principles, in which they have complete confidence — thanks to deep understanding of the ‘why’ and evidence of their effectiveness (including via personal experience).

The more you apply those principles, the better your pattern recognition becomes.

This goes hand in hand with making more connections between the ‘nodes’ (tools, tactics, etc.) within your mental network.

It even feels simple!

…because you are ‘chunking’ information.

In other words, you’re grouping related information, such that your brain treats multiple data points as a single piece of information.

You’re processing more information with less cognitive effort.

Here, checklist thinkers are at a huge disadvantage.

Many great historical thinkers thought in images rather than words. Einstein, Edison, Ford, Tesla, etc. would only verbalise their ideas after crystallising a clear vision in their mind’s eye.

Robert Greene’s book Mastery offers this great insight:

“The use of images to make sense of the world is perhaps our most primitive form of intelligence, and can help us conjure up ideas that we can later verbalize. Words also are abstract; an image or model makes our idea suddenly more concrete, which satisfies our need to see and feel things with our senses.”

Images offer a fluidity that words and numbers lack.

Images allow for more flexibility, while words and numbers are necessarily rigid and constraining — the point of language is to adhere to certain conventions.

Personally, I use writing as a stress-test of ideas for both myself and clients, and favour more visual approaches for the research stages.

Particularly for large or complex projects, before I start typing, I like to write my ideas on small cards, then move them around on a large surface to see how the ideas might fit together.

Checklists are the polar opposite of images.

Don’t get me wrong: we all need to start somewhere, and checklists are better than no system at all. Plus, checklists offer value in, as the name suggests, final checks — making sure you haven’t overlooked anything.

However…

Specific percentages and time periods (for e.g. the base), along with specific characteristics, make for rigid thinking. Cognitively, they’re also laborious to process, because you treat each checklist item as an individual data point.

Combined, those drawbacks mean:

• Catching nuance becomes difficult

• Connections get missed

• Depth is lacking

These are partly caused by checklists tending to focus on what, not when — a question best answered by deep understanding of the ‘why’.

Successful traders combine different pieces of the puzzle to stack the odds in their favour.

The more puzzle pieces you combine, the easier information chunking becomes, and the more patterns emerge in your mind.

Those patterns aren’t verbalised, but visual.

Not just through charts, but also graphs and other visual elements — which naturally offer space for fluidity and flexibility, yet remain attached to the core truths of the market.

As you ask more questions, dig deeper, and encounter new information, that information tends to refine the patterns you already have, rather than create new ones. You’re processing more information, but with less effort, because that additional information reinforces the basic principles that underpin everything else.

You say something like: “I’m just looking for low-risk entries into the strongest names in the strongest groups, then ride the trend.”

Simple!

But that belies the depth of thinking and experience behind those words.

Top performers constantly build on their knowledge…

…but they do it by pursuing depth, not breadth.

The answer doesn’t lie in chasing a new strategy, or blindly gathering more information.

Instead:

• Find ways of making your existing strategy more potent.

• Seek deeper understanding of how stocks truly move and how markets work, along with deeper insight into your edge.

• Critically evaluate your performance to identify opportunities for improvement — regardless of your existing abilities.

As Tom Dante always says:

“If you’re not working on your edge, someone else is.”

Here’s another quote from Tom I enjoy:

“Curiosity is the basis for improvement.”

I’ve previously written on TTRH about how curiosity (and passion) motivates you to put in sufficient reps.

But I haven’t addressed the critical role of curiosity in asking the right questions — the ones that provide vital information for guiding our improvement efforts at every step of the way.

To quote Robert Greene’s Mastery again:

“The moment that you rest, thinking that you have attained the level you desire, a part of your mind enters a phase of decay. You lose your hard-earned creativity and others begin to sense it. This is a power and intelligence that must be continually renewed or it will die.”

The learning never stops — so, you must keep your mind in a “state of openness”.

Quite apart from emerging technology, trends, seasonality and market environment, your competition will catch up with you if you stagnate.

The world around you won’t stop changing just because you have.

Plus, as pointed out in the above quote, your brain (mind) will enter a phase of decay if you don’t keep exercising it — meaning that if you stagnate for too long, you’ll actually lose ground.

But as you get closer to mastery — which goes hand in hand with specialism — chances are you have fewer people directly ahead of you. Because as you grow, you’re increasingly doubling down on what works for you, making your specific skill set increasingly unique in the process.

So, how can you still improve? For that matter, how can you meaningfully improve at any level?

Ask curiosity-driven questions.

This works in a range of situations, from planning the next trading session to reviewing your weekly or annual trading performance.

Here are four more scenarios where asking the right questions helps you go into more depth and get more value out of your opportunities to improve:

1. Reverse engineering.

Again, don’t just imitate the actions of people you admire— try to embody their thinking.

Ask questions like:

• Why are they doing X? Why is X important?

• X and Y appear the same to me. What are they seeing that I’m missing?

• Does X add value to my strategy?

And if you are going to imitate someone, don’t replicate just the surface features — imitate the actions (deliberate practice) that gave the person the ability to create those features, to their level, to begin with.

Through that process, you’ll not just embody the thinking that developed those techniques, but also start making them your own.

2. Adapting ideas to your personality.

Needing to find what works for you was a recurring theme among the reader stories earlier this year.

But experimentation aside, how do you establish what does and doesn’t add value to your strategy?

While others can give you new ideas, or help you refine half-finished ideas, you’ll be far more effective at adapting them for your personality if you understand the thinking behind them.

Without that deeper understanding, you can’t select ideas well, or handle conflicting advice. For example, some say to buy the breakout, while others say the exact opposite.

Who’s right? That depends on your personality!

Understand this, however:

Both tactics can be foundationally sound, because both reflect the reality of how stocks move.

(Or ‘market structure’, if you prefer.)

Stocks move through range expansion and contraction.

The longer the contraction or neglect, the more powerful the subsequent range expansion. This is why big, sustained moves higher tend to start with a gap up on huge volume, caused by an event catalyst, after a significant period of neglect.

Such moves tend to trend higher, making higher highs and higher lows, often respecting the key moving averages. At some point, a substantial move needs a longer period of digestion, before coming out of that consolidation and resuming its uptrend.

Once you have that foundational understanding, you can start to look at ways you might systematically exploit those structural tendencies (inefficiencies).

EPs, breakouts, pullbacks and parabolic moves are ultimately all part of the same market ecosystem — but each comes with different win rates, risk–reward ratios, average holding periods, maximum drawdowns, etc.

To exploit these types of moves, you can get as creative as you like.

Just make sure that creativity is grounded in reality:

First build a firm foundation. Develop your edge around a real market phenomenon.

3. Overcoming intuition gaps.

To come back to Theo and Clement, both had an intuition gap — not unusual in top performers, in my experience. In fact, as a ghostwriter, I’ve come to realise this part of my work is arguably more valuable than the actual writing:

Helping people overcome those gaps (between their intuitive understanding and what they can verbalise) by asking them specific questions so they — and readers — can gain mental clarity.

The mechanics of creativity (and to some extent intuition) are:

1. Internalising knowledge so deeply that you can access it without thinking.

2. Discover something that takes your knowledge one or two steps further.

3. Find the connection between that discovery and what you know. It must exist.

4. Figure out the technical components of your creation, so you can add them to your knowledge base and trigger them at will.

This is basically what I observe in TTRH collaborators and clients. They obviously have the information — it’s just a matter of extracting it from their heads by asking the right questions!

My tip: be as specific as possible with your questions.

Ask for examples and/or for them to elaborate on something they said. And if you think you’ve ‘got it’, repeat your understanding of their point back to them, in your own words.

Do they feel you’ve nailed the fundamental concept?

4. Direct engagement with people you admire.

Fair play — my work gives me above-average access to such people.

But we live in a special time, when anyone can interact directly with industry leaders through social media. And if you ask good questions, your odds of getting a real response are decent — not least because you may trigger fresh ideas in the person you’re contacting.

Remember:

Even extensively interviewed experts have untapped insights.

In preparation for a recent call with Brian Shannon, I tried to find questions he hadn’t previously answered in public.

I was surprised to realise that while Brian has repeatedly shared his origin story around AVWAP, he has rarely, if ever, been asked about the equivalent story around trading with multiple timeframes.

So, I put the question to Brian.

From there, the conversation progressed to other aspects relating to multiple-timeframe analysis. Me being me, I tried to go deep, getting to the fundamental points of how and why his methods work.

Brian’s response formed the basis of this new article: “How I Started Using Multiple Timeframes”, which includes an audio version. The rest of our conversation will form the basis of future Alphatrends articles.

An ability to ask the right questions and relentlessly seek satisfactory answers goes a long way towards mental clarity and depth.

These might be questions that:

• Address knowledge gaps

• Deepen your understanding

• Lack a clear (immediate) answer

• May lead to more questions

• Challenge the status quo

For example…

How come that, in spite of being interviewed hundreds of times, no one thought to ask Brian certain basic questions? (The origin of multiple timeframes is only one example.)

Is it because most people prefer to play it safe, asking questions they’ve heard him being asked before? Questions that are just optimised for engagement? Questions to which they can guess the answers? Questions that stay within their comfort zone?

But the more comfortable you are, the less you’ll grow.

So, if you get the opportunity to ask people questions — by replying to a person’s tweet, by sending them a message, maybe even by speaking to them directly — make it count.

And don’t forget: asking yourself good questions can also go a long, long way towards mental clarity, depth and nuanced simplicity.

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This brings us back to the paradox of expertise in discretionary fields:

The deeper you go, the more you simplify.

Not because you’re processing less information…

…but because you’ve transformed complexity into cognitive efficiency. The concepts become simpler and simpler in your mind, and the processes become effortless.

Or, as I put it, ‘nuanced simplicity’.

- Kyna

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Listen to this stack

Timestamps

• Part 1: The beginner’s trap — fixation on output replication (1:12)

• Part 2: Beginner vs expert thinking (4:32)

• Part 3: Nuanced simplicity in action — lessons from TTRH guests (7:00)

• Part 4: The mechanism behind making more information simpler (12:42)

• Part 5: Going deeper by asking the right questions (18:12)

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