Regarding the "I'm a Loser" threads

Discussion in 'Trading' started by fl_trader001, Feb 1, 2003.

  1. yes

    and I deleted my correction post.

    One more Q long as on subject: how do you insert prior comment in bold letters. Is there a forumula or is it copy and paste? thnx
    #21     Feb 1, 2003
  2. Now for novices, I just tell them that they must know that it can cost much much money to learn and take many years. So if you can't afford that don't dream.
    #22     Feb 1, 2003
  3. Click "Quote" at the bottom right of the message you want to quote. There isn't any time limit for doing this. You can also edit the quoted section, leaving just the relevant parts of the message you want to quote. Which saves space in the thread and also makes it clearer which remarks you are replying to.
    #23     Feb 1, 2003
  4. While I agree with much of what has been said in the original post. I don't *completely* agree with a couple of things.

    "You can be your own boss, hang out all day making a fortune at a ridiculously easy job."

    Having been my own boss for a number of years before I started trading, I knew when I started trading, that becoming profitable was not going to be easy. However, I must admit that I didn't know how hard it would be for me. I think that the *how hard it really can be*, hits many traders early on, after a period of "everything I touch turns to crap". This is where I had to back off of the *fly by the seat of my pants trading* and start writing some rules.

    "The reality of the situation is this - real edges are extremely rare, and any that exist are guaranteed to be made extinct at some point (this is the nature of the markets)."

    I disagree that real edges are extremely rare. In fact, I believe that real edges are commonplace. I also disagree *somewhat* with, "any that exist are guaranteed to be made extinct at some point (this is the nature of the markets)" At *some point*, well that might very well be true. However, I can look at chart patterns from many moons ago and see the same types of moves playing out then, that play out now looking at charts from just yesterday. So even though the edge could be lost at *some point*, an edge can be used profitably for years. So, what if it does become extinct at some point. I see nothing wrong with using it until it does.

    My definition of a *real edge* may differ greatly from fl trader001.(and everyone else's for that matter:))
    A simple real edge can be derived by using moving averages (simply a moving trend line) and candlesticks or macd or support and resistance (insert your favorite indicator here). An edge to me is being able to predict (for simplicity's sake, a probality of greater than 50% - preferably a good bit greater than 50%) that if X happens then Y is most likely to occur. As long as the probability of Y occuring after X sets up, happens more often than not, then I see that setup as an edge.

    You can tell a compulsive gambler pretty easily. They are always "on the verge of success".

    While this is true (I do agree with some of the original post), there is often a learning period that can be quite long for a trader to become profitable *consistently* as in look at your income tax return for the year - did your trading pay off?

    Well, the statement of " I am on the verge of success" can be a normal and true statement of the *soon to be* consistently profitable trader as well as a compulsive gambler statement. (*soon* can be within the next, week, month, or year, imo.)

    It can take some time for a trader to learn the markets. Example: I can walk up to a piece of heavy equipment (let's say a track-hoe) and look at it for a while, having never run this equipment before, I can inspect it and trace the hydraulic lines from the levers to the various parts of the machine and through deductive reasoning, I will eventually be able to tell you that if I pull X lever then Y will happen and it *always will*, provided the machine isn't broken. It is never random.

    With the markets I can observe patterned behavior of the participants (which is the market) by looking at charts of past behavior and I can come to the conclusion through deductive reasoning that *if I pull X lever on this machine that Y will happen.* Well, the difference is that I have to make a decision based on operating a machine that is random, *part of the time*. (unlike the track-hoe that is not random)

    The random *part of the time* feature that the market has is the feature that defines the risk. How I handle my trade according to this risk is what makes the difference between me being a gambler or a trader. This reality usually sets in right about the time that the trader sits back and takes a hard look at the "everything I touch turns to crap" stage. (I can't and don't intend to speak for all traders here, but I would imagine that most have had some sort of experience akin to this at some point)

    I dare say that most traders have experienced compulsive gambler behavior at times. The first thought that comes to my mind is me having a losing day early on and then my mind becoming obsessed with *making my $ back* right then, right there. This mindset, has more often than not (an led me to greater losses for that day. Now, I have a daily stop loss figure in place, but I would not have this daily stop loss figure had I not experienced first, the big drawdown days first hand for myself - then felt the pain and recognized the need for a solution. (the discipline to honor the solution is one thing that separates the compulsive gambler from the trader)

    The random *part of the time* feature of the markets is where the compulsive gambling comes from. (rat pushes button pellet drops out):D

    My behavior - my reactions - to the trades that don't work (and the ones that are working) is what separates my trading as a professional, from my trading as a compulsive gambler (either I practice discipline or I don't). I have had to learn most all of this the hard way = losses and pain from losses.

