In PVT trading, as you have read many times, 1 out of 8 trades in position trading has to be exited as a FBO. In SCT trading early on I recommended doing wash trades for practice. As time passed and the learning was more formalized that has become unecessary since there is a anti-whiplash element in SCT trading when a too early trade ensues. So with either approach , the early one or the present one, there is no need for a trader to have losing trades. with the 24,000 trades trader666 did on his portfolio managed 1000 S&P 500 stocks from 2002 to 2005 it would have been dice to see his win lost ratio in numbers of trades. He lost appxoimatelt 50% of his capital each year going from 500,000 to 100,000 end capital. All stocks were boutght on rising price, rising volume and A going to D. He invenered a portfolio management techniquw for exiting which he averes is common in portfolio management. And he concludes from his work that scoring the P,V relationship doesn't work. To this date no one has duplicatd his work or your work on SPM. Both these failures of individuals doing what they did are not duplicated by users of PVT and SCT. There is a minor issue, as always, in proving successful systems do not work. The minor problem is that the systems are being used by successful people and successful people are passing the approaches forward. For stocks, we are in the fourth generation of doing this. Some mentally challended adults with trusts would be in their early 70's and late 60's. So how does one go about proving something wrong that is successful? SPM is not an example since it doesn't qualify by the hypothesis. What about portfolio backtesting? Can any portfolio backtest of a successful system prove the system is a failure? What is the only thing a porfolio test of a successful system prove? The answer is it must use the rules of the system and show how the rules work. Testing part of something is a good idea too, but you can only draw conclusions about that part. QED. For those who are curious about the labelling I used on the charts posted, I tag them from where I got them as a reference. For example, Trader666 was making a pont about a byzantine mess he named a chart. As you see it is now a byxzantine turd sort of thing and it isn't his. What a copiously annotatd chart that is 6 1/2 hours long is, is in the eye of the beholder. I used it to over write a zig zag line of trades that an advanced intermediate would take. The person could take he trades as a consequence of knowing what is going on in the markets. How different this is from finding an edge, predicting what the edge will do and betting on the market doing what is predicted. I don't find this to be like poler and gambling but it has characterisitics that depart from non probabilistic binary systems that are based oncertainty and sufficiency. If you are looking for an edge, why annotate? If you are going to predict why annotate? If you are going to bet on the prdiction, why annotate? There is never a reason the annotate while using the CW type trading. Many people espress the opinion that channels are drawn after the fact. They are betting that this is the case. do you think any of thse people ever feel they will lose the bet? No, they believe that they will never lose this bet. What do people who annotate feel about these people who are "certain" that all channels are drawn after the fact? They are not concerned with these people since they are not affected. Annotating a channel and projecting it into the future is the dream come true for a beginner who is learning. This is how scoring works for PVT and this is how SCT works. Cahnnels determine the length of a trade. ALL trader666 trades started on the BO of a prior channel (short) at point b where the short to long overlap stopped and the first volume suge began for the long channel. But his portfolio management caused all these treades to lose money. An average of X per share where the average was 16 to 20 cents.
Why do so many beginners get into daytrading, with sky-high expectations? There is no mystery. To imagine success, to picture riches, to see yourself as famous make up the hopes of the many. It falls to the few - or the very few - to execute and achieve results that make them successful or rich or famous. Sky high hopes of themselves harm no one else. Daytrading does offer gigantic rewards. This can come quickest from volatile and liquid futures markets. You will find that amateurs cannot spot this as obvious and sadly will almost invariably never harnness what such markets offer.
I am/was one of them. Account swings can be greater than 15% per day (especially with options, I would know paper trading them), and we assume we are smarter than everyone else. I'm not doing badly, but every step forward encounters unforeseen problems and requires a reality check and some serious adjustments. My expectations are still sky high, but I'm taking it slow and paper trading for a few months. I have been in the markets for about 8 months though.
Ok, I will admit that my options account is down 55% after 3 weeks of paper trading. I attribute about a total of 20% of that to stock news risk (I got crushed when wal mart announced bad sales for example, trading a breakout) and another 20% to messed up orders and bad order management (not managing day trades -- i only have 3 -- so not being able to close trades when i accidentally ordered puts and not calls, closing trades when my target reached but no day trades left, always trying to have all my money in the market -- stuff like that). Part of those losses would happen when I would try to have a neutral put/call on the market, and since I only traded about 35 stocks with the lowest options spreads (large caps, clearly), I lost money sometimes when I was right on the market (trying to get a large cap to go against the market is just plain dumb, unless it has a negative beta already -- doesn't help) I'm not at all disclaiming my 55% loss, because hey sh** happens and I need to be responsible, but I'm moving to indices and ETFs (which I have had the most success with anyway), and I think I can erase my mistakes, and cut down those other 15% losses and be even in a few more weeks. Also, my forex account is up big, real big, but I only started about a week ago so I haven't traded in choppy markets yet. There is room for the beginners to prosper, but they need a lot of natural skill. I think I bring it to the table. We shall see.
You couldn't be more wrong when you say you need "natural skill". Sure it helps to have certain attributes that could aid you in becoming a better trader but successful trading really boils down to experience, and no one comes into the markets with experience. You gain that through screen time and commitment to your task. Also, if beginners prosper, it almost always short lived. Markets are always changing and, the only way to adapt and continue doing well is to have a trained and experienced eye to pick up on the subtleties, and again, you don't come into the game with this skill.