oolarinm, My point too! Don must have misread what we wrote and responded to what he thought we wrote, so I will give Don the benefit of the doubt... nevertheless, Don's points were good ones, even though their precision as a reply to our points was somewhat lacking! ... hopefully Don will actually read people's posts in future, before "replying" to them Regards, Candle
I have to agree, although what Candle says is obviously true, it's quite frankly of little to no practical value. Why? If you're a beginner or not too far along, you've already heard and absorbed those comments from endless discussions, endless chat sites, and endless books -- but how to incorporate them in any meaningful way into a positive expectancy trading strategy is a whole 'nother matter. And if you're reasonably well along, consistent and successful, then you already know those "truths" like the air you breathe (even though you may use discretion and violate them when appropriate). So in either case they provide nothing of concrete value although we all nod our heads and say, "Yeah, right..." Candle, I appreciate that you made $300K in 2001 as you've let us know many times, that's a stellar year, but I can assure you that it was a bit more involved than merely trading with the trend (except, of course, for the countertrend setups...), cutting losers short, etc. Now that's getting down to where the nitty meets the gritty. Does it describe the particulars of a trading strategy? No. But it lays it out in no uncertain terms that without an edge all the discipline in the world won't save you, only make you bleed a little slower. It's obvious when you think about it, but when I started out I went for quite awhile thinking all I had to do was cut my losses short, let my profits run, etc. And I was getting killed because I had no edge.
OF COURSE WEATHERING THE LOSSES AT TRADING IS EASIER IF YOU HAVE: 1)OTHER REVENUE STREAMS. 2)LOTS OF $$$$ TO BEGIN WITH. I CAN'T BELIEVE 4 PAGES OF POSTS FOR SOMETHING AS OBVIOUS AS THIS. LOL LET'S MOVE ON TO SOMETHING THAT ISN'T SO SELF-EVIDENT. I'M GETTING BORED. PROTRADER1
Magna, Your points certainly have merit... however, to this day, I maintain that Trading Style is the least important part of this game, as long as it is "sensible" ... pick up any trading book for a plethora of trading styles.. for what its worth, I do momentum scalping, intraday sector trading (similar to Hitman), swing trading (Tony Oz set-ups mainly). Psychological development is key, I am convinced. Psychological development to a higher degree will allow a trader to better: 1) trade with trend (or other antitrend entry criteria) 2) cut losses 3) run profits Candle
Candle, I maintain that Trading Style is the least important part of this game, as long as it is "sensible" Not sure what "sensible" means here, because I can assure you that the large number of losing trading styles I adopted early on seemed clearly and unequivocally sensible to me. I would agree if you said "as long as the trading style has a clear edge, a positive expectancy." Psychological development is key, I am convinced. I agree with you 100%, with the caveat that your trading strategy(s) have a clear edge, a positive expectancy (I know, it's sounding like a broken record...) But once the latter is in place, then I agree that the former is of paramount importance. Regarding your Three Commandments I'm not convinced of two of them: 1) trade with trend (or other antitrend entry criteria) The generally accepted platitude is "trade with the trend" or "the trend is your friend"; however, since you've added the second portion regarding antitrend I can't really disagree. But imagine a newbie's quizzical look as he ponders, "hmmm, he says trade with the trend or trade with the antitrend, which one is it, and how do I go about doing that??? And did he mean the 1 minute trend, the 5 minute trend, the hourly trend, the 120 minute trend, the daily trend, the weekly trend, the monthly trend, etc." 2) cut losses Absolutely. Positively. No ifs, ands, or buts. 3) run profits Welllllllllll, I know quite a few scalpers that make very nice livings and they never let their profits run. In fact, they consider it sacrilegious to not take just about any profit the market is offering. One scalper friend has this reminder taped to his monitor: "It is never wrong to take a profit".
