Perhaps I was being a bit harsh. If so, I apologize. As I mentioned earlier, I think that introspection is a good thing. You have to know who you are if you are going to trade successfully for any length of time. And while eastern philosophy has its virtues, I wonder how efficient it is to get "too" caught up in it for that purpose. But that is just my opinion. I recognize that we don't all go about our lives in the same way, nor should we. There is no one "right" way to wear a hat. Here is my bottom line. I think that most reasonably intelligent people willing to put in the effort can learn to trade. Some will take longer than others. I am one of those slow learners. The critical issue is finding a method that not only works, but also fits. In my case, I had developed methods in the past that would have worked on balance, yet I languished. I was confident that, although I would incur losses, I would likely come out ahead over a series of many trades. However, I found that I could not deal very effectively with a fairly high proportion of losses regardless of the expected net outcome over time. It was just not in me. Perhaps it is a matter of upbringing, perhaps it is genetic, or perhaps it is a combination of the two. Regardless, I had to deal with it. I tried to change with limited success. So, I finally decided that it would be easier to find a shirt that fits rather than try to wear a good albeit ill-fitting one. And so, I worked and developed a method that I consider to be very reliable, certainly much more so than anything else I had come up with in the past. There is a catch, however. Because it is quite reliable, it more than occasionally misses fairly sizeable moves. Some people would not be comfortable with this combination. They would rather incur more losses along the way and not miss out on any of the big moves. But that is just not me. I need to be confident that my next trade has a very good chance of not losing money (either profit or break-even). I may be losing out on what is optimal, but it is the only way that I can effectively play the game. And, I like it because it suits me. Perhaps one day I will change, but not today. And probably not tomorrow. As I said: trading is trading. So much for introspection. On the other hand, if you are using various tomes on eastern philosophy for change, then may I suggest David Burns' Feeling Good Handbook. http://www.amazon.com/exec/obidos/t...104-6179906-5546363?v=glance&s=books&n=507846 I would think that it may have more practical application to personal change than vague and eloquent passages subject to interpretation. Finally, if you are drawn to meditation, as many devotees of eastern philosophy seem to be, then may I suggest Herbert Benson's The Relaxation Response. http://www.amazon.com/exec/obidos/t...104-6179906-5546363?v=glance&s=books&n=507846 It deals with a simple, quick and scientifically proven method of achieving relaxation and the alpha wave response consistent with that achieved by acknowledged masters of meditation and eastern philosophy. And the best part is that you can learn the principle in minutes (although it will take a bit longer to get the hang of it). You won't have to journey to some distant mountain top for answers. In summary, I am not suggesting that the eastern philosophy that you seem to espouse is without merit. Indeed, I think it has its place in the scheme of things. However, insofar as trading is concerned, I think that there are more practical and efficient means of achieving a favorable end. Just my opinion.
My post and reply has nothing to do with eastern philosophy...Let me make that clear. I parsed Marty's post and he may have been referencing to eastern philosophy, but the part I parsed is true for me...not becase of tao or dao or whatever... Michael B.
Thanks. Yep, I am just using eastern philosophy as a spring board for discussion... and I found them to be surprising well-made spring board because they relentlessly try to zero-in the elusive truth.
Hi Thunderdog, Actually I have parallel experience, I think my brain is so miswired that I would not trust my money with myself during drawdown... I decided to either really work on it (how to lose profitably) or automate what I wanted to do. I ended up automating my strategy because of my programming background. I took the approach of replicating what I am trying to do as a discretionary trader and less worrying about the degree of freedom and curve fitting etc. My scalping system looks really sad sometimes but I learn to constantly manage the expectation or you wouldn't believe the round-about way I try to damper it (ultimately deviate from the method). My milestone is to survive the 1000th trades... and I hope I will get there in three years. One trade at a time...
Actually it can be more difficult to simply go for the essence sometimes due to our own habitual patterns. Even though the shortest distance between two points is a straight line, it might not be practical to walk thru a wall. In Buddhist tantra, they use the process of building it up (development stage) and then break it down (completion stage) to get at the essence. So adding more does not necessarily take it away in that context.
Thanks to Michael and Thunderdog. I think I do get lost sometimes (actually a lot of times).... The points you guys brought up helped me refocus a bit on what's important... such as not to tamper my system during drawdown.
Chapter 9. Moderation "Stretch a bow to the very full, and you will wish you had stopped in time. Temper a sword-edge to its very sharpest, and the edge will not last long. When gold and jade fill your hall, you will not be able to keep them safe. To be proud with honor and wealth is to cause one's own downfall. Withdraw as soon as your work is done. Such is heaven's way." Do not let the cup overflow. Avoid pushing things to the extreme because they tend to have counter-intuitive effects. Do not overstay a position (liquidity dries up). Yet being overprotective and unable to take "proper" risk guarantee small profit now and drawdown over time (as the winners unable to cover the losers). Withdraw as soon as the trade is DONE. This month proves to be a tough period for me as my system was down almost 10% but I am encouraged to see a little bounce in equity at the end. I am not particularly proud of the fact that I tamper with my system on a few occasions (with mixed results). That is not OK and I have to watch my fat fingers.
I actually paid for a copy of Lao Tzu's TaoTeChing translated by Red Pine. It's pretty good with various commentaries by the ancients even including some esoteric meanings such as "breathing should be relaxed". I will try to finish what I have started and this will motivate me to finish the book. Chapter 7: "Heaven is eternal and Earth is immortal the reason they're eternal and immortal is because they don't live for themselves hence they can live forever thus the sage pulls himself back but ends up in front he lets himself go but ends up safe selflessness must be the reason whatever he seeks he finds." Heaven and Earth's vital energies are inexhaustible because they don't fixate on themselves. Whenever appropriate, the sage conserves his energy by pulling himself back. When there is no good setup, a trader should not trade. This will put him ahead when others get chopped. From backtesting, one can see that a very few trades a day can be very profitable in theory. It is OK to let go of suboptimal trades. Whenever appropriate, the sage gives up himself but ends up safe. A trader should accept the risks of good setups and let the trades reach their potential (assuming the methodology does work). I don't think there is a choice here. I don't think one can be profitable unless one accepts the risk of the trade and let it reach its target. Trading on egg shells is not the answer either. I think people trading on egg shells (including myself) because either their setups do not really work or they have not accepted the risks. One cannot grow and the equity curve will just go back and forth. You got to be there! Do not limit or fixate your ability as a trader and let the market tells you how much you can make. Risk your ego when opportunity is indeed present. Profits will be there over time.
Sorry, I should have started on Chapter 10... my mistake. This "cut losses quickly and let profits run" IMO only works for certain setups trading S&P intraday. If your entry is not superior, you might need a bigger stop or it would whipsawed someone's college fund out of you. If you have no idea about the potential of your trades, you cannot execute the "let profits run" part effectively. Actually the guy who helped me out flatly stated that the adage does not work for intraday S&P trading. He scales into a pullback up to a point (averaging losers) and take profits quickly. I have evolved beyond that after a long struggle and came back to this "cut losses quickly and let profit run." It is not a generalization! If your setup does not work for you, you will find taking profits quickly and closing down shop early when ahead help stop the bleeding initially. But it was very hard for me at least to grow something out of it (I know another trader who does this successfully). I read somewhere that the entry is not important but the trade management is, I have to disagree. I think the type of trade management is a function of the entry. This is the new translation I am using: http://www.amazon.com/exec/obidos/t...102-5989514-6046518?v=glance&s=books&n=507846