    So when traders say things like, *I have stopped my big losses and I take small losses now, but I'm having trouble letting my winners run (I"m Guilty!!!). and things like * I take my profits too soon, because....I'm afraid of losing money* (Guilty again!!!)

    Well, MERCY, why on earth would you be afraid of losing money, after all it's not like you have allready lost gobs of cash learning the hard way how not to lose your money !!! :) (a bit of sarcasm):D

    So, of course this can be a giant psychological hurdle to overcome. In my opinion, when a trader has reached this stage. Having the discipline to keep losses short, but still having the *fear of losing $ and compulsively take profits too soon*. Then the feeling of "on the verge of success" is quite prevalent! Why is this feeling so prevelant now? It's because you are on the verge of success. In this case it does not mean that the developing trader is gambling. In many cases, getting over the fear of losing money and taking profits too soon is the biggest thing that is standing in the way, of your trading paying off.

    Originally posted by Rogue Trader
    To have an entry point is to have discovered an edge. To define the exit point is to own the edge.

    To me each stage of learning to become profitable takes time. It takes deductive reasoning that I can only develop over time, from experience! It takes learning to exercise discipline from having the pain of not exercising discipline hit hard.

    For me it takes knowing what I am going to do, when the market doesn't do what I thought it was going to do. (preserve capital)
    I trade a small account and I consider myself a student of trading. Not letting my profits run is my, biggest problem. Am I a gambler, no. Do I believe that I should remain aware of that possibilty, yes.

    What part of my trading do I need to work on improving the most? Defining my Exits !!! Does this also take time, experience and discipline, YES !!!

    #24     Feb 1, 2003
  5. like this... voila!

    thnx again phantom... !!
    #25     Feb 1, 2003
  6. The question is how long will it take a trader to find that edge. Once you reach the point of finding your edge, you're out of the soup kettle and can start "relaxing" with the confidence that you will succeed.

    It all depends on understanding the market and how the market behaves so you can predict the odds of X --> Y.

    This is the core of the "I'm a Loser" problem.
    #26     Feb 1, 2003
  7. I've been asking how to do that for months. You're the first one who could explain it to me so I could understand. Do you know how to post charts?
    #27     Feb 1, 2003
  8. acrary defined in concrete terms on this site, what an edge is.

    You take your so called edge, let's say you buy support and sell resistance, and you compare it to random. So, if you trade on average 3 times a day, and your trades last on average 23 minutes per trade, you then go tell the computer to just randomly make 3, 23 minute trades per day and compare results. See?

    So, if you can just find that random comparison to your edge, you can test it. And you can test it many ways. Now I have never actually done this, but his method is the first sensible thing I have ever read which takes the so called edge out of the realm of cool trader lingo into a definite logical testable idea.

    Off topic? who cares, the topic of edge supercedes the topic of gambling.
    #28     Feb 1, 2003
  9. Well, Phanton Trader,

    First of all, the part of my post that you have edited has somewhat been taken out of context. This part to be exact:
    I will eventually be able to tell you that if I pull X lever then Y will happen and it *always will*. It is never random. doesn't really belong where you have put it. This part was describing learning the movements of a non-random machine, and not the sometimes random movements of the markets.

    How long will it take for a trader to find their edge varies from one trader to another. Writing a workable clearly defined method took me several months. To me that's the easy part. Trading my method with discipline and keeping my thoughts out of the way, is the hard part.
    #29     Feb 1, 2003
  10. There is a section at the bottom when you are writing a post which says attach file. If you save your chart as a picture, then press browse at the bottom of the screen for writing posts (it's directly above submit reply), it will bring up a box where you can go to the place where you stored your chart/picture. Double click on the one you want and the file will appear in the bit where the writing goes next to the browse button.

    Then when you send in your post, the files will be uploaded at the same time and attached as a link on your post.

    #30     Feb 1, 2003