Anybody recognize this? ¡°Those who don¡¯t understand and respect history are doomed to repeat it and provide liquidity for those of us that do.¡± _________________ We are not trading companies, stocks, or fundamentals. We're trading people, those who are moved primarily by fear and greed. The opportunity as a short-term market participant exists at the moment one emotion stops and the other begins. I heard a rumor from a friend of a trader's sister that her cousin's uncle's best friend knew the brother of a guy that told his neighbor that the subject of this entire thread was possibly a bunch of crap.
I don't agree fully with "To Adapt and Evolve" paradigm because adapting to what can be pure noise is useless and even dangerous because the system can be even completely destabilised by being too much changed - that is to say its volatility will grow and in worst scenario the machine can explode or the person get into psychological problem - this is a learning - an ESSENTIAL one in his school of thought because other recent schools of quality management have somehow lost this perpestive - from Deming's quality management. So one must be able to distinguish between noise and information before adapting and evolve. As for myself lack of discipline in trading comes from this incapacity of recognising the origin of this problem and not really from "psychological" problem although of course someone who is lacking character will have major problem but even excluding lack of character it is not enough to be able to have discipline when you don't know the reason why you should evolve and adapt. Overtrading is a good illustration of this problematic and the solution : it is by trying to react (adapt) to every noise that the trader get whipsawed.
As for Deming I just posted a link here although it rather deals with the more global subject : pdca rather than variation concept which is another important part of his teaching. http://www.elitetrader.com/vb/showthread.php?s=&threadid=22938
Thanks for the post. I see what you're saying, sometimes it difficult to distinguish between noise and meaningful event(s). Most of the examples I referred to were major events that changed the market forever. Noise is par for the course of trading, and adapting to the noise can be just as dangerous as not adapting to the change that affects our environment. For example, the folks that didn't adapt to ECN and saw them as noise, were ultimately washed out the business. Its very important to make the distinction between noise and a meaningful and impactful event.
As an aside, to illustrate jai's point about evolving. some months ago, before i made the decision to go into daytrading, a friend of a friend who was a day trader had a conversation. This trader was successful and quite rich from the boom years. But now all he could say is 'Something's got to change, nothing is moving' He was not making money any more and couldn't pay for his manhatten suite. At the time i didn't know what to make of it and decided to venture forth into trading anyway. Now i see that his success was predicated on the times, the boom years and not compatible to what is the now. And the now is the only thing thats important. Not what worked once, but what works now. When the boom stage comes again, and it will come again, the ones standing now will change again, and on and on forever.