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Why are we afraid of simplicity?

  • #21
  • Sep 28, 2006 6:02pm Sep 28, 2006 6:02pm
Quoting summitfx
Ok now I know why I'm having problems
tskk tsk
BECAUSE I CAN !
  • #22
  • Sep 30, 2006 12:43pm Sep 30, 2006 12:43pm
some people just enjoy the hunt better than the kill.

they wind up hunting for so long that they forget how to execute the kill when a great functional weapon has been placed in their hands (if they know how to use it).

and sometimes, some people simply arent traders. and theres nothing wrong with that. you might be a wicked systems developer, or analyst, but a sucky trader. if thats the case work on what you do best, theres no shame in it.

thousands of people write books on trading and get paid for their analysis cos thats what theyre good at.

i read this somewhere about hedgefund managers differentiating themselves from investment bankers and the rest of the financial world:

" we eat what we kill "

i like the kill cos thats when i eat
  • #23
  • Sep 30, 2006 12:59pm Sep 30, 2006 12:59pm
I think the idea is.....if our brain can process available information and make a decision to enter/exit the market, why can't a computer do it? Why can't there be a mathematical formula or combination of mathematical formulae that will consider that information and make those decisions the same way our brain would? Ie, a completely automated holy grail type of system that will allow us to never even look at a chart and get filthy rich by following a pre-arranged algorithm. So, with that in mind, the search starts. And then we end up tying ourselves in knots, adding countless indicators and complex mathematical tools, only to find that what was meant to make our life easier has complicated it even more.
"The market will rally from this or lower levels"
  • #24
  • Sep 30, 2006 1:27pm Sep 30, 2006 1:27pm
Quoting PeterFM
Most people don't want to work, they want it all, and they want it now. Why should they work for it when they can use someone's indicator and cruise all the way to the bank.

If those on the outside survive long enough to realise it's all smoke and mirrors, they'll end up here, or in the PF trying to climb out of the hole.

Even here, with the wealth of information freely available, it's the same. Give them a system which someone's already refined and it's like the starting gun in Whacky Races. When they find that there is work (thinking) involved, they stick another indicator on, thinking it will take the work out of it. You can see how little they want to work at it when you watch them post their trades and you realise they haven't even bothered to read the method's rules properly. One of the latest methods on the Forum calls for nothing more complicated than drawing a couple of trend-lines, and hitting some keys on a calculator, but all of a sudden lines are heading in the wrong direction, indicators are appearing on all their posts, all because it's easier than doing the job properly in the first place.

I thank my lucky stars that I stumbled over FF, or I don't think I'd still be in the game. I'm a long way from being any good at this, but I'm not going backwards as fast as I was. For this I thank Jim, Dial, Fiji and too many others to list.
I think you've got it exactly right Peter. Of the oft quoted 90% losers, I'd say only a small number are simply not cut out for trading because no matter how hard they work, they have a mindset opposite the one they need that is so large as to be insurmountable in a single lifetime. But as for the rest of the 90% losers, it is simply because they refuse to put in the necessary effort. (See my sig).

Trading is easy. Learning how to trade easily is very difficult. I personally think the difficulty lies in trying to fix the wrong thing. All the newbies focus on systems and indicators. They will give occasional lip service to MM just to sound cool. But how many threads are there that dig into where the real problems lie; inside the trader? Apart from fijitrader's awesome threads, there are very few.

Dial
sxaxlxvxaxtxixoxnxbxyxgxrxaxcxexdxoxtxoxrxgx
  • #25
  • Sep 30, 2006 1:41pm Sep 30, 2006 1:41pm
Quoting diallist
But as for the rest of the 90% losers, it is simply because they refuse to put in the necessary effort. (See my sig).

Dial
Hi diallist

Yeah, too right. I think there's a reason for that too. Many people turn to trading in search of an effortless way to make lots of money. They're sick of working 9-5 and they want something that doesn't require any effort at all.

But it's not all down to plain lazyness. If you look at the way some systems that are sold on the internet (I'm having a hard time holding myself back from saying what I think of people selling forex "systems" for profit) advertise themselves, you'll see how often they say "make $2000 a day working 3 minutes a week" and things to that effect. Many new traders were introduced to forex by one of these things in the first place. They simply googled for "make money online" and found one of these too-good-to-be-true promises.