1) and 3) are in the context of a pre-determined time framework specific to the given trading style, be it a pure Level 2 scalping environment, 5min bars, daily bars, weekly bars or whatever. Any given trading style must always be traded in the context of its time framework. Otherwise, contextual misinterpretations (with resulting poor performance) will result. [ With regards to your point on trading the trend or trading the countertrend, this is a set-up / belief set issue (Van Tharp's work goes into considerable detail on Belief Dynamics... Mark Douglas does similar analysis from a slightly different perspective)... the belief will be validated / negated by the necessity (or otherwise) to implement 2) ]
sorry I came late to this thread, but I have to state that I disagree with the premise. I encourage responses. (Pun intended) It is my emotions that have allowed me to become profitable. (I learned how to work with them and how I responded to certain situations. I learned to distinguish between good responses and bad responses. I seek to react correctly in reaction to my emotions. I "feel" when a stock has moved too far too fast and look for a low risk entry. I feel when the spoos are going to break out of the range. I look at a chart and sense a reversal (the more visceral my reaction the better.) If zen held the answers there would be no questions. It is my belief that Zen is a collection of pithy statements and specious beliefs that get close to reality but are really a deception. There is nothing wrong with experiencing emotions while you are trading. After a while your emotions help you determine what others are feeling and you can exploit their fear and greed in the market. Without emotions there is little real tape reading. When I am focusing on a stock I feel what the specialist and his clerk are dealing with and I sense whether they are reacting to big volume or just setting up the tape. Without emotions you are paper trading. That is why paper trading is so useless. That is why Don likes his guys to do opening orders to get into trades. There is nothing like a little price action to get the emotions stirring to force you to concentrate. Ill take an emotions over zen anytime. Pro golfers admit to feeling pressure when putting. So you are not supposed to feel pressure in your job? It is the people who can putt while still feeling the emotions who make money. Only once in a while do you lock into the zone, and you soon wake up. Strive to trade properly when you feel emotions and let them work for you -- the more nervous you are the more you need to be aware of how to deal with the situation and the more you need to focus on the execution of your plan. When you do not feel emotions step up your size and force yourself to concentrate on you plan. Finally, I restate my belief that the greatest "zen" states are reached while surfing and that state would not help your trading because the concentration turns into euphoria.
quote (dotom) : It seems to me that most new to intermediate traders around here are looking for help with developing a profitable trading method, with everyone agreeing that discipline is of utmost importance. quote I really feel that I am in this category. Five years ago (or so) I started playing the guitar. Then I got an electric fender and I got so obsessed thast I practiced scales, chords and everything else like a maniac, 12hrs a day. After a year or so, I heard Joe Satriani, learned about John McLaughlin, AlDi Meola and the likes (George Benson, etc etc etc ) and have gotten so dissapointed that I stopped playing it at all. I thought, Geez, Ill never be as good as them... Then after another year or so I picked it up again and just put on some BB King record or E.Claptons unplugged and started jamming along with it... and this was it! I was "hypnotized"... I do it every day now, play with some songs from the radio, laid back bluesy kinda style... Q : HOW DOES ONE AVOID THE SAME THING IN TRADING WITHOUT THIS "FIRS YEAR OF MY GUITAR?" Without trading like a maniac, trying every style etc etc etc... I Understand all that you guys are saying , and BTW one of the best posts I read lately COMISSO - I UNDERSTAND what Mark Douglas is saying but, ... what do I apply it to? My trading is more or less break even, of course with some breaking of my rules so it sucks but how does one go this "step further"? Thank you guys and keep up the work. HNY All hope you had a blast... I know I did . Alex
you certainly have a point, but it is my feel that you and Commisso are talking about the same thing, I see no contradiction in your angles. The thing is, you have your emotions under control - they do not govern your actions in immediate sense. Rather you use them as reflection of what the crowd experiences and you act accordingly to this perception of yours. For instance, when you feel fear you don't panic, fear does not make you act out of your own fear. Instead, you utilize someone's fear. This is very solid and valid approach, and it's not contradiction to Zen, IMO. The point of Zen is not getting rid of emotions but rather skill to recognize them and to detach yourself from them so they wouldn't impact your decisions. I guess the very word "emotionless" is not quite right when it comes to trading. It's commonly used as conventional and convinient description but it would be more correct to talk about detachment from emotions while still recognizing them in order to utilize them. Best regards, Vadym