Is this seriously what trend traders do?

Discussion in 'Trading' started by IronFist, Sep 22, 2017.

  1. They buy a position, it goes against them, stop out for a tiny loss.

    They buy another position, it goes against them, stop out for a tiny loss.

    They buy another position, it goes against them, stop out for a tiny loss.

    They buy another position, it goes in their favor for a bit, returns to breakeven, stop out for scratch.

    They buy another position, it goes beneficially, stop out for a win.

    Why not just enter randomly?
    murray t turtle likes this.
  2. JackRab


    I've actually done a few random trades a while back... just flipped a coin and head I buy and tails I sell... then kinda work it... wouldn't recommend it, but I did make some money.

    Definitely don't do it without any volatility though... you're just a sitting duck then...
  3. just21


    Why take losses? Why not be aware of the spread into other products or different months of the same product. Maybe you can turn a loss into a scratch.
  4. CALLumbus


    Maybe you can turn the loss into a much bigger loss ? You suggest exchanging a random variable for another random variable.
    i960, Statistical Trader and VPhantom like this.
  5. just21


    Uncertainty is what this business is about. Maybe the crowd are taking losses before mean reversion can take place.
  6. You gotta look at a trade from a much more Critical and analytical perspective...
    Understand its potential trigger points,

    Most people look at trading, and approach it, being blind folded and dropped in the center of a random war, o_O
    And they oddly seem to be Ok with that defective approach; just leaving things to random chance and luck and God.

    You need a certain degree of reasonable expectations, wait for them to unfold and happen -- But also have a loose, malleable mind,...just in case things start to act erratic and maybe irrational,

    What do you trade?
    All of my examples comes from daily trading/following of the SPY/DOW charts.
    Each instrument and timeframe...each have their own unique battlefield variables in play that you need to be potentially aware of,

    Alot of trading lessons and wisdoms are not derived from actual trading books and traders and mentors and etc.
    But from independent sources and various misc things in life,
    Last edited: Sep 22, 2017
  7. Simples


    Of course this is all there is to it. When you've got a smelly horrible turd, you just slice it just right, and then it all goes down well!
  8. 777


    Because trend traders think the type of trend they are entering is meaningfully more likely to move in their desired direction than random entries. Ttey think their method gives them worthehile positive expectation.

    Simply entering long and short randomly on short term trades should give you negative expectancy after trading costs and slippage.

    Side note:

    Randomly going long US stocks and holding for very long periods probably produces positive expectancy as costs and slippage are overcome by a larger upward market bias. Umm... unless there is a terrible disaster like nuclear war destroying too much, etc.

    Certainly buying and holding 400 stocks for 10 years that are selected by dart throwing monkeys figures to outperform most hedgefunds because of the fees the funds charge.

    (One exception is the Medalion fund by Renaissance Technologies)
    Last edited: Sep 22, 2017
    Statistical Trader likes this.
  9. Actually if you enter randomly, but then go out using an appropriate stop loss rule (appropriate to the level of trading costs), you actually end up ahead in any market that exhibits trends (eg I tested this on futures markets, and it worked in around 92% of them). You don't do as well as if you enter using a rule that identifies the trend, but you do okay.

  10. Grantx


    I disagree. Just because a trader is ok with random does not mean that their entire approach is based on luck, God, and chance. Less analysis, more involvement I say. Of course trading involves luck but how do you define luck? A golfer can take 10,000 swings before eventually hitting a hole in one – was he lucky? Sure he was! Nothing skilful about it, he just kept going until he got it.

    Chance? You will not make money unless you take the chances that the market presents to you. Market analysts always have 100% perfect hindsight vision but ask them what’s coming and you will likely get:

    ‘well it looks like X is going to happen but if some outlying factor influences things then Y is going to happen’ .

    Seriously?? An entire article of nonsensical jargon and the analyst tells me it can go either way? I can do better than the best analyst out there because I will cut to the chase and bypass the eyewatering mind numbing analysis and just tell you in eight words:

    It can go either way. Take your chances.

    (I bet at least one person will count to make sure that there were indeed eight words....I made sure before posting :D)
    Last edited: Sep 22, 2017
    #10     Sep 22, 2017