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Thread: 2018 Trading Account Experiment

  1. #31
    RANT #7 - Einstein, Pandora#8217;s Box and Gordian#8217;s O

    The conclusion of the previous RANT (post #82), in suggesting the plogical game is an important factor in becoming a better trader, opens up a veritable Pandora#8217;s box of plogical and emotional factors that we can take a fast peek inside of now.

    Trading is not rocket science. You may only buy or sell to open a transaction, it may only go down or up from entry, then at a certain point the transaction is closed. That#8217;s it, however we can tie ourselves into a Gordian knot of plogical distress over it. Why, exactly?

    Einstein famously said three great forces rule the planet: stupidity, fear and greed. He'd have been a comparatively good trader, I#8217;m convinced. We know trading fear is rooted in loss aversion and we#8217;ve looked at that at a preceding RANT so allow #8217;s focus on another two.

    Greed is an even more effective force than fear for traders, otherwise we wouldn#8217;t open a position at the first place. It manifests itself mostly by trading too large for your account so even a short losing streak of transactions causes severe financial harm. If your account drawdown is 10 percent you only need 11% back from there to recover fully. If you are down 50% you want to double click the account from there to get back. That is quite tough indeed and even more so if you envision your emotional state when half of the money has vanished. Should you bet small and restrain your risk you won't easily get into this kind of mess, and maintaining emotional balance will be all the easier for you.

    Stupidity may also be tamed if you are patient and willing enough. At the outset of your trading you need to trade in minimum size for a long time simply to accumulate experience and learn. Consider this as an apprenticeship during which you won#8217;t make any real money but you will develop the essential skills to prosper if you graduate. You#8217;ll understand when you are ready, don#8217;t hesitate to jump the gun. Get really good before you commit fantastic money to your venture. But if you don#8217;t understand as you move on you will never graduate and your stupidity is going to be your undoing. In case you have been trading for a while but not getting anywhere, I strongly suggest you go back to square one and start your apprenticeship afresh. You ought to be able to handle it faster second time around.

    The concept of the brain games is to keep on a plogical and emotional level. Trade in size, have good risk control, cut losers short and take small losses all play a vital role in assisting you to achieve this. They'll help you overcome the unholy trinity of anxiety, greed and stupidity and, like Alexander, cut through the Gordian knot.

  2. #32
    Hi marcmarc,

    not sure you will read this, and this isn't any worries at all.

    To begin with, from a personal point of view, it is a real shame that you are going, as you're actually looking”real”. Not a lot of talking, no”bullsh*t”, and what you're doing made sense. Even more, on your”daily experiment” (the main subject of this thread), we can follow it live easily.

    It seems that each time I discover a thread of interest (at least to me), apart a very few exceptions, it will not last over a few months in the least.
    It could seem weird at first (am I a black lady, or some thing!! ;0), but considering it, it may actually make a lot of sense too.
    There is definitely a life to live outside, and life is short as you quickly discover when gently getting older. So you would need to be veryyyy alone, or in need of a lot of focus to come and stay super busy onnigeriaforextradingforum once trading is just a task for you.
    Anyhow, enough talking.

    I would love to take the advantage which you may be eager to answer another question.
    Once more, no worries if you don't answer.

    To keep it very easy, I understand (or at least I think I really do...) trading is probably a 50:50 action.
    It's not possible to state at 100% the price is going down or up.
    All in all it is rigged against us on the very long run, and not at break even, because of the spread basically.

    So you need a border that's greater than the spread in order to get any opportunity long term.
    This advantage will most probably be quite small, and only achievable with the law of high amounts.

    Afterward, in the expertise with your trading, along with other trading you have observed through the years, how do you state”confidently” a trading egy has a border (or a number of advantages whatever they are, it is not significant here)?

    Can you utilize a number of trades to give you a fantastic idea that the approach probably has an edge?
    If so, roughly speaking, how many trades would you need to give you an idea?
    Fifty? A hundred? A million? 10 thousands?

    Should you think that it is not really several transactions, then from experience how could you be confident that a particular egy (whatever it is) has most probably an edge?

    I must say, with my small experience,”the control your risk (bet small, cut flop sharp at predefined high risk as a very simple example), let winner runs multiple R once it appears possible” makes sense.
    It's like if you are losing frequently, but the equity appears to creep up anyhow (but if I had been 100% convinced, I wouldn't be aboutnigeriaforextradinganymore...).
    In the end, really not simple to use (if I shut here??? Nooooooooo, I should have shut!! Or Sh*t I am dumb, I shouldn't have shut!!!! I am sure everybody knows the feeling;0))))))), however, it is logical.

    Anyhow, enough ramble!!!

    Thanks for your thread which was really agreeable and clear to follow, and it has (with a few others) certainly helped me thinking in my battle.

    All of the best.

