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Admit it - your profits are based on luck

  • #141
  • Sep 19, 2008 4:27pm Sep 19, 2008 4:27pm
Quoting tdion
it seems to me that everyone is enjoying the discussion, or we wouldn't have 10 pages of responses.

maybe you could contribute something useful for once....

(by the way, you are doing a good job of looking ignorant.)
The day I care about what even the majority think, let alone one questionable individual, in a business where the majority lose money will be the day I give up trading.

Ok let's examine one of your infatuations, knowing what is moving price, knowledge without which you say you have no edge and know nothing.

It's easy enough to learn about what moves price, all you need to do is read about significant technical levels and fundamentals. But will that knowledge alone help you to become consistently profitable? No, of course not.

If you want to have a sensible discussion then fine, but so far all I see is a poor attempt at someone trying to be controversial and not quite knowing what subject to focus on. Luck? No, that didn't really work. Gambling? Well it got a bit of response but not any real fireworks. What's next, I can't wait to find out!

You have a nice evening, I'm going out now but will look forward to the next installment
  • #142
  • Sep 19, 2008 4:54pm Sep 19, 2008 4:54pm
What happens (for example) if we take only trades that pay positive swap, and hold them long enough so that the swap exceeds the spread? Even by making random entries and exits, we have positive expectancy, a small edge. Casinos make billions from a small edge. Of course, they do so much more quickly, due to their rapid transaction throughput, but the forex trader has the ultimate weapon of compounding.

What happens if we can also show that, everything else being equal, prices move in the direction of the carry trade? I’m the world’s dumbest fundamentalist, but even I couldn’t help notice that while the cash rate rose here in NZ (from 7.25% in Feb 2007 to 8.25% in July 2007), the NZDUSD climbed from 0.69 to 0.81, but as soon as RBNZ announced that rates would fall, and we’ve since had two cuts (8.25% to 8.0% to 7.5%), NZDUSD has fallen back to around 0.69 again. With some decent MM, there’s got to be a definite edge hidden somewhere in there. During the rise, 1200 pips in 3 months, plus the positive swap, for simply being willing to keep a position open.

Let’s get more technical. What happens at double or triple tops or bottoms? Doesn’t price reverse more often than not? And even if it breaks out, isn’t there frequently a decent move? By exiting quickly if wrong, and not taking profits too quickly when right, isn’t there the possibility of an edge? Not a guaranteed winner every time, but something that delivers > 50%?

How large an edge do we need, in to convince ourselves that trading is a worthwhile activity? I think it’s a pertinent question, and the answer depends largely on our goals and expectations, and how much patience we’re prepared to bring to the task.

David
  • #143
  • Sep 19, 2008 5:01pm Sep 19, 2008 5:01pm
Quoting merlin
your AIG example is in the right direction, but its a lot more complicated than that, especially when you start looking at individual companies. darkstars stop hunting technique is a perfect example of a good premise in forex. another good forex broker premise... there is no central exchange, and therefore the bid/ask should fluctuate among brokers. developing and understanding the premise isnt the hardest part, it just takes a lot of experience which cant be bought, taught, or shortcut. its the testing an executing the premise that presents the biggest challenge in terms of intelligence, but anyone who can code EAs and understands statistics will be able to pull it off.

its almost impossible for a novice to come up with a good premise because they dont understand whats going on behind those little candles. instead they look at the candle itself, just seeing the surface, and making little patterns in their head or with a computers. but behind the candle is where the magic is, thats where the people are. i call it "the human element". the best premises i have ever traded are rooted directly in human nature. humans are predictable to some extent, and herds of humans are even more so. if you can come up with a premise based on human observations (in regard to trading and the markets, not talking vodo crap here), and then the data tells you its legit, chances are you got winner on your hands.

and ive always enjoyed your posts too man you bring a greatly need dose of reality to the forum! i used to have the stamina to talk reality at FF, as you do so vigilantly, but i found it incredibly disheartening to share my knowledge, only to be rewarded with newbies attacking me because i stepped on their foolish expectations LOL. now im not saying i agree with you that trading is gambling, because i know deep down its not, but your words are a lot more realistic than 99% of the stuff we hear on the internet.
great post..i gained a lot from reading it..people and myself forget we are actually studying the behaviour of people pyschology. i think we can get the direction right thats not gambling placing the stop loss tight without being hit requires a element of luck if it a tight stop or could be seen as a gamble..
  • #144
  • Edited 6:19pm Sep 19, 2008 5:16pm | Edited 6:19pm
first, you are calling me "one questionable individual" when YOU are the newbie here. check the join dates.

ted was the first to mention gambling on page 3 (7 pages ago) not me.

obviously there is no changing your point of view. there is no changing mine. why don't you just stop posting here, instead of keeping the instigations going?

why don't you put me on your ignore list?

start your own thread if this one is so bad... we'll do just fine without you.

