Do you think successful trading is more heavily based on your own skills (discretionary/mechanical) or the random luck of the market?
- How does skill weigh in against luck?
No skill in trading! 107 replies
Need luck or skill for trading? 232 replies
Luck, Randomness, and Chance in Trading 0 replies
Almost everybody says that exits more important than entries, but nobody has ever been able to explain why.
DislikedI'll quote Van Tharp "Yet real money is made through intelligent exits-which allow the trader to cut losses short and let profits run."Ignored
Dislikedyou have NO control over where the market is going to go. What you do have control over is when you decide to close that position.Ignored
I’ve read “Trade Your Way to Financial Freedom”, and I also subscribe to Dr Tharp’s e-mailed newsletters.
Sorry if this sounds high-handed, but simply quoting another person’s opinion doesn’t really prove anything. There needs to be readily demonstrable logic underlying the words.
For almost every trading theory you could ever devise, you can find an “expert” who will support it, and an “expert” who will denigrate it. There are folk who say that you should scale up, scale down, scale out. There are folk who recommend trading with the trend, others counter-trend. There are folk who trade mechanical systems, others who say they don’t work. There are folk who trade the 2% position size rule, others who recommend Martingale type betting systems. And so on and so on and so on........
It is mathematically self-evident that cutting losses and letting profits run will only work profitably to the extent that prices trend. So the question becomes: do markets trend (in the timeframe that you’re trading) more often than they don’t?
You can not control price moves any more when you are contemplating entry, than when you are contemplating exit. The only difference with exit is that you have money on the line, hence there are likely to be emotions involved.
Dr Tharp (and many others, e.g. Chuck LeBeau) believe that one can profit using completely random entries. Here’s an experiment. Try opening a long position whenever your method tells you to sell, and vice versa. If these folk are correct, your profit should be unaffected.
Darkstar’s post makes a passing reference to exits, and only in the context of breakouts. Trading in the direction of a breakout is NOT a random entry. The direction is not randomly selected, and neither is the timing. I suspect that people believe exit is more important than entry simply because they take entry for granted.
Sorry if I’m being pedantic, but I remain unconvinced. Feel welcome to reply, Mike, but I’ve no desire to get involved in an interminable argument on semantics. If your method works for you, trade it and I wish you every success.
DislikedBecause fundamentals ALWAYS trump technical analysis, should we accept our successful trades are lucky that are based on TA?Ignored
DislikedIf I am correct, many banks use these contracts to hedge economics of their countries, which is an animal completely outside of trading. These banks are not "trading," but exercizing their contracts to hedge against the future.Ignored