A trading edge is the easiest thing?

Discussion in 'Trading' started by livermoreorless, Jun 21, 2009.

  1. After all, all of us have access to the same TA tools - stochs, macd, rsi, cci, etc.

    Isn't a trading edge the easiest part?

    I think discipline is the tough one. U could be literally given the best trading edge strategy but if you don't have the proper discipline you will never make a dime.
  2. Dreamers, dreamers....sweet dreams....
  3. The most amazing aspect of trading and the biggest confliction in trading is not the actual process of trading. The biggest confliction in trading is the psychology behind how a person decides to become a full time trader. Not only is it the psychology behind how a person decides to try trading, but another surreal aspect is what a trader needs to do in order to become successful. It is truly a profession where a majority of people who start out need to actually mentally change themselves in order to become successful at it.

    So we are at the beginning of the decision to become a trader. What type of personality, mentality (whatever you like to call it) actually tries to become a full time trader? Certainly the timid valedictorian who has been accustomed to following a straight and narrow path their entire life is not attracted to the profession of trading because they know the profession involves heightened risk and a confusing path that is unorthodox. The type of person who is attracted to the profession of trading is willing to take risks and may even like the idea. Another large majority are even gamblers and some are even reckless. The point is that a significant majority of start up traders are risk takers. If they weren't then they wouldn't be doing what they were doing.

    So what is a risk taker? A risk taker is willing to risk harm, loss or injury in the hope of gain or excitement. They don't follow the rules. They follow what attracts them at the moment. They may even do physical stunts such as sky diving or base jumping. They don't have any discipline because they know if they go all in with the risk and they make it out alive the reward will be amazing. A risk taker may take the risk of simply not conforming to society in order to conform to their own beliefs hence becoming a day trader. The bottom line is that somewhere either in the conscious or subconscious a trader starting out has some tolerance and even attraction towards risk.

    Now let me ask you something. If you had a choice which set of adjectives do you value more? Do you value discipline, rules, structure and organization more? Or do you value fun, excitement, intensity and euphoria more? The truth is that a person who values discipline, rules, structure and organization is very unlikely of taking on the "risky" profession of day trading. On the other hand the person who values fun, excitement, intensity and euphoria is much more likely of taking on the profession of day trading. There is just one little problem. In order to become a successful trader you have to value discipline, rules, structure and organization.

    Trading is a rare profession where a high majority of aspiring traders must actually change their value structure in order to yield success. To be a trader you must change the person you are.
  4. the1


    Very interesting thought. Why do traders make the same mistake again and again? I occasionally find myself slipping back into old habits like not getting out of a bad trade soon enough, and I have to do a real focus check. It's incredibly hard to stay at the top of your game 100% of the time. Even the greatest hitters in baseball go into slumps.

    Tiger Woods really sucked it up this weekend :eek:
  5. Discipline is a CLICHE.

    Trading is finding the balance between the intuitive and the analytical.
  6. I tell you dreamer, if you have to change to succeed in something you better stay away from it. Change is impossible especially if you are an old fart... (older than 30 abouts)...

  7. Could not agree with you more!
  8. Yes. 90+% of traders lose and 90+% of them use TA like you posted. When they wander away from the simplistic and start learning price action, they generally realize this stuff does not work.

    Connect the dots, and you will realzie a real edge is the most important thing, and a lot rarer than people imagine
  9. overbet


    Connect the dots, and you will realzie a real edge is the most important thing, and a lot rarer than people imagine [/B][/QUOTE]

    This is true. I would add that the disciplines of planning and executions are vital as well. When I started trading I sat next to a very successful trader (a few million $ profit a year day trader) He would spoon feed me good trades that he seen and did himself and tell me why he liked them, when he got in when he got out, I am putting a bid in here I am putting an offer in here.....everything!!!!!, but I would still lose money in many of them. That is how important it is to have a reason for your trade (edge), have the discipline to have a predetermined plan for all outcomes and follow it with resolve. You must also have flexibility to realize when the circumstances that got you into the trade have changed and adjust your plan to suit the changes.
    Two traders are in the same exact position and are taking a tremendous amount of pain in the position. Trader Z is whining, squirming in his seat and crying like a little baby who is not getting his way. His emotions are high and he is wretched inside cursing the world, stomping around and yelling at the screen. He tries to trade his position and improve his price or trade his way out but makes bad decisions and gets whipped around because he is so emotional and ends up getting in worse shape. He revenge and anger trades sometimes at the height of these emotional outbreaks. He doesn't know what he will do if it goes another point or two against him. He ends up losing more getting stuck deeper and sometimes even blowing out the position on a whim because he can’t take it anymore, he is tired of steaming and tired of losing money and just wants it all to stop. On the other side of the coin is trader A. Trader A knows he is in a good trade that has a positive expectation and will show him a profit once the variance has been smoothed out. He knows sometimes he will get stopped out of this trade setup he is in and he will lose money. Trader A knows that even when he is stopped out and forced to cover the trade as a loser it is okay because over time this trade will pay him a profit. He is savvy, he is seasoned, and he has seen it before and will see it again and again. He is emotionally detached because he knows his risk and he knows he is right. He has ice in his veins while trader Z’s blood is boiling. An outsider looking in cannot tell that Trader A and Trader Z have on the same position. If trader Z can manage to change his thinking and actions to model that of trader A, he will make it. If not, he will remain, just another victim of the violence of the market.
  10. Nexen


    Most claim trading is hard and even more believe it. Perhaps knowing what to do is, but once this is found it is not.

    Trading is actually very simple.

    The problem lies when the market forces you to do exactly what you should not do. It gets inside your head and it trashes your plan to pieces.

    Here are the key elements to profitable trading.

    * Don't trade what you think but what you see, react to what price did.

    * Buy low sell high, this requires massive patience.

    * Cut the losses short, let the winners run.

    * Identify the various trends learn to fade the insignificant ones, don't fade the ones that carry the actual steam.

    * Do not use lagging indicators, trade support and resistance. Learn to identify turns without oscillators, learn to spot oversold-overbought via price action.

    That is about all you need to start.

    Unfortunately, the implementation is much harder but with time and plenty of dedication you can make it happen.
    #10     Jun 21, 2009