CL Redux

I don't mind civil, mature, respectful debates... that's one reason why I'm here. We are all at different levels of experience and understanding in this profession. I figure I'm somewhere between knowing nothing and knowing too much.

I also realize nobody wants to think about statistical odds, probabilities, random distributions of results, etc. That stuff is boring as all hell... especially to me, because I don't have the world's longest attention span to begin with. But that's the stuff upon which successful trading is based.

There are no genius savants out there who magically see trade entries that all work, never get stopped, never get chopped, never just miss getting filled on the only real trade move for a given day, etc. We fantasize about such things, but in reality trading is simply a repeated grind. Find a systematic approach, know the parameters for success, grind it out and try to keep your thoughts and emotions from sabotaging yourself.

Truth is, every single, successful trader with zero exceptions operates like that. Self-directed or blackbox system, same thing. Know the parameters, know the statistics, grind it out day by week, work hard at managing yourself to stay out of your own way.

Welcome to trading, market & symbol be damned

 

Are you just preaching in general here or was it directed towards me?

Because if it's directed towards me, I think that's pretty cute, considering that I'm now studying mathematics and statistics in school and loving those subjets. When I was trading actively, I also utilized a historical database and statistical analysis for my trading plan.

I've also done work modeling intraday price movements.

I think you're wrong.

What you're saying is and probably will be reality for most people.

I am however convinced that it's possible to do a lot better than win some, lose some and have trading be a fight and a grind. The latter does not seem to be worth doing to me.

Of course, reaching that level is pretty damn hard and reserved for a select few.

That's why I'm recently asking gurus if their trading profits matches their trading wisdom.

 

#1: In general... I have no idea what you're doing in your life

#2: I am not wrong, I simply know what I'm talking about based on years of experience thru first-person sources such as numerous futures brokers and numerous successful, professional traders.

http://www.elitetrader.com/vb/showthread.php?threadid=187730

If you really want to understand how successful trading works, read & reread that thread, make a statistical study of the day to day process which created year-ends results. Tell us what the daily win/loss ratios are, weekly and monthly net-profit distributions, largest day gains and largest day losses relative to the averaged mean.

When you get done with those stats, you will understand a lot more about the reality of trading than you do right now. And I might add if you never did any better than match the performances in that thread, you would still be a wild success in the trading world

 

LF,

Do you think human behavior can be modeled (mathematically or otherwise) to the point of being predictable?


RN

 

Ok.

Thanks. I'll look into it!

 

Yes.

LF

 

LF, I believe it's your unwillingness to accept the "grind", the "win some/lose some" nature of trading, that has prevented you from consistent profitability over time.

You believe there are traders (or "gurus" perhaps) who can somehow attain something near to perfection. In fact, every consistently profitable trader I've met here wins some and loses some.

Experienced scalpers rarely have losing days, but have plenty of losing trades.

Experienced day traders rarely have losing weeks, but have plenty of losing days.

Experienced RTM faders rarely have losing trades but the occasional losers can be relatively large.

"But you have to understand that there’s no possible way that these mathematical formulas can predict the outcome of these patterns on a trade by trade basis, only on a series of trades. So when I get a signal from my methodology, at the most fundamental level what this is telling me is that the odds are in my favor that somebody is going to come into the market (this is what the pattern means) and bid it higher than here if I bought or offer it lower than here if I sold. That’s all that it’s saying. Now they’re either gonna come or they’re not, and so as a result I don’t look at this as being a ‘right’ or a ‘wrong’; I look at this as ‘How much distance am I going to give the market to move away from my entry point to tell me that they’re either going to come or they’re not, and any further is not worth the cost of finding out.’” - Mark Douglas (interview)

 

interesting how cl vol has been so low after that step away smackdown at the beginning of the year where some big player was repositioning portfolio or just wanted to blow people out of positions and clear the deck for the runnup that followed - gotta love the cl games

 

By definition, if you win some and lose some, you're barely getting by. What Austin described to me sounded more like a desperate attempt to hope something would stick and hoping that by year end his account would be in the green, compared to calmy executing a trading plan and realizing it's edge over time.

At least change it to 'win a lot, lose a little'. Whether that comes from a high win percentage or a lower win percentage where the winners significantly outweigh the losers.

For day trading or trading in general to be worth it, you should be getting a higher return on your capital than you could be getting elsewhere. Risk is also a factor. Just barely getting by does not cut it, at least not for me. If so, I'll rather put my money to work elsewhere.

As for why I wasn't consistently profitable over time, there's probably multiple reasons for that. Maybe I'm not mature enough in my market understanding yet. That's one. But I also think a large factor was that I was in a position that forced me to take more risks and use more leverage than I should have.

Speaking of great traders, there was a trader called Mark Weinstein in the Market Wizards books. In short, he basically claimed that during a certain time period preceding his interview, he never had a losing trade. Prior to that, he had blown his account multiple times.

Is this bullshit? Maybe. Or even probably. Who knows.

The point is that Mark developed a method and had such high criteria for entering a trade that he would never take a sub-par entry/set-up. He used multiple indicators, TA, and ways to view the market and would wait until very indicator, time frame and elliot wave cycle would line up perfectly and tell him the same thing. Only then, would he enter.

So, that's one way to approach it.