Whenever I talk to a newbie on the marketiva chat, they seem absolutely perplexed when I tell them it can take months or years to learn a method that works for them and become disciplined enough to use it and make a profit.

In the end, it doesn't really matter how many indicators you use. 99% of indicators (my own estimate) do not much more than identify a trend. Identifying a trend is not the problem. It's what you do with it that matters
"The market will rally from this or lower levels"
  • #26
  • Sep 30, 2006 2:51pm Sep 30, 2006 2:51pm
Quoting LightKeeper
In the end, it doesn't really matter how many indicators you use. 99% of indicators (my own estimate) do not much more than identify a trend. Identifying a trend is not the problem. It's what you do with it that matters
That's exactly why people throw on ungodly numbers of indicators and rules to said indicators. They're trying to hash out what to do with this trend (be it weekly, daily, hourly, etc trends) instead of giving into Ocham's Razor; IE, "the price is below this point so I should go long and set my exit at this point." They want someone/something else to tell them what's to do so they can also throw away responsibility should something go awry but still be able to snag all the profits.

My personal system involves a 55 period EMA, a four hour chart, and my eyes. And that EMA is only there as an exit indicator.
  • #27
  • Edited Oct 1, 2006 4:18am Sep 30, 2006 3:57pm | Edited Oct 1, 2006 4:18am
Quoting LightKeeper
Hi diallist

Yeah, too right. I think there's a reason for that too. Many people turn to trading in search of an effortless way to make lots of money. They're sick of working 9-5 and they want something that doesn't require any effort at all.

But it's not all down to plain lazyness. If you look at the way some systems that are sold on the internet (I'm having a hard time holding myself back from saying what I think of people selling forex "systems" for profit) advertise themselves, you'll see how often they say "make $2000 a day working 3 minutes a week" and things to that effect. Many new traders were introduced to forex by one of these things in the first place. They simply googled for "make money online" and found one of these too-good-to-be-true promises.

Whenever I talk to a newbie on the marketiva chat, they seem absolutely perplexed when I tell them it can take months or years to learn a method that works for them and become disciplined enough to use it and make a profit.

In the end, it doesn't really matter how many indicators you use. 99% of indicators (my own estimate) do not much more than identify a trend. Identifying a trend is not the problem. It's what you do with it that matters
Dead on Lightkeeper!

In Jack Schwager's Market Wizards video, he states "Why, are people in general attracted to the markets? Because, it's an easy way to make a lot of money! Why do people believe its so easy? Because there's only 2 things you can do. Buy or Sell. And, some people might get it right in the beginning. And that begiles people to believe that trading is a lot easier than it is. Because you can have short term success, by pure luck! It can't happen in any other profession. How many people go into a bookstore, pick up a book titled "How I made a million dollars in the stock market", read it over the weekend and think they can start trading Monday morning and believe they could beat the professionals who've been doing it all their lives with all the experience they have? Many people would think nothing of it! But, how many people do you know would go into a bookstore pick up a book titled "how to perform brain surgery" read it over the weekend, go in the operating room Monday morning and believe they could perform successful brain surgery? Really, it's the same thing!"
  • #28
  • Dec 7, 2007 12:23am Dec 7, 2007 12:23am
Quoting summitfx
Ok now I know why I'm having problems

yes i know this thread is a year old....but worth a read.
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  • #29
  • Dec 7, 2007 2:35am Dec 7, 2007 2:35am
Quoting jjk2
yes i know this thread is a year old....but worth a read.
Hey, thanks for the bump.
It is, isn't it. Wrote it almost a year ago and just reread my first post and it makes me smile...as this is still one of the last few points that can mean living in pain over positions and entries etc or feeling at peace with it all...

I feel it's both one of my nicer posts and one of the most true ones you can find..and it's as striking to me now as it was when I wrote it
Trust price. Know yourself.
  • #30
  • Dec 7, 2007 3:02am Dec 7, 2007 3:02am
What a beautiful post seekinglight.

I think people dont wanna make trading simpler because it seems too obvious and people never do the obvious

Or is it a question that people think the forex market is a complex monter and therefor they need a complex charts?

Maybe it is a question of trying to impress your fellow traders with a cluttered chart that only you can make sense off?

Maybe it is because since there are so many indicators available traders think they shouls use all of them?

I can only speak for myself but i have been thru all the indicators. And eventually ended up with price action and a lot less ulcers
  • #31
  • Dec 7, 2007 3:02pm Dec 7, 2007 3:02pm
Quoting SeekingLight
Hi all!

