The trend is pretty simple in broker world and is not a secret to anyone in the street, you have group of people that make profits in certain duration, more like few months or even years, then suddenly those winners turn to losers and eventually gone. In long term, they all gone. This situation is pretty repeatable especially on those active day traders (aka gamblers). the reason is simple, day traders are either trend followers, fade the trend or scalpers, either strategy will work in 33% of time in general. In ideal world you should be able to identify trend, chop using price action or whatever TA you can find in human existing. However, none of those PA "expert" are or able to prove that they can do in REAL TIME and with the number of successes that can be proved as statistical significant. Big institutions already try this before and they can't make this happen as well, this is why their main trading profits are still coming from commissions (especially from those active traders/hedge fund), market making/HFT and exotic financial products. The summary is you can't copy or fade the winners or losers. Long term investor is a different story.
"In long term, they all gone." - Absolutely true. I have dozens and dozens of stories and know very few as successful as I have been in 3 decades. 2000ish - sitting in private session heard "industry expert" telling us he is buying more Nortel at 125 a share. I asked him his reason - more eyeballs he said (Honest he did!). I cleared out of his mutal fund within the week. I could see no logical reason for price to eyeball metric. Boss runs into my office as Nortel falls. Time to buy at 85 - Nope I said. Time to buy at 45? No. 22 No. 10 No 8 No. At 8 she says I don't care what you say, I am loading up on it. At 6 she loaded up again. Months later I made my first buy at 1.10ish, went on vacation came back found it down to 83 cents - doubled my position, several months later at 3.80 or so I received the financial statements which I read. Sold it all after reading since I detected several things "odd" with statements. (So did the authorities who later sued all the people in charge and eventually lost). One friend of a friend doubled down so many times that he said he would be a multi-millionaire when it hit 12 dollars again. It never did. Uranium. Hot topic. Owned some. Friend who knew I invested asked me to explain to their "group" why after a uranium recommendation (by their guru) on Saturday they all lost money on the open buying it first thing Monday. Talked about market makers and what they do. Stayed with the group for several months. At my final session, I still recall 12 of us sitting in a circle - 11 saying buy more with both hands and me saying I have sold my positions and am now swing trading. Recall being kicked out of the group there after because the leader said - several people didn't like my attitude. LOL. I immediately thought as he was speaking, is this a confirmation of a top? 1999ish Internet mutual fund made a killing off of it and exited when I heard a comrade tell me his 18 year old daughter had 100K invested and was making more money that he was. OMG, I thought. Met fellow later on the street and asked gently about his daughter - big disaster he said. but its coming back. 2004ish - Friend introduced me to a "gold trading wizard" since we both traded. A few years back I told him I had sold my positions (I first started buying gold in 2001 or so). He listened to me faithfully as gold went up. I told him I was out and swing trading gold. He said well I disagree, I only have to wait until it gets up to 2000 an onze and then I will buy my island and retire. He also had his mom's money (dementia). Sent me an email telling me and others that he was down 35% but after one more drop, they would go to the moon. He was holding. Stopped sending emails when they dropped to 55%. Still dropping. Lost girlfriends money, apartment (sold it to invest in gold while moving in with girlfriend), mom's money, and last I heard his car since at 58 he failed the "clock test" and was diagnosed with early onset dementia. Why am I still here and so many are out for the same basic reason? Luck I guess. BTW, I am very quiet currently (AKA not even swing trading). Left May 20th due to concerns about Greece that many people said wouldn't affect anything. Left late May and could beat buy and hold on several stocks I watch by loading up today. I am still very very cautious.
I'd say your ability to spot a uptrend and enter on it and your ability to accept that your in a downtrend and exit with profit intact, rather than some dream price to retire at falling in love with and holding it all the way back down Mate ( NOT Me honest ), was messing around with a £115K GBP account, just for fun, playing with Telewest @115p or £115 ? can't remember, went against major downtrend held and held, got him to go hard at £8/8p, needed 49 for BE, got to 43 rang him said exit, wouldn't, downtrend and delisted blew 115K having some fun!! Moral, of the story, if in a downtrend, don't hope just exit!
A fx dealer hosted a contest that paid out cash prices to whoever could lose the most money in the shortest period of time. Anyone care to guess if the losers became winners?
one time my paper account got ahead of my real account, and rather than wait for ib to reset it I decided just to spend the afternoon losing money in it to bring it back to reality. I maxed out my size and broke every trading rule I could think of. I was trading mostly eur.usd. The very moment it would go profitable I would take the other side. If it started losing I would add to my loser. After about three hours I was exhausted and up about 30%.
Exactly. One must ask who promotes these common sense trading rules that seem to make perfect sense yet most just keep on losing. Most rules are promoted by the very people who want you to lose and over trade. The market itself has a vested interest in you losing money. Hence the heavy emphasis on psychology, rules, charts and a myraid of other feel good material. One needs to break free from the rule mindset to make it in the market. surf
When starting this thread about Input, I didn't mean entry/exit signals at all! Haha - Just trying to test you guys! Sorry for a bit playful! Surf is right! Spending 10 years learning/ getting a wrong mindset, (for the awakened ones) then another 15 years trying to remedy it (usually unlearning is harder, sometimes very hard or even impossible!) before developing a correct one! Haha Worth 2 cents!
opposite to the wrong is wrong the right is in a different universe i am not sure its parallel universe to the wrong one, but definitely is a different one , and it almost never touches or crosses the universe of wrong... so to fade the losers is a loosing proposition... the question may arise what if to follow winners (assuming you know them and they will tell you all their trades) the answer: it is also a loosing proposition... because looser do not have the balls to follow winners... not that winners have iron balls themselves, they just compensate iron with knowledge and experiences and believe in their method loser do not have this luxury, that compensation is not available to them.. they just have to stick to the trader they follow no matter what... it never happens so when shit will hit the fan, losers will abandon the following and will start doing something else (something what loosers do...) so no matter what the looser will do in terms of following, he will loose.... it reminds me an old joke : The wife tells the husband: "You are such a moron !! If there would be a competition among the morons you would take a second place in it !" The husband asks: "But why a second place, not a first one?" The wife answers:"Because, you are a moron !"
A scientific proof that fading does work, probability wise : Q Researchers Tested The 'Gambler's Fallacy' On Real-Life Gamblers And Stumbled Upon An Amazing Realisation http://www.businessinsider.com.au/the-gamblers-fallacy-and-the-hot-hand-2014-4 One of the most interesting things that comes out of behavioural research is the situation in which people act as though they believe one thing and their actions cause the opposite outcome to occur. A study by University College London psychology professor Nigel Harvey and graduate student Juemin Xu, published in the May 2014 issue of Cognition, found that online gamblers on a betting website believed in one common gambling fallacy, the “gambler’s fallacy,” and this led to them experiencing an opposite effect, the “hot-hand fallacy” (via Cardiff Garcia). The hot-hand fallacy occurs when gamblers think that a winning streak is more likely to continue. This belief is based on the idea that having already won a number of bets improves the probability that they will win the next bet or the next number of bets. Luck will continue favouring them, and the same outcome of winning bets gets more likely the more times it happens. The gambler’s fallacy works in the opposite direction. This is the idea that during a losing streak, it is likely that a gambler’s luck will turn around and that they will start winning. Here, repeatedly getting the same outcome decreases the probability of that outcome occurring in the future. The problem with both of these, and the reason they’re labelled fallacies, is the fact that, in most games of chance, subsequent outcomes are independent from each other. A roulette ball landing on red after one spin has zero effect on what happens on the next spin. A pair of dice landing on 7 on one roll doesn’t do anything to the next roll. Each time the game is played, the universe essentially forgets all previous outcomes and starts from scratch. This independent nature of gambling games means that streaks have no particular meaning. Winning bets five times in a row has no effect on what happens on the sixth bet. This means that both the hot-hand fallacy, saying that winning many times in a row increases your chances of winning on the next bet, and the gambler’s fallacy, saying that losing many times in a row increases your chances of winning on the next bet, are wrong. So, it’s somewhat surprising that Xu and Harvey actually found evidence that the hot-hand effect really does happen. They analysed the records of an online sports betting website, containing hundreds of thousands of bets on horse races, soccer games, and dog races. Amazingly, they saw that, the longer a streak went on, the more likely the gambler would win their next bet. Here’s a chart from their paper showing this result, based on all bets made on the site in British pounds. The dotted line with circle markers shows the increasing probabilities for winning the next bet based on already having won a streak whose length is indicated on the horizontal axis. The solid line with triangle markers shows the probability of winning the next bet if you haven’t had a streak of that length: Xu and harvey hot hands fallacy betterXu and Harvey, May 2014 The longer the winning streak, the more likely the next bet is also a win. Initially, looking at all the bets overall, 48% were winners. If you win your first bet, you have a slightly improved 49% chance of winning your second bet as well, higher than the 47% chance of winning if you lost your first bet. After that, the hot-hand effect takes off. People who won two bets in a row had a 57% chance of winning their third bet — far higher than the 45% chance of winning for people who didn’t have a winning streak of two in a row. As the chart shows, the longer the streak went on, the more the odds of winning the next bet improved. By the time you won six bets in a row, you had a 76% chance — better than 3 in 4 — to win your seventh bet. Xu and Harvey also saw a mirror-image effect with losing streaks. The longer a losing streak a gambler was on, the more likely that they would continue to lose. The next chart from the paper shows this effect. The solid line with circle markers shows the probability of winning the next bet if you have already lost the number of bets indicated on the horizontal axis; the dotted line with triangles shows the probability of winning if you’re not on a losing streak of that length: Xu and harvey losing streakXu and Harvey, May 2014 As losing streaks go on, the probability of winning the next bet drops. By the time you’re on your sixth loss in a row, you have just a 23% chance of winning the seventh bet. What could cause this? The outcome of one horse race or soccer game shouldn’t have any effect on the outcome of the next race or game that a gambler bets on. Horse race betting gamblingREUTERS/Alessandro Garofalo People wait for the start of a race at the San Siro horseracing center in Milan May 23, 2009. Maybe the people who experience winning streaks are better at placing bets than the people who don’t get hot. Xu and Harvey compared the overall returns for gamblers who had at least one streak of getting six bets right in a row to the returns for the gamblers who didn’t, and saw that there was no difference: Winning-streak gamblers had an average loss of £1.0078 for each pound they bet; non-streaky gamblers had an almost identical average loss of £1.0077. This rules out the idea that gamblers with winning streaks are better at picking winners. If they were, we would expect them to win more bets overall and make more money than non-streaky gamblers, which does not happen. Xu and Harvey then looked at what kinds of bets were being made by gamblers on both winning and losing streaks and found something amazing. Bettors were behaving as though the gambler’s fallacy were true and that either a winning or losing streak meant that their luck was more likely to change on the next bet. This behaviour actually could lead to the hot-hand effect we saw above. To see this, Xu and Harvey looked at the odds of winning for the next bet placed by gamblers on winning streaks and losing streaks. Gamblers on winning streaks became more conservative and started betting on races and games with better odds of winning, acting as though they believed that their luck was going to run out. Gamblers on losing streaks became more risk seeking, and started betting more on long shots, apparently believing in the classic gambler’s fallacy that their luck would have to turn around sometime soon. The following chart shows this behaviour. The odds against winning for gamblers on a losing streak with length indicated by the horizontal axis are shown on the dashed line with triangle markers, and the odds against winning for gamblers on a winning streak are shown on the solid line with circle markers. Higher odds against means a smaller chance that the bet will win. Xu and harvey streak oddsXu and Harvey, May 2014 Players on losing streaks went for riskier and riskier bets, taking bets with higher odds against in the hope that a big payoff would make up for their losses. Players on winning streaks went in the opposite direction and made bets that were more likely to win as their streaks went on. This behaviour could explain the hot-hand effect. If players on winning streaks are taking more likely bets, then that could lead to the streaks continuing. If players on losing streaks are taking riskier bets, then that could lead to their losing streaks continuing. The interesting part of this is that the gamblers appear to be behaving as though they believe in the gambler’s fallacy, that winning or losing a bunch of bets in a row means that the next bet is more likely to go the other way. Their reactions to that belief — with winners taking safer bets under the assumption they’re going to lose and losers taking long-shot bets believing their luck is about to change — lead to the opposite effect of making the streaks longer. UQ