Maybe I'm dim today but I have no friggin' idea what that convoluted story was supposed to be about. Fletch
I believe he was saying in a rather eloquent way that risk management is the most important part of trading. IMO, it is the holy grail of trading, and it took me 9 years to realize it.
Don't give up. It took me a long time to figure out this daytrading stuff. I thought I would NEVER figure it out, then one day BAMM. Hit me right between the eyes. I pull $$$ from this market almost every single day, like it's an ATM. How much do you want? I go for Singles every day, very good money management (risk), I have a TRADING PLAN that I do NOT adjust daily, and Discipline. I keep losses Fixed, no moving stops, etc.. I also left NASDAQ and started trading High Volume NYSE stocks (4 Million plus) and the money started flowing. The last 2 months have been awesome, pulling 1-3k daily, today was my best day in months, almost $5,000 - commisions. Best day ever was $26,000, pure luck. Today I had 44 trades R/T and 100,000 shares. I look for 10-15 cents per trade. My system today produced a Minumum of $2,600 in profit and a Max of $8,000. Exits are my weakness. Good Luck Mac
Now what if the last sentence is incorrect, that it can be predicted with a high degree of certainty? Suddenly you will have a P/F of 10 ~ 20 depending on what - & what timeframe - you trade.... Maria
acrary once said "there are lots of edges. Just don't expect to find them in the Open, High, Low Close data." He's a deservedly esteemed poster. I think I know what he meant, but yet it's hard to understand in some ways why that is. I mean, unless you go on a tick basis, wouldn't there be an OHLC for every time frame (or was he just referring to daily charting)? It seems--depending on your time frame, the OHLC is the summation of what happened in that period. If that period is too large to get a real feel for what occurred, then you can go with a smaller frame, but that still is comprised of an OHLC. F-Trader, 'preciate your encouragement. Sounds like you trade often and swing a pretty heavy line, certainly more frequently and larger than myself.
Wow, the same thing happen to Archimedes -- except he was naked at the time. I wonder what hit him between the eyes? :eek:
acrary once said "there are lots of edges. Just don't expect to find them in the Open, High, Low Close data." It just seems that there is always some edge other than market understanding in professional trading e.g technology, info or execution advantage. Having the capital to create situations rather than react to them is an edge. Knowing where stops are is an edge. Watch the book handover stop runs in FX almost daily. Banks have access to FX flows, Pit had BBO + can see GS buying. Prop had direct access + Bullets vs Walt + Irma with browser based, SAC, Steinhardt etc had/have first call, Big funds get access to IPOâs and thus effortless outperformance, CEO of Broker allegedly tells big clients deal pipeline etc In my local market I know exactly what my edge is and it is not all market understanding. A lot of it is processing the same info that everybody gets and the equivelent of reading the financial statement footnotes rather than just the Chairman's statement. Pros generally have intimate knowledge of one market or one asset class. I can see something on the tape and immediately know something is going on, a casual visitor would not. I go into markets I don't know when the public is in them and leave before it goes back to being the same guys who sit there everyday (at least that is the theory!).
your post reminded me of another thread, where someone else listed several edges. Starting to come back to me...maybe that's a sign of hope.
Acrary is indeed correct. There's more that meets the eye than the OHLC data. Possibilities are all around us, yet if we are not trained or our minds are not open to them, we do not see them. This is true in life as well as trading. I think Mark Douglas wrote a little about that, using the example of a new trader or a child. That's why it is important not to have a bias and keep an open mind. A (possibly poor) example illustrating this point is if you think back in the day before fancy computers and algo trading.. when TA was relatively new and mystic... John Bollinger, and whoever created MACD, Elliot, and GANN lines and all the fancy indicators that we take for granted were the first to see that. Fischer Black and Myron Scholes, Samuelson and Merton are other examples of people who saw more to it than just OHLC. Unfortunately these methods have become common and just as available to everyone as OHLC data, which makes their use somewhat less effective. That does not detract from the underlying principle that Acrary's stated, though. BertH, at first I didn't quite understand either what Acrary was talking about.. I'd always thought price and volume were the main things to look at because it seems everything is based off of those.. but I've slowly come to see that that's not necessarily the case, and have changed my observations. Currently I'm doing some work that borders this line of thought... As far as Risk Management/Money Management is concerned, as mentioned in the 'Edge' thread, Risk and Money management serve as magnifying glasses to amplify the results of your strategy or stop you from bleeding from deep cuts if your strategy has no built in edge or positive expectancy. They do not serve as a real 'Edge,' as they are a necessary part of a successful system. Yet no amount of risk management will stop you from dying the death of a thousand cuts if you don't have a profitable strategy. You'll just lose your money slower... To end on a positive note, and to maybe give you an idea of where to start off... stop worrying about profits or losses.. hell stop trading for the moment. Just sit back and observe. When you don't have the pressure or excitement of the market pulling at you, you tend to notice more things...