"keep it simple" - yeah, RIGHT

Discussion in 'Trading' started by Gordon Gekko, Sep 24, 2002.

  1. how many times have we heard something like:

    keep it simple

    it can be as simple or as complicated as you make it

    just look at this post by j_commisso:
    what THE HELL is anyone supposed to do with that?!?! i'll take that stuff and file it away in the endless, "sounds nice, but have fun using it" category. for more of this, just visit this thread for page after page of quotes that will get you nowhere in trading:

    so now that i've made my point, now i'm going to prove it. take someone like me, who has been at this racket for 3 years and still doesn't know what the hell to do. when i say i don't know what to do, i mean i don't know which combination of everything i know to use. I'VE READ EVERYTHING ABOUT TRADING. the answers are within me, yes, but until i find a combination of everything that works, I'M LOST.

    so here i am, trying to make money trading. as with everyone else out there who's struggling, look at all the things we must consider:

    timeframe: do we want to trade 1 min, 2 min, 3 min, 5 min, 15 min, 30 min, 60 min, daily, weekly, monthly, or some other interval chart? do we want to use more than one? if we use more than one, why not use 3? which should be the entry time frame, exit time frame? how often do we want to be at the computer watching a trade, making decisions, entering trades?

    time: do we want to use tick charts, bar charts, point & figure, something else. do we want to enter when we see a pattern, at fixed intervals, only at the close, etc.

    entry: do we look use trendlines, moving averages, fade common patterns, new highs, new lows, pivot points, range breakouts, double tops, double bottoms, random entries, go with the trend, fade the trend.... make a system for trending, make a system for chop. is the entry important....is the entry not important.. stochastic settings x, x, x.....volume.....no indicators.....2 indicators........make up your own indicator....i think we all understand the bottomless pit of finding an entry.....

    backtesting: does backtesting help? should you even do it? how far should you backtest? how much backtesting needs to be done? can you even backtest accurately?

    stop loss: mental stops, having your stops only count if violated on a closing basis, no stops, stops based on multiple conditions... should you trail your stop. should you combine these methods for different portions of your trade....i could go on and on.

    targets: some people like to use targets...some people don't.

    trailing stops: should we trail a stop? if so, at what point? from that start? after a certain gain? only trail a stop on a portion of your position..... how far should u trail the stop? based on what?

    win rate: should you go for a 70% scalping win rate....or a 23% win rate with big gains?

    scaling in/out: now here's a great subject. some say add to winners......some say scale out as the trade goes your way. some say start with a full position and reduce if it doesn't go your way. if you add, how much? if you scale out? how much and when? i could go on and on.

    risk per trade: how much risk per trade..some say 1% per trade....some say 2%.....some say it varies with your trading......some say use optimal f....some say a fraction of optimal f.....some say don't use optimal f at all.

    charts: some people say use charts, some people say you don't even need to use charts. some people say create your own type of chart.

    instrument: do you want to trade stocks...qqq, dia, spy......eminis....

    well, i've typed enough here. you get my point..i could go on and on. anyone who's been at this for years damn well knows what i'm talking about. there are so many elements to trading and each element can be tweaked....and each tweak can be tweaked.....and then how do you test everything for optimal results when there are INFINITE combinations of everything??

    there may be trading methods that are simple, BUT HAVE FUN FINDING ONE THAT WORKS.
  2. Gordon,

    What do you want to get out of trading?

  3. stu


  4. Gordon,

    Why do you assume that the words were written for you to get anything out of?

    They are nothing more then a linguistic expression of my own experience.

    In other words, I did not write those words for you or anybody else to "get" something from.

    Oh and another thing, the above were three of the simplest things under the sun for those that have directly experienced them. Perhaps maybe it could be your own interpretation that is complicating things and not the meaning of the actual statements themselves :) ??

