10% inspiration and 90% transpiration is often quoted. For me personally it was more like 1% inspiration and 99% transpiration, if I watch the time spent on it.
Thanks Bob, good conversation. Yes, I agree with that fully. And that's why I move to programming my trading ideas (or assumed edge) and clicking back test so I don't waste time trading something that does not have odds of making money. No more just blindly trading a strategy I think will work. I have a question for you regarding this statement cause I come across that statement often. The comment is very very very confusing to me and I really don't understand it. If nothing works forever, then why do people spend money on historical data (e.g., +10 years worth of /ES data) back testing automated strategies? For example , below is a strategy I am working with in NinjaTrader, notice I am back testing from 2006-2012 (in sample data). Ignore the stats, just an example here. So are you saying if someone back a strategy over 500-1000 trades and then go live the system may fall apart. Sorry, that statement "as nothing works forever." is the most annoying statement ever and really throws traders off. Please explain this.
lawrence-lugar, It is just common sense to me. I don't have problem losing money, but there is no way possible, i am ever trading my real money if I am losing money in demo or a forward/back test of trading idea/system shows bad results. I agree with you as well. I think that word edge is getting overrated. I personally learn more and get lots skill/experience when I sit down and stare at the chart daily from 8:30 to 3pm and take trades (with real emotion).
The trading environment is dynamic. And you have to kind of understand and realize that. Even if you have some kind of automated, systematic 'edge' formula that you trade off of that eliminates the human emotion aspect of trading. Edges and to a lesser extent, skill, are both fleeting. -- Everything works...until you get blindsided and punched in the face, No one and nothing is completely bullet proof and invincible in the market. We're all exposed to the constantly lingering inherent dangers around. Debating Trading is like debating politics. Some people with nothing, but their dimwitted knowledge and failures will debate you till the end of time because of their stubborness and close-mindedness. and maybe ego too. and when they lose and realize it, they take out their frustrations on their wife or pet or wall. or a bottle.
I think that what you do is not the best solution. Programming and watching the results can be wasting time too. After you got the results you should analyze manually were it went good or where it went wrong. If you always test programs you will never see nor understanding the underlying powers that work. It would be like optimizing your parameters for past data and hope that it will work for future data. So you will be trading blindly without even realizing it. I speak from personal experience. The thousands of hours of analyzing manually the market and the tradeplan help me massively to improve it and to understand what is essential when trading. The "WHY?" question can only be answered by analyzing manually what the tradeplan does, what it should do, and why it is not working. To avoid that "things will not work for ever" you should build a dynamical system. Almost all people build statical systems. Statical means build for the market in past based on that data.
Thanks, but what do you mean "The trading environment is dynamic. And you have to kind of understand and realize that" For example, I trade the ES and CL. Over the past few weeks, I see that the stop loss of 3 points I use to trade with have cause lots of losses. The trade still goes in the expected direction, but the bar ranges are very big now. Lol, I simply just stop trading the ES this past week. However, if I use a 8 point stop loss, I may be profitable. Is this what you mean by dynamic trading environment. Thanks
jinxu, I am nowhere near stressed. What is there it be stressed about. This is just general conversation about trading. I exercise and play video game and go hunting for fun.
I'm just accustom to the term "edge". The reality is one could trade randomly. Use a wheel to pick the stock, another to pick buy or sell then cover at the close. I think you need to find something that places the odds in your favor. If you don't have that, you will likely lose money after trading costs. I have seen my share of those with Skill/Experience/Wisdom that have not been able to use all that today. They are stuck in what worked 20 years ago, not what works today.
My personal experience is that many traders are stressed/frustrated because they have some preconceived notion of market behavior that does not reflect real market fundamentals. This is the root reason for their frustration because they build market system based on bad ideas. A simple analogy is in the 1400s people assumed the earth was the center of the universe and build many mathematical systems that tries to explain astronomy based on the (wrong) assumption that the earth was the center of the universe. These systems while work in one area would not work in another area and as a result they became more complex over time. Food for thoughts.