  3. #33
    Hello J-F,
    Thank you for your kind words, and I will assure you I do trade this stuff for a living - hence the absence of BS, I can#8217;t afford it if I want to eat frequently! I am quitting posting because the proof is in front of me that I am better off only about the daytrading. I was rather hoping I could make another stream of income from longer term trading for a kind of diversifiion. I am sure from my expertise on this experimentation I could do this acceptably provided time and program, but the daytrading only suits me better as a person. I have always been one for the path of least resistance!

    To turn to a question. My beliefs and experiences tell me trading is a closer to 50:50 game than many of us want to acknowledge and, yes, you need a trusted edge to pay both trading expenses and individual mistakes you will inevitably make. Now, the concept of edge is a tricky one because it's very difficut to specify cleanly; and many methods just have a border in particular market conditions, they are negative expectancy constantly.

    That in itself doesn#8217;t really matter, provided that you've got the ability to identify the ideal times for your own method and apply it just then. Equally, all edges are basically marginal (or else there are many more billionaire traders out there) and so they also depend on exceptional subject, consistency and risk control to work. Without these things, the best edges will evaporate and, sadly, human nature isn't on our side for all these characteristics when trading.

    I expect you can see how slick the notion of border quickly becomes, and also how many moving parts head to creating this up. So you only know you get a trusted edge when the proof is there for this, i.e. when your fine, stable, consistent equity curve tells you it's working and you're trading properly. It#8217;s not only a function of the law of large amounts, although lots of proof clearly helps. It took me several years, much trial and error (mostly error!) And literally tens of thousands of trades. I expect you will do! The good news though, is when you see your edge clearly and see it working frequently, it will become easy just to stick to the correct narrow path because you've got continuous positive reinforcement from steady profitability. Trading gets a lot easier at this point!

    I could finish with three pieces of information for you from long experience that I only know are true: ensure your method suits you as an individual; risk control is the single most important element; and working on when to take profits/cut losses is considerably more significant than when to input.

    Good luck!

  4. #34
    Hi marcmarc,

    Thanks for sharing all of your really excellent information/experience together with us. I enjoyed following you. Happy trading.


  5. #35

    Thank you very much for your time, along with the pieces of information.
    So easy... but certainly not easy:0)


  6. #36
    Before reside trading commences in January, it may be useful to summarize in general terms the trading egy that will be employed. Several salient points can be created:

    1. Only three markets to be traded: EUR/USD, AUD/USD and USD/JPY. They are all liquid, lively and low round trip cost markets. Markets that don't fulfill these criteria are just supplying additional obstacles which need not be faced. The more markets the better as it raises chance but I will limit to these three at least once since they're my mainstream intraday trading markets that I am most comfortable with.

    2. Daily timescale candlestick charts are the only means of analysis. I only get confused by multiple timeframes and daily charts are convenient for the kind of low in-trade management kind trading I envisage for this particular experiment. You could equally well use bar charts but I am most comfortable with candles.

    3. The charts will be clean with nothing except the candles. I am not a fantastic believer in indiors, they're nearly all derivatives of inherent price and I've yet to loe one that operates better than arbitrary over a huge sample. Thus, I focus on pure price action only.

    4. Additionally, I only focus on technical price action without regard to fundamentals. I envisage most transactions will only persist for a couple of days at most and I do not believe fundamentals are generally very reliable indiors within this timeframe. Price will tell us exactly what we need to understand efficiently enough.

    5. The core concept underlying trade selection is only to take trades that are together with the current dominant trend, and after a counter-trend retracement is believed to have failed. If the market is trapped into a trendless range afterward sensed failed breaks of either end of this range are acceptable entries. What constitutes a trend, a range, a collapsed retracement and a collapsed range break are easy eye-balling subjective price action judgements.

    6. The whole position for all transactions will be entered and closed in 1 go. I can loe no net advantage complete in partial openings and closings therefore that I proceed with the cleaner and much easier egy.

    7. Risk control is mostly managed in two different ways: each and every trade or order will probably have along with it an inviolate hard stop loss order; and the standing size will be calculated such that the highest risk at the hard stop is 1 percent of the account balance at the time of this order being placed. There are no exceptions, risk control is paramount.

    8. Initial stops will be put at a price point at which the price arrangement indies the initial rationale for the trade probably no longer holds. The stop loss is tough and compulsory: hit the stop, cut on the trade, no questions asked. Should a trade accumulate an open profit the halt is likely to be moved closer to current price, but not further away.

    9. Profit carrying leaves are softer. Profits will generally seem to be taken on any favourable expansion candle or price spike; or whenever a profitable trade appears to have run out of steam, all again determined subjectively from the price action independently.

    Phew! Think that#8217;s quite enough for today.
    Live trading commences 2 January.

    Account Overview: Balance #10,000 ( 0.0%) No. Trades YTD 0

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