What good is a brain?

Discussion in 'Trading' started by lindq, Mar 30, 2004.

  1. lindq


    I've been fortunate this year to be swing trading a system that's done well. And like all of us, I like to think of myself as a pretty bright guy.

    But recently I compared average gains per-trade for the past 12 months for those that I actually entered based on my system alerts, to all trades that were generated by the system. Naturally I had been working under the assumption that my efforts to use my considerable brain power to select only the "best" trades would improve my results.

    I was wrong. The system alone outperformed my brain by a fairly wide margin on average gains per-trade.

    What about you? Is your brain helping? Or do you find it getting in the way of your trading?
  2. Banjo


    Machine traded systems have no emotional state, brains have varying emotional states, linnearly unpredictabe. A brain trading a stratadgy (system) will never do as well as the non emotinal machine because the variable of the emotional state can never be systemitised.
  3. It is getting in the way of everything not just trading.
    You must go beyond your brain...

  4. IMO, if I understand the poll, is that should use your brainpower to research ideas and develop your trading plan.

    Then relax, listen to your favorite music, and let your plan make money and do not try to outthink it. Simply put, take the trades and honor the stops and exits.

  5. OK, I'll bite, mainly because the market is a little slow right now and I have already seen the Paris Hilton video so many times it puts me to sleep...

    Yes, my brain is definitely the reason for placing and closing winning trades.

    At any one time I probably have more than 50 trade structure dynamics tumbling around inside my head including keeping my emotions in check.

    There's no system that can replace using common sense and determining/deciphering, weighing and balancing the onslaught of TA and FA and news and other data input we get bombarded with in trading.

    I constantly adapt and adjust risk tolerance, probabilities, trade management, money management - ongoing.

    It is ALL part of successful trading.

    Good thread!

  6. Attempting to beat your own systems and then underpforming
    them is way too common.

    I'll make 2 points:

    1) You spent numerous hours creating a system, and then when
    it comes time to trade it live, WHY IN THE WORLD would you
    experiment with essentially a new, untested, version of the system
    by changing the rules on the fly, or choosing a subset of signals??
    Bad bad bad idea.

    2) I always think of the markets as perfectly designed to make
    an emotional human do the WRONG thing. Remember this the next
    time your about to "trade on the fly".
    Systems cannot be affected by the markets in this way.
    The market is always trying to SUCKER you out of following
    your profitable rules.

    Learned my lesson the hard way.



  7. I'll add that your system can only indicate your buy/sell signals. It's up to you to make the trades.

  8. what was "the hard way" you learned your lesson?


    I quote a former business associate....

    "There are three kinds of people in the world: those who make things happen, those who watch things happen and those who ask, "What Happened?"
  10. Yes the market screws with human emotions, but the answer is not machine trading because there is a corollary to your above statement.

    The market is also designed to frustrate the greatest number of dynamic hedgers. That's a dense statement but what it means is that there are people obligated to do certain things in response to market conditions, either as a pattern trader, a trader using math models or a hedger- these are the dynamic hedgers.

    The market screws with those people as well quite apart from the emotional aspect. Your machine trading will get front run just the same as any emotional human trader because both are BOUND to make a particular decision in certain conditions.

    As the Turf Betting book says, when the general public catches onto a pattern of race outcomes, the racing form will move away from the public.
    #10     Mar 30, 2004