lol, Guy2. This is ET. Do not expect an informative response...I surely hope you do not do your research and consider the contributors in ET to be of any importance with anything valid to contribute.... Michael B.
"5 months Man those were the days.....I took $12,000 (I know its not 5000) in just under 5 months. Took TRAC from 3 to over 30, BIDS (this pos still around lol) from the Toronto exchange to Nasdaq from 3 to 32, KTEL from 7 to 70, 265 points from QCOM, 125 pts from YHOO." yeah, the problem was that "back in the day", it was like shooting ducks in the barrel getting in. With almost no formal understanding of the history of the markets, I converted $50k into about $1.1 million from Nov. 1998 to March 2000, using a largely buy and hold strategy and getting out "whenever the reason that I bought the stock no longer applied". I was in the Internet space at the time in my job and just did a Peter Lynch style approach to aquiring web hosting (remember EXDS, that was a 5 banger for me, and I did not even catch the whole ride on that one) and router companies. I actually had no real idea at the time what an amazing accomplishment that was. Of course, the downside was that I actually started to believe that I knew something about the market. After taking some profits in 2000, I re-invested the money and "caught the falling knife" 4 times over the next 2 years. (I was convinced that after the 3rd attempt, that the falling knife could not fall a 4th time, LOL). Net-net (no pun intended), I got out at $75K. When I tell people this story, they love to point out that this was actually a 50 percent profit over 4 years -- they say this of course, just to torture me. Near the end of that losing streak, I adopted a mechanical TA volume breakout system thru the help of a friend, complete with money management, stops, exits, etc and have averaged about 20 percent a year since then using other money that I had from before -- even though I did this crazy high tech investing, I always understood the value of diversification. So even though I had great returns initially "back in the day", I don't miss it at all. That whole roller coaster ride in the end, turned out to be just a bad dream for me, although it did provide one hell of a lesson in trading/investing psychology.
- I thought I'd broken some sort of rule here I take the Fooled by Randomness approach to all comments that I receive from any source. I've written a very sophisticated (IMO) back testing system and I love running all these myths through it and finding out what really works and what doesn't. I do find some interesting comments from the odd person though and am always willing to listen to any opinion. In fact I've been toying with the idea of creating a poker simulator that would run a monte carlo style test on different hands of poker to see what hands would win out in the end. The simulator would include naive and rouge players at random that would not bet/play to their hand's potential in order to make it as realistic as possible. Regards,
When i read this thread i have the feeling that many traders start from the wrong principle. They look for indicators to make immediately and fast money. They rely to much on math. They think you can solve everything with math. Math can help you, but first of all you need to start from a sound and correct basis. The first thing I did was observing the behavior of the ticks. I started reading books, not on trading , but on psychology. I read about the irrational behavior and thinking of humans. I learned about the emotions that prevent humans from trading pure rational. I learned which part of the brain was responsible for doing what. I concluded that the basis of a good trading system had to take all these things in consideration. Human behavior drives the markets. And they do that in an inefficient, irrational and emotional way. Once I knew that, I started thinking how to measure all these things and put it in a visual recognizable form. The first aim was to prevent losses as much as possible, because if you donât lose you can keep trying to catch a big move without being wiped out. I looked for a system that gave me this âeternally trade for freeâ possibility. Once losses were under control the next step was to maximize the profits. I never had a specific return in mind that I wanted to achieve. I was already lucky not to lose money. I knew I had to learn to walk before trying to run. Year after year I adjusted my system, not to optimize it to the actual circumstances, but to make it work in every market at any given moment. At least ten times I was sure the system was complete, and as many times I experienced that the job was not over, or will ever be over. Each trading day, after the close, I started analyzing the previous day: what happened, what said the system, what did I do, why didn'tât I do what the system saidâ¦â¦I evaluated and learned some lessons. The frequency of adapting the system went down dramatically. There were two reasons for that: First the system became better and better, so improving it became more and more difficult, and secondly I had less and less new ideas to explore, I had tried hundreds of ideas and ran out of inspiration. To me trading is a profession, you have to be engaged in it in an addicted way because otherwise you will never find the energy to stand up each time you fall. And believe me, I fell hundreds of times, but I stood up again, even the day when I lost 50 000 $ within 24 hours. But each time I asked myself: am I chasing a dream or is what I try to do possible? I always tried to give myself an honest and objective answer, because trying to achieve something that is impossible to achieve is useless. At this moment I still have to work on the most difficult part of all: myself. The system performs well, but the human that has to manage the system has not yet the discipline to do what has to be done each time. Almost every day I violate the rules of my system, sometimes very hard, sometimes very subtile. Each time I donât follow the system for 100% I feel guilty. But I know what the cause is of this behavior: thatâs why I started building my system by reading on psychology. The basis where I started from is the only real problem that still has to be solved: human behavior. My conclusion: trading is a very tough business, asking a lot of inspiration, transpiration and commitment. Only a few will be really successful, but the reward can go beyond your wildest imagination. To be able to win, one has to participate.