    PEACE and good-trading Gordon,
  5. for the record, i am not someone who thinks they're going to make 80000% in 6 months. if i could make a decent return, let my money grow...and improve as a trader throughout my life, i'd be happy. right now, i am one confused individual. i know so much, i don't know where to start.

    i know there will be some who will say maybe i'm not cut out for this. but i am. i am perfect for this. i will figure it out eventually. i just can admit i don't make money. i don't know one other person on this board who admits it. instead, everyone gives advice..and they probably don't even make money either.
  6. MVP


    Slippage, commissions, system reliability...

    And mental inability, personality incompatiblity, financial disability...

    How do you keep it simple?

    That's simple.

    Ignore what doesn't work.
  7. Start with logic/common sense; you're after profits, how do you profit? Buying lower than you later sell or vice versa. Which indicators to use? Well, can you buy and sell and indicator reading? Not really. Most indicators are lagging and cannot beat consistently monitoring price levels and volume. Why not start from there and throw out all those toys that just tend to be short-cut gimmicks for people who need to sell this system or that how-to book? That removes alot of the clutter. Money management? Start with cutting off losers fast, at least faster than your usual profits. Time frame: are you as fast at the kb than your average teenager playing DOOM, or are you a late-comer to the computer age and are better off not even working with an intraday screen? How many decisions per day are you comfortable making?

    Generally, the idea of KISS works but if you start off by theorizing on paper on what should or shouldn't work you'll get no where. Start with how you're trading right now, and work step by step from there, keeping in mind that what makes you lose is the opposite of what makes you gain. It's a slow but steady progress, but with some logic you should be able to chip away at what seems conisistently unprofitable and augment what is profitable (make a list: "1. Never double down on losers." and so forth). Eventually, you'll see a pattern of deduction which will speed things up greatly, until then it won't be very simple at all, nor should we expect things to be.
  8. Gordon,

    I know this may sound like painfully stupid advice, but the thing that turned me around as a trader was simply looking at charts. Not charts with stupid indicators all over them, just bar charts.

    I'd look at support and resistance points. How they broke, how they retraced, how they followed through. How failed trends reversed. Where I would enter, where I would exit. No trading just observing.

    I didn't look for patterns they talk about in books, like wedges and triangles. I looked for patterns that my own mind recognised as being similar to other repeatable patterns.

    My eye found two. They have no name. I've never read about them in a book. As far as I know, no other man on earth uses them to trade, but I see them constantly in many time frames. I trade them they work most of the time.

    Forget everything you have learned and start to observe. Really observe with your own mind's eye, what's being revealed. Your mind will find it's patterns. It's own way of modeling the market. Not someone elses.

    It's time to empty your cup.

  9. gg,

    judging from some of your other posts, you place a very high value of logic and rationality. unfortunatly, trading is beyond rationality and logic. that is the point that commisso so eloquently makes. untill you can step beyond logic into your intuitive nature, trading will continue to elude you.


  10. Actually, the three sayings succinctly cover many of the most important issues in trading:

    <b>Trading is the art of getting out of your own way...</b> Reflects the difficult psychological and cognitive barriers to successful trading -- undoing a billion years of evolution to succeed in this most unusual of modern jungles.

    <b>Trading is a dance with the sacred geometry of chance...</b> Reflects the statistical nature of price action -- combining both deterministic and stochastic tendencies into one giant hairball.

    <b>Trading is an endless journey with no end in sight...</b> Reflects the evolving nature of the markets -- that no system seems to last forever.

    <b>What to "get out" of "What is trading?" #1: Alternative perspectives on trading</b> They may be cloaked in mystical language, but nearly every statement in that thread says a little something about trading. Indeed, I'd bet that most of the statements could be regrouped under J_Commisso's 3 statements -- reflecting the subjective, objective, and ever-changing aspects of trading. Its always good to be occasionally reminded of each of the myriad elements of successful trading.

    <b>What to "get out" of "What is trading?" #2: Learn how traders think:</b> Although I would be the last person to say that the postings on that thread are beliefs held by all traders, I would bet that many of the beliefs are held by many traders. In the short-term, the markets are driven by the beliefs for traders. Thus, anything that helps a trader get inside the head of other traders is a good thing.

    Happy trading,
    #10     Sep 24, 2002