How would you explain to someone how to trade without using the word "because"?
Where can mathematics be applied and where is it better to stay fuzzy?
I have my thoughts running around in my head and I hope I can clarify them by writing it all down.
The Market seems to be almost completely random with no trustworthy patterns and I would like to go a different way about trading than I used to before.
I'd like to focus on what to not trade. The other side of the spectrum. I want the the dis-confirmation as far as possible and then be left with tradable opportunities. Maths and numbers will only be applied to money-management and even there they will stay very simple.
How do I see money management:
I define one unit which I am ready to risk and then I don't change the value of it. It may be 1% of the deposit or more or less, but the second trade I take will have the same dollar/euro/swiss franc etc value as the first one.
From then one I go for an average of RRR 1:3 and play the big numbers game.
Why the fixed amount? Because I have no clue how many trades in a row will be losers.
So let's play:
0.5 cent of 100 EUR will allow me to have 200 losing trades in a row before the account is empty.
The aim is: 30 Winners out of 100 Trades.
The (only) math behind it: 30*(+3) = 90 Units won and 70*(-1)= -70 Units that I lose. Grand total 20 Units won.
For simplicity reasons I left out the spread I pay to my beloved broker
That means that I expect to have 60 Winners for my possible 200 trades. But as I don't know when they will appear I prefer to have a big number to play with.
End of the math.
Now the trading.
I don't know anything about it.
Two ways to handle this:
Top down or Bottom up.
Top down: Read a whole bunch of books, visit seminars
Bottom up: Make as many mistakes as possible. Imitate. Learn from the older traders.
Can we please post as many "bad setups" as possible?
Only one rule: Trade ideas before the fact. Not the "I-entered-here-although-I-should have-exited-at-this-or-that-point" kind of trade.
I consider this to be mental masturbation.
I don't want prediction, because we cannot.
No go hard go fast rules, no cookie cutter clean setups.
What would be nice is to list all bad setups and be left with a category of trades where on could say:
"It seems like you could enter somewhere here and give it a shot up to down there/up there."
And anyways no stress we need a 30/100 hit rate .
No justification, just go with the flow, no indicators needed, no financial concepts, no interpretation of news.
And once a trade is over I will not look for a pattern. The idea is to develop intuition for the market.
I allow myself one comparison. Reading humans: There might be some predictive power in behavioral patterns, but the variables (nationality, social background, state of mind that specific day, actual health state, sleep, hunger, etc), which make it almost random. Just like markets. And if you can read people, you probably cannot teach it, because anyways you learned it by trying over and over again. (I work as a receptionist in more than 200 room hotel, trust me you cannot teach that with much certainty). But my intuition is pretty good, sometimes I am faster at guessing how the person in front of me feels like, before he/she finds a way to express it (words, facial expressions...). But I am sometimes PLAIN WRONG!!! All that I can do then is adapt my behavior, do more, do less, or I don't know.
The last trade was good because - we don't know, because... well we don't know.
If you don't believe in this uncertainty try to forecast where the price is going to be in 1 day? Can't? Try then 1 hour ahead. Can't? Try 1 minute ahead? Still can't? Try 10 seconds ahead? Notice something? What ever time frame you chose, you don't know what is behind a move.
And if you did in fact hit a right number, forecast correctly another 100.000 times and you will fail. We all get lucky sometimes, but an RRR of 1:3 or even 1:15 is not enough to wipe out positively all that errors.
Could we get together and gather some ways to develop an intuition for the market? Get a feeling for it? A way o feel the market? The same way kids learn?
Not "read the market" but feel it?
Where can mathematics be applied and where is it better to stay fuzzy?
I have my thoughts running around in my head and I hope I can clarify them by writing it all down.
The Market seems to be almost completely random with no trustworthy patterns and I would like to go a different way about trading than I used to before.
I'd like to focus on what to not trade. The other side of the spectrum. I want the the dis-confirmation as far as possible and then be left with tradable opportunities. Maths and numbers will only be applied to money-management and even there they will stay very simple.
How do I see money management:
I define one unit which I am ready to risk and then I don't change the value of it. It may be 1% of the deposit or more or less, but the second trade I take will have the same dollar/euro/swiss franc etc value as the first one.
From then one I go for an average of RRR 1:3 and play the big numbers game.
Why the fixed amount? Because I have no clue how many trades in a row will be losers.
So let's play:
0.5 cent of 100 EUR will allow me to have 200 losing trades in a row before the account is empty.
The aim is: 30 Winners out of 100 Trades.
The (only) math behind it: 30*(+3) = 90 Units won and 70*(-1)= -70 Units that I lose. Grand total 20 Units won.
For simplicity reasons I left out the spread I pay to my beloved broker
That means that I expect to have 60 Winners for my possible 200 trades. But as I don't know when they will appear I prefer to have a big number to play with.
End of the math.
Now the trading.
I don't know anything about it.
Two ways to handle this:
Top down or Bottom up.
Top down: Read a whole bunch of books, visit seminars
Bottom up: Make as many mistakes as possible. Imitate. Learn from the older traders.
Can we please post as many "bad setups" as possible?
Only one rule: Trade ideas before the fact. Not the "I-entered-here-although-I-should have-exited-at-this-or-that-point" kind of trade.
I consider this to be mental masturbation.
I don't want prediction, because we cannot.
No go hard go fast rules, no cookie cutter clean setups.
What would be nice is to list all bad setups and be left with a category of trades where on could say:
"It seems like you could enter somewhere here and give it a shot up to down there/up there."
And anyways no stress we need a 30/100 hit rate .
No justification, just go with the flow, no indicators needed, no financial concepts, no interpretation of news.
And once a trade is over I will not look for a pattern. The idea is to develop intuition for the market.
I allow myself one comparison. Reading humans: There might be some predictive power in behavioral patterns, but the variables (nationality, social background, state of mind that specific day, actual health state, sleep, hunger, etc), which make it almost random. Just like markets. And if you can read people, you probably cannot teach it, because anyways you learned it by trying over and over again. (I work as a receptionist in more than 200 room hotel, trust me you cannot teach that with much certainty). But my intuition is pretty good, sometimes I am faster at guessing how the person in front of me feels like, before he/she finds a way to express it (words, facial expressions...). But I am sometimes PLAIN WRONG!!! All that I can do then is adapt my behavior, do more, do less, or I don't know.
The last trade was good because - we don't know, because... well we don't know.
If you don't believe in this uncertainty try to forecast where the price is going to be in 1 day? Can't? Try then 1 hour ahead. Can't? Try 1 minute ahead? Still can't? Try 10 seconds ahead? Notice something? What ever time frame you chose, you don't know what is behind a move.
And if you did in fact hit a right number, forecast correctly another 100.000 times and you will fail. We all get lucky sometimes, but an RRR of 1:3 or even 1:15 is not enough to wipe out positively all that errors.
Could we get together and gather some ways to develop an intuition for the market? Get a feeling for it? A way o feel the market? The same way kids learn?
Not "read the market" but feel it?
Demo only