Quoting lostinspace
You have a nice evening, I'm going out now but will look forward to the next installment
  • #145
  • Sep 19, 2008 5:36pm Sep 19, 2008 5:36pm
so much hate in such a small thread.

TD, my man! What is up?
I appreciate your IQ and appreciate your system trading comments, but I have to poke a couple holes in your "success in trading is luck" thesis. Luck is not 100% or 50% of my success. If the market is my dance partner and I'm the market's dance partner what % is luck?
Here is why you don't need to know how an engine works to drive a car. I mean you don't need to know what moves the market to get an edge. When there is a cause there is an effect. The effect makes a formation that is very similar to previous formations. This formation might be a bullish candle formation. Bullish candle formations occur at the beginning of a bullish trend or in the middle of a bullish trend or at the end of a bullish trend. If you pick 2 of the 3 you are making money buying the instrument. Perhaps this is an argument of semantics. I prefer to call this kinda stuff statistics. I understand you call this stuff luck or gambling. I really think it's semantics. I mean I don't call getting out of bed in the morning a gamble just because I could be struck down. I do consider the odds of being struck down and I avoid those situations as best I can which is why I don't smoke pot and walk around a driving range.
You catch my drift. This post was mainly for entertainment value. Sorry if I took up too much board real estate.
It really is that easy.
  • #146
  • Sep 19, 2008 5:54pm Sep 19, 2008 5:54pm
jeff, you are always welcomed to post anything you want, anytime you want.
  • #147
  • Sep 19, 2008 5:58pm Sep 19, 2008 5:58pm
Hey tids,
your pretty confident in your backtests and programming will return 1000+% returns. It seems to me you put in alot of effort in an attempt to eliminate any chance component in your technique. How do you reconcile your trading belief that luck is responsible for success with your actual trading technique?
(btw this is just a simple question and not a personal attack)
BTC Return This Year: na
  • #148
  • Sep 19, 2008 6:08pm Sep 19, 2008 6:08pm
well i am confident that the POTENTIAL is there to make several thousand percent, as several years of backtests have shown. (in fact, i was up 4000% on the year until this week )

my reconciliation: i can't identify the cause/effect of any of my trades.

in fact, the only premise i've ever been able to identify is the price change during news releases....


i'd like to add that every system with wins and losses is subject to monte carlo.... obviously a string of winners can balloon the account very quickly, while a string of losses can be devastating. knowing i have wins and losses, i always cross my fingers that the sequence will at least be balanced wins for losses, so i can break even if i am not profiting.

Quoting M.A.C.Doug
Hey tids,
your pretty confident in your backtests and programming will return 1000+% returns. It seems to me you put in alot of effort in an attempt to eliminate any chance component in your technique. How do you reconcile your trading belief that luck is responsible for success with your actual trading technique?
(btw this is just a simple question and not a personal attack)
  • #149
  • Sep 20, 2008 3:41am Sep 20, 2008 3:41am
Yawn
  • #150
  • Sep 20, 2008 4:51am Sep 20, 2008 4:51am
Quoting tdion
not everyone is fortunate enough to have (or ever find) an edge, mike.
I think what tdion is saying is that one never knows when an edge could get, well, a bit dull in the future (especially a technical one). There is plenty of evidence of this occuring in today's market.
  • #151
  • Sep 20, 2008 7:33am Sep 20, 2008 7:33am
Quoting tdion

my reconciliation: i can't identify the cause/effect of any of my trades.

obviously a string of winners can balloon the account very quickly, while a string of losses can be devastating.

Like most people who speculate for financial gain I expect the 'cause' of your trades is to try and make money, and the 'effect' will be the result of that effort, sounds pretty straightforward to me.

If you're asking why price moves well that's also an effect, of traders buying and selling. The cause goes right back to basic economic fundamentals and geopolitics, everything else is a domino effect.

About strings of winners or losers quickly ballooning or devastating an account, that's usually the result of poor money and risk management. The aim is to have a relatively smooth equity curve, slow but sure and without big swings.

Cheers


(ps: enough with the threatening PM's already, eh? Thanks)
  • #152
  • Sep 20, 2008 10:28am Sep 20, 2008 10:28am
hello,

i'm new here and VERY new to forex. I have been reading this thread.

i believe forex trading is not at all like computer science. forex trading is more like business.

in computer science, there's while loops and so many things you can do. the best part of a computer is that it will execute your command every time without fail. the same can't be said about business.

in the case of trading or a business, based on information gathered and on past experience, we are confident the trade or business will go our way ... or not. maybe it's gut feeling or just optimism or pessimism.

in my opinion, trading is not about luck. it's about having a system which has a good chance(high probability) of giving profit over time.

i guess it's like taking a free kick or shooting an arrow. we practise and practise for the big game. after a while, we become confident if we did this and don't do that, we are confident to hit the target - no guarantees in life, right?

i think it's a bit like insurance, we buy insurance in case we get injured