DT: The flagship of my posts is brutal honesty. I criticize myself as hard as I criticize anyone else, and when I have a bad day / trade I don't blame luck nor market. When people ask me questions, I don't sugar coat stuff. Read Neo's posts about his chance at making it, and I told him flat out that his chance is "slim to none, barring a miracle or at least until his financial condition significantly improves". As someone who only missed two games this year, all paper trading result to me, when you talk about day trading, is total garbage. When I talk to people about style/system/strategy, unless it is real time, real money, I am not interested. I DO NOT possess a college degree, and I hate it when people start to put together math analysis with equations touting what is luck, what is skill, when the person doesn't trade. ***You think that you can be good at day trading.*** If you really do feel that way, then you will not ask whether trading is skill or luck. When you begin to ask people bringing you evidence that their numbers come from skill or luck, those of us who have invested our blood and sweat into this game take it very personally. I can assure you that I too have a real chance to blow up, considering that even Soros did, but I can also assure you that the game will always be the survival of the fittest, adjust to the environment, and this is the same rule in any other business. For a company to survive among its competitions, it must adapt to the environment instead of holding on to the same old rule book, the same applies to traders. Those who has been super successful and then blew up is not because of sheer bad luck, it is because like the dinosaurs, they became obsolete. ***"everybody has a better weapons to a newbie trader" - are you sure?? are you really sure? Not every newbie is stupid, not every newbie knows nothing at all about trading. A lot of people who trade for months even years, are LOSERS.*** This is also the worst possible newbie mentality. If you look hard, you can ALWAYS find people who blew up bigger than you, in a worse situation than you are. I had the same mentality and it was thrown out of the window after I lost 19 out of 20 games to start my career. A newbie is stupid, he takes hits, he becomes smarter, but you don't learn the stove is hot until you touch it, and some people learn it after first a few burns, some people don't learn it until they lose their hand. Always, always look for someone better than you as a benchmark, that's the only way to play the game, people worse than you are more like alerts, if you do worse than them it is time for a gut check. All I can say is I put in at least as much effort as you did when I started, and I basically devoted myself to the market the same way a zealot devoted himself to his religion, and it took me three and a half months to get that most important first check. I was VERY stupid, I did have far worse weapons than I do now, both physically (less monitors, higher commissions, smaller size) and mentally (experience, experience, experience, something you do not learn from paper trading nor books). ***Will you play a game, if you know, that every strategy that you use in this game has a expected P/L =0? Or even below zero, when you add commissions costs? Of course NO! Is this pointless?*** How the hell do you know "every strategy" has a expected P/L = 0 until you have traded a few? I firmly believe that it is the trader who makes the style, not the style that makes the trader. And you will never find out by sitting on the sideline without actually playing the game. ***That's why I wanted a statistical proof, that trading is not that kind of game. That there're systems, traders ( like Hitman ) who have positive results from big number of trades. "Believe in my heart"... you say... there's nothing to BELIEVE in, trading is not a religion, show me numbers, show me stats.*** Life is not all about stats and probabilities, if you truly believed in probabilities, you already know that 8 out of 10 traders will fail, why bother with it? You have already seen the stats, you know the odd is against you from the get go, and if you don't believe in yourself, you will not make it. Trading doesn't have to be a religion, but it sure is hard to become the best of the best at something without treating it like one.
>Trading doesn't have to be a religion, but it >sure is hard to become the best of the best >at something without treating it like one. Approaching it with the fervor and energy of a religious zealot? -- yes, certainly helpful and quite likely required. Approaching it with a religious like "greater than the sum of it's parts" mystical philosophy? -- not required. As always, your results may vary. JB PS: and yes Hitman, I trade my own money full time for a living.
Another superb post Hitman. I've been reading what you've had to say for over 2 years, long before you came to Elite Trader, and I'm further impressed with the clarity, the forthrightness, the willingness to absolutely tell the truth as you see it, no bs. I suspect DT won't be thrilled with what you had to say, but if he'd let it in he'd realize you're trying to help him by removing the sugarcoating and all the endless mental gymnastics newbies like to spend their time with. Not that you need it, but keep the honesty coming Hitman, that matters alot. While I've always enjoyed reading your journal, it's posts like these that add a precision and purity to the trading conversation.
jaan-- thank you for the reply it added to my understanding. My most recent info on this subject was the discover magazine interview of the "top" QM guy from England. Now an application to trading. That guy said that the collapse theory is for weak minded people and that an honest mind must conclude that the only solution is the many parallel universe solution. According to his theory must I believe that in one universe I have never had a losing trade, in one never a winner. And in one universe every person who has read elitetrader must have never had a losing trade. Taken to the logical conclusion doesn't the existence of trading markets refute the parallel universe theory because everyone can never be right. (O.K. take a zero sum market) thanks
When asked If luck has a role in trading...... He replies" In the long run zero, I don't think anybody winds up making money in this business because they started out lucky. Then asked if luck makes a difference on individual trades he replied................"THAT IS WHERE THE CONFUSION LIES, on any individual trade it is almost all luck. It is just a matter of statistics. When I first read this statement something inside me clicked.... I realized that defence is much more important then offence. Nick
hehe, freaky, isn't it? basically, there are numerous experiments that demonstrate this. a typical experiment involves firing an electron from point A, measuring it at point C, and forcing it to make a "decision" at point B inbetween (for example, at point B there are two slits, so the electron must "choose" which one it'll take). apparently, the measurement performed at point C will have an effect on electron's "decision" at point B! since the electron passes point B before reaching C, this demonstrates the ability to mess with electron's past. no, it's not that bad, really. although the act of observation will mess up the system for good, as i said, the observation will still give us plenty of information about the system's state before. threfore, the "collapse" is not necessarily a "bad" thing in itself. to me it's obvious that awareness and insight are prerequisites for understanding. to people who assert otherwise i just say that when they use the word "understanding" they don't mean the same thing as i (and most of the people) do. finally, the "awareness will cause the collapse" is just a hypothesis that one should not take for granted. hehe, this just goes to show that the saying "the easiest way to get a bunch of physicists to fight is to give them a bottle of wine and ask about the interpretation of QM" is so true! personally, i don't subscribe to the "manyworlds" interpretation. i believe the collapse is real and its cause is much more mundane, having something to do with critical mass of the system -- something the QM does not cover (yet). LOL! an interesting point. but i think it is flawed: in all the parallel universes, the laws of nature still hold, so in the multitude of universes there will be none that would feature all participants of a zero-sum game as winners. that of course does not prevent a subset of universes with all ET readers as winners (because all market participants don't read ET). i sure hope we're in one of these! - jaan
I've found that developing your own trading system(s) and simply executing them during the day will "almost" remove any psychological aspects of trading and makes all the books I've read such as books by Mark Douglas, somewhat irrelevant. Most days now, I'm not doing any market analysis during trading hours. Working on the system when the markets closed if needed, with abosolutely no pressure. While it can be fun to "go into the trenches" as other posters on this forum call it or try to battle yourself and the market; this is unnecessary. I now laugh at these discussions about "mechanical Systems trading" vs. "Going to battle, discretionary". In my mind, using systems and concrete rules for entries, exits, position size, etc. is what "professional" traders do, the "amatuers" that work at these so-called "PRO" firms just talk big and don't realize that they are amateurs as well. They seem to be living in their own little bubble with blinders on. I'm trying to go beyond that. If psychology is one of the biggest hurdles to a traders success and emotions such as fear, greed, anxiety, etc. are wasting your time when you should be focusing on your trading, Why not just eliminate this! have a plan and execute it. If two individuals want to start a business and go to the bank for a loan and the first one says hes going to run the business on his day to day gut feel, and he hasn't projected his cash flows into the future by using historical figures because the business environment is unpredictable and anything can happen. The first guy also tells the bank that his plan is to buy widgets when the fibonacci stars line up and sell them when Elliot waves have crashed. The second guy has projected his future cash flows, has a solid business plan and a clear vision on how he will operate the business. I think we know who is not getting the loan..Of course, both may fail but all the evidence I've seen suggests that taking trading as a business without any emotional attachment is the better path. If people on these boards don't think that there are mechanical automated programs scalping the E-Mini's for 2points, 30 times a day.. they are mistaken.
precisely! that's the very thing that i keep telling people. while i would never argue which approach - discretionary or mechanical - is "better", i would like fellow traders to recognize that they are very different. that's why discussions about expectancy, statistical relevances, and curve-fitting are of direct relevance to system traders, while to discretionary traders they seem "pointless academical mumbo-jumbo". the opposite is true for things like emotional preparedness and discipline. - jaan
>The flagship of my posts is brutal honesty. Yeah we know already.... >As someone who only missed two games this year, all paper trading result to me, when you talk about day trading, is total garbage. When I talk to people about style/system/strategy, unless it is real time, real money, I am not interested. Good for you...However, *I* am interested. Proper "paper trading" can be valuable, as "backtesting" strategies can be, and evaluations of past performances etc. >I DO NOT possess a college degree, and I hate it when people start to put together math analysis with equations touting what is luck, what is skill, when the person doesn't trade. Then you really can't speak to a math analytic approach, or possess an informed opinion, can you? >If you really do feel that way, then you will not ask whether trading is skill or luck. Sure you do. At least any RATIONAL person would ask such questions...and Keep asking them. These are not new questions and have been studies in academic circles for many years, they ARE legit questions. Then there are those who just choose to believe with little or no evidence. >When you begin to ask people bringing you evidence that their numbers come from skill or luck, those of us who have invested our blood and sweat into this game take it very personally. That's your problem. The mere fact you have sweated will not change whatever the facts are. >I can assure you that I too have a real chance to blow up, considering that even Soros did, but I can also assure you that the game will always be the survival of the fittest, adjust to the environment, and this is the same rule in any other business. For a company to survive among its competitions, it must adapt to the environment instead of holding on to the same old rule book, the same applies to traders. Those who has been super successful and then blew up is not because of sheer bad luck, it is because like the dinosaurs, they became obsolete. Of course you must change if results are forthcoming...this is self-evident. Who does not know this??? >How the hell do you know "every strategy" has a expected P/L = 0 until you have traded a few? I firmly believe that it is the trader who makes the style, not the style that makes the trader. And you will never find out by sitting on the sideline without actually playing the game. This is platitude. Actually, it is closer to the truth that the trader must have the 'right" strategy, and the strategy must fit the trader. They both are important, they are synergistic. Tell me something that I don't know. >Life is not all about stats and probabilities, if you truly believed in probabilities, you already know that 8 out of 10 traders will fail, why bother with it? You have already seen the stats, you know the odd is against you from the get go, and if you don't believe in yourself, you will not make it. Stats & probs help us create models of the world, Hitman. They help us to form RELIABLE info and opinions about the market, about life. They help us overcome built -in cognitive errors and to look with more objectivity. Your 'beliefs' will not alter physics, no matter what blood&sweat you sacrifice to the trading gods. If you wish to discard any and all these devices for "spiritual" trading as the fundamentalist religous fanatic eschews science, so be it. But life is not all about "beliefs". >Trading doesn't have to be a religion, but it sure is hard to become the best of the best at something without treating it like one. You are well on your way. FIREHAWK