Why do 5% of Traders Win?

Okay here is the explanation: some one said trading is technically simple, but emotionally hard. If it's technically simple, that means one should be able to automate it. If you automate it, then you have taken the emotion out of the decision making. Therefore, a lot (remember I didn't say "ALL") of programmers should be able to implement the "technically simple" rules (not my words). But obviously, this NOT THE CASE -- which is my point. I am saying it's NOT THE CASE that automated traders are all profitable. Again, which is my point. So therefore, it can't be the case that (1) the rules are technically simple, and (2) it is all about emotions.

 

see above.

 

I wasn't really pointing my statement at you. Seems to me many people here do believe automation would make many people profitable, which I believe to be untrue. Looking at the filled in charts and can see patterns clearly. In my opinion, it is totally different when trying to do it in real time. We all know past results don't mean it will happen in the future. Some people can't handle that uncertainty. Screen time, dedication, and being level headed are very big in being profitable.

 

I don't know where anyone gets that idea, but if one thinks that way, it is certainly laughable.

I do know that if one thinks they have the ability to determine if a method even has a chance - faster or better than a computer program, they are certainly fooling themselves.

Discretionary trading and trading a system are so different from each other and that is mainly due to the emotions involved at execution. While nothing can remove emotions, automation is an attempt to do so when it is most important to do so...at the time of execution.

 

tr, good to see you posting. hope all is well.

 

To start – I cannot program

When CF says trading is technically simple, but emotionally hard – it is



I have hired numerous programmers in an attempt to automate how I trade – and believe me, how I trade is damn simple


To a programmer – they cannot code the intangibles….

They have enough problem with coding a trend…. (which btw I cannot give you rules for a trend… but I damn well know one when I see it)…. let alone momentum.. volatility…, weakness…, or strength

These are constantly in flux and change to one degree or another….. daily, hourly.. more often


A trader can flow with the mkt…, can read the psychology of a chart…. can adapt and change… code cannot unless it is rewritten/ modified

A level headed trader, who can execute – will beat a bot – this I know

RN

 

Okay, fair enough, I agree with you. It is technically simple for humans, hard to program. That's been my experience too, and that's why still only a small percentage of automated systems work.

 

SSRRKK

You ever get it figured out.. I’d hire you in a heart beat to code it for me… only problem is - you’d have all the money by then

RN

 

Hey RN, thanks for the subjunctive offer, but then again, my whole point of trading is to avoid the need for being hired for anything... good luck to you

 

I don't know the answer to this, but I am a skeptic.

I don't think 'thinking' is necessary and my math tells me it isn't. When one thinks, he is implying a belief and that's not helpful...

We inserted an algorithm into the platform that I thought was so simple, it could not possibly work...(THERE WE GO, THINKING AGAIN). Basically, it would determine if a move in either direction was large enough based on the volatility of the stock, the stock would close above / below that level 50+% of the time.

Now, how you trade it is a different story. Do you trade the breakout / pullback / or a reversal. And more importantly, where's the EXIT?

It was so simple, that I did not even begin testing it until last Fall. I was stunned that it actually outperformed some of the more complex algorithms.

And, for what it's worth, we only put a chart in the platform to make certain the trades were being executed at the correct time and place.