Having witnessed a few weeks and months of the factory at work I've come to wonder....why do people need things to be complicated? Vegas and James16 have made it clear to me that you can have a strategy as simple as "enter and exit on slope change, take profit at fibs" and turn out thousands, and I mean this is literally, thousands of pips of profit.
Compare to systems with stochs, MAs, RSI, bollinger bands and sometimes - and I know this from my own experience - even all at once.
You end up looking for 2,3,4,5 confirmations and when finally all indicators line up - 90% of the move seems to already be over. Well, at least it feels like it.

So if the simple stuff works - and this is being proven daily on the PF and by traders like Vegas, Diallist, James16 and many others here on the factor - then why do we strive to keep on inventing new ways of combining indicators and learning new rules and rulesets, if the most simple of systems are proven and work?
Is there maybe some subconscious urge at work here, refusing to let us make money with too simple a system, not being able to say you mastered something as there really isn't much to master other than consistently applying a most basic logic?
Is it a lack of achievement or the conviction that one doesn't deserve something so simple?
Why, why do we strive for constantly new (and potentially complicated or just plain different) systems when we have perfectly functional and profitable ones at our disposal?
Why bother with others?
Greed in the form of trying to achieve just that little bit more profit by finding the "ultimate" system no matter how complicated or exotic it might be is just another vice in the life of a trader, lost in a state of perpetual searching instead of being set on a path and travelling with a set destination.

So, what are we waiting for?
What are we looking for that isn't there already?

Something to think about, something I've been thinking about.

SeekingLight
You are not afraid of simple good for you, yet I notice you mention slope change, fibs....Keep in mind that there are many ways to trade and as long as you make money it does not matter if your chart has 10 indicators or not. It is not what you have on the chart that makes the difference but what you see in it.
  • #32
  • Dec 7, 2007 3:30pm Dec 7, 2007 3:30pm
Entities should not be multiplied beyond necessity.

Occam's Razor - All other things being equal, the simplest solution is the best.

I don't know Latin - I copied it from Wikipedia but it does catch your eye.

We are constantly reminded that most fail at this game.

Simple + Success doesn't compute - it's counter to what we read about trading.

If it were so easy then why do so many fail?

I don't believe it's easy.

If it were truly easy then you can post your real name and we should be able to find it one the Forbes list.
  • #33
  • Dec 7, 2007 4:04pm Dec 7, 2007 4:04pm
I liked this post given my path of trying and programming every indicator in creation over the last 10 years.

Earlier this year I got rid of the CCI off my fine tune entry/exit chart leaving nothing but a couple of MAs on each chart (tuned to whatever seems to act as S&R). I've noticed in the last couple of months I'm starting to read S&R better than previously after an article I read in September.

Why not simple:
- indicators feel better because you get a "signal"
- people need certainty in an uncertain game
- fear of being wrong, fear of not knowing, fear of uncertainty.

- it takes time to be able to read the price and find working patterns of long and short timeframe activity.

Good question SL.

Quoting accrete
In agreement w/all the good posts above on Price being king. . . and though i know, realy know, that this is true, i still have my cloths on and have yet to truely trade naked. I'm trying to do work in some changes to my charts/style, time will tell as to when i'm able to make the transition profitably.

I also know this, that without the comradery and great interaction here at the factory i'd surely be lost without a compass. The search for the perfect indicator will hopefully shed some light on the market in ways one might not have thought of if simply trading of bars/candles, at least for me it has. I remember situations where i would come accross a new-to-me indicator, say the CCI at the time. I'd study that indicator till the light bulb went on and figured out what price was doing in the candles against the median ma. Then i'd jettison the CCI, but the MA remained. Maybe someday even the last MA will vanish off the chart? I think that is one way to simplify things. Learn what an indicator such as our MACD,RSI,Stoch,CCI etc do, and learn the price pattern/behavior that corresponds to the indicator, then go back to price without the indicator...but i suppose for some ppls learning style this would be more complicated than actually having the indicator?

Just rambling on a day off.
: ) Thom


: ) Thom
  • #34
  • Dec 7, 2007 4:45pm Dec 7, 2007 4:45pm
Quoting SeekingLight
Hey, thanks for the bump.
It is, isn't it. Wrote it almost a year ago and just reread my first post and it makes me smile...as this is still one of the last few points that can mean living in pain over positions and entries etc or feeling at peace with it all...

I feel it's both one of my nicer posts and one of the most true ones you can find..and it's as striking to me now as it was when I wrote it
anytime, but this is basically the truth. crazy sets of indicators is not the key to profits. it took me painfully to realize it....

in terms of calculation, i realize how futile it was trying to come up with the perfect formula....you can't rely on these indicators as forecast. its just illogical.

now most of my time is spent just breakouts on s&r. it would've helped me big time if i realized much earlier taht the search for the holy indicator is futile....but then again, if i hadn't gone through that path and discovered and saw the truth myself, then i would never know....this just goes to show you, trust the words of the experienced traders....they are NOT fooling anyone.

Less stress + no chart whoring + clear thinking = profits.
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  • #35
  • Dec 7, 2007 4:57pm Dec 7, 2007 4:57pm
i think also our denial of simplicity is built in. there is disproprtionate rewards of financial speculation compared to the amount of effort and energy or labor you put in. (*energy wasted moving ur mouse, and clicking)

ex. " it can' be this easy! no way! i work 8 to 6 job for 5 days and make only 5% of what im making now. "

so according to that school of thought, the the young 25 year old british trader who merely trades on interest rate announcements, who make 6 digit figures in about 20 minutes, cannot exist!


do feel free to contradict, flame, tear apart this post. its public forum after all.
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  • #36
  • Dec 7, 2007 5:49pm Dec 7, 2007 5:49pm
Quoting aha
Once there was a hawk standing on a tree watching a tiger and a lion fighting on the ground. He think the tiger and the lion are both stupid because, "why don't they fly high and then dive down toward their enemy? that's the simplest method to win."

A story from a Chinese Kongfu novel authored by Yong Jing
I like this because with regard to trading most do not know whether they are the lion, tiger, eagle, bear, bull, muskrat, snake,pig, or platypus....

It takes time to find that out. Then it takes more time to know how to win.

Lou
  • #37
  • Dec 7, 2007 6:15pm Dec 7, 2007 6:15pm
Simplicty is subjective isnt it?

Someone jokingly posted a chart with a "mess" of lines and indicators on it, as if to say, "your charts shouldn't look like this". Well, truth is, my charts arent that far removed from the chart posted, just from a visual, first glance perspective. Everyone that has seen my charts thinks they are a complete mess. However, to ME, my charts are in fact, quite simple, and I see, everything I need and want to see, very quickly.

It seems theres a consensus on trading forums, that if you use more than a couple indicators, you are somehow "overdoing" it, or your just confusing yourself with too much information......and that trading "naked" without ANY indicators, is somehow better? I dont get this. If trading naked works for you, fantastic! If trading with 10 indicators works for you, then thats fantastic too. One is not better than the other.

I use a lot of indicators.....and NONE of them confuses me, not even a little bit. Indicators are only confusing when you don't know what you want from them, or what purpose theyre serving. I know pretty much exactly what I am looking for, and what I like to see in each indicator.

In general, try to avoid using too many indicators for the same purpose. For example, you may not need 5 different indicators to give you a single entry signal. However, an indicator for trend identification, maybe a couple for entries and exits, maybe a couple more for support and resistance.....seems perfectly reasonable to me(thats in fact pretty much the setup I use).


Indicators aren't necessarily bad....just know why you are using them.
  • #38
  • Dec 7, 2007 6:40pm Dec 7, 2007 6:40pm
I'm not against indicators if it helps, but I strongly believe if you looking at price charts long enough they will begin to talk to ya. For me I can't even put a simple moving average on the chart with out getting confused. Now if I really want to get messed up I'll look at candles and moving averages..lol
Check Mate GAME OVER
  • #39
  • Dec 7, 2007 7:02pm Dec 7, 2007 7:02pm
Aldente,

1. How long have you been trading?
2. What timeframe (x mins, hourly, daily etc)?
3. How long have you been trading for a living?

I ask because I think that simplification (by removal of redundancy and by being able to read price better) is evolutionary and I'm curious to know where you are on the path. Or indeed whether my theory has any validity at all.
  • #40
  • Dec 7, 2007 8:19pm Dec 7, 2007 8:19pm
trading is not simple, but it is simplified....
just like many thing that is evolves.....
or ... we only get used to it...
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