The Compleat Gentleman Trader

Discussion in 'Psychology' started by Arthur Deco, May 15, 2008.

  1. Time was, from the Enlightenment to Ante-Bellum days, a gentleman could dabble in an expensive hobby without fear of being found odd (one would have said "queer" then, but this is now). Dilettantes, they were called. Or Renaissance men. They wrote poetry. Designed gardens. Created elaborate fishing lures. Made dandelion wine. Played expensive violins badly. But never were they expected to do anything so crass as make money at it. That, indeed, would surely have spoilt the fun.

    Nowadays there are many more pastimes suitable for a dotty elderly shut-in. I myself trade casually. And opine on the relationship of trading to Eastern philosophies, or how trading is like the many women I have slept with. Or make obscure literary references to the follies of traders. I am not alone on ET in this. But we are a passing phenomenon. With the new three year lifetime of posts, we surely will leave no legacy for future generations.

    Despite this, I shall here from time to time share petits morceaux of trading wisdom meant not to make you money, but to enhance your enjoyment of trading.
  2. Hypo, you don't have to mention my nickname to prove your point! :D
  3. I told you I was not a singleton.

    So here is a tip for the gentleman trader of leisure not actively trying to make money, or perhaps even avoiding it for the sheer sport. Like letting the wild hog get close before you cut loose.

    When you aren't trying to make money, you can try different things. For example, you can try to see how intuitive you are by trading pure instinct. I highly recommend this exercise because it demonstrates very forcefully how attuned the market is to herd ibehavior. It fades it. Viciously. Mercilessly. And quite amusingly.

    It is a humbling experience that if approached right can form the basis of a sound sense of the rhythm of the market. Of course, you want to use a reasonable stop in this exercise so it doesn't cost you TOO much. That is the subject of my next missive.

    Then again, you may be that rare native genius who just naturally jiu-jitsu's the market.
  4. Your writings are highly amusing. This particular personality of yours has significantly better style than the others. Looking forward to more. Meilleurs voeux
  5. We took a vote and are split 7-9 on whether we are pleased by your praise or not.

    Now to stops. Like all my gentleman trader exercises, this one has an unexpected benefit. Or two. Let us say that we are letting instinct be our guide in "discretionary" trading. Following Mamis, this means that we are trading when our confidence is high that we have a winner. Joe Doaks quantified this in his No-Brainer system. Students of Mamis will recall that paradoxically the risk is highest when the certainty is the greatest.

    So our instinctual entry is almost always wrong, and we must endure the humiliation of cutting our losses, or rapidly deplete our gentleman trader's account. What should our stop loss be? I can only answer for NQ, because like a proper dilettante should, I trade outside the mainstream. I leave ES and the like to those who proclaim themselves to be my betters. For NQ the answer clearly is three ticks. (I know this because when an ordinarily GOOD entry based on probability goes bad, it almost always gets worse after three ticks.)

    So the game is to take a day, or two, and practice practice practice taking that stop without hesitation until it is automatic, ingrained. For this training, be PROUD to lose. Of course the odd No-Brainer DOES occasionally lead into a mo-mo trade once or twice a day, so have the presence of mind to let it run. It could pay for the exercise.

    The unexpected benefits? More on that later. A hint: regret and personal insights.
  6. Sounds too much like "Venus in Furs"
  7. stoplosses are for the plebs.

    rather distinguish yourself from the masses, take the other side.
  8. OK, so you are never wrong. How do you always take the other side of the masses?