Modern Trading Fundamentals: Kostolany to Algorithms
Why this guide?
Today’s paradox
Markets have never been farter, information never more abundant… and decisions never more emotional. Without a framework, traders expose themselves to impulses, FOMO, and overreactions.
The TradingToBeRich promise
A clear path that reconciles psychology, technique, and reasoned automation. Goal: exit the emotional lottery and adopt a simple, robust, evolvable method.
The 4 pillars of the modern trader
Pillar A: Psychology & discipline
Emotional control, cognitive biases, decision framework. Essential
Pillar B: Technical fundamentals
RSI, overbought/oversold, multi‑timeframe coherence, open price, platforms.
Pillar C: Strategies & markets
FX, trend, market regimes, usable fundamental analysis.
Pillar D: Algorithms & tools
Core concepts, implementation, optimization, robustness and limits.
Kostolany: the psychological compass
The 3 I: Imprévisible, Inconnu, Impondérable
Three forces no model fully controls. Implication: leave a margin of uncertainty in any strategy (tolerances, circuit breakers, leverage reduction).
Time as an ally
Choose an appropriate horizon, practice patience, allow breathing room. “Sleep on your investments” = accept the market’s tempo.
Crowd & emotional cycles
Panics, euphoria, overreactions.
“Buy on the sound of cannons, sell on the sound of violins.”
Bridge to algorithmics
Operationalizing Kostolany: sentiment analysis, contrarian rules, controlled randomness to avoid being predictable.
Essential technical basics
RSI & Overbought/Oversold
Interpret extremes in context.
What is a Good RSI for a Stock? • Understanding Overbought Conditions
Timeframes & coherence
Avoid multi‑horizon dissonance; define one primary TF.
Open price & micro‑dynamics
Gaps, liquidity, opening orders.
Psychology & decision‑making
A simple decision framework
If/Then rules, position size, stop, trade journal.
Algorithms & modern methods
Concepts & examples
Contrarian, trend‑following, sentiment.
Implementation & optimization
Train/test split, walk‑forward, robustness.
demy
“Usable” fundamental analysis
Turn macro/sector into operational rules.
Use case: trading from home (incl. Japan’s famed household traders)
Real‑life constraints
Time, family, budget, time zones. Pick a calm window + one asset class.
Minimalist setup
Reliable screen, stable connection, daily checklist → less but better.
Calm, methodical strategy
1–2 pairs, 1 primary timeframe, simple rules, no overtrading.
Psychological safety
Conservative sizing, pause plan, zero revenge trading.
30‑day action plan
| Week | Goal | Key actions |
|---|---|---|
| 1 | Foundation & Journal | Read Psychology & Kostolany sections, create a trade journal, 0 real trades. |
| 2 | Clean technique | Choose 1 simple setup (e.g., RSI + structure), paper backtest, entry/exit rules. |
| 3 | Micro‑live | Tiny size, one asset class, respect stops, no overtrading. |
| 4 | Review & improve | Measure KPIs (contextual win rate, expectancy), adjust, document. |
FAQ
Is RSI 30/70 still relevant?
Yes — when integrated into context (trend, volatility, levels). See: RSI guide.
How do I handle the fear of clicking the button?
Simple rules, tiny size, breathing routine, a trade journal with weekly review.
Can an algorithm eliminate my emotions?
It reduces them by standardizing behavior. But the human remains the critical variable (start/stop, tweaks).
How much capital to start?
As little as possible to learn discipline, not to “get rich fast.” Size comes after method.
“Kostolany + algo”: viable long‑term?
Yes: psychology → market hypotheses; algorithm → execution & robustness. The duo is powerful.
Resources & Glossary
Internal resources
Overbought Conditions •
Good RSI •
Timeframe Trading •
Open Price •
Trading Software •
Trading Bias •
Decision‑Making •
Algo Concepts •
Demystifying Algo •
FX Trends •
Fundamental Analysis •
Glossary
Starter glossary
Overbought/Oversold, Drawdown, Expectancy, Sharpe, Walk‑forward, Market regime, Sentiment, Contrarian.
Legends & references
Kostolany (psychology), Thorp (quant), Soros (reflexivity), Buffett (long‑term discipline), Dalio (systems & learning).
30‑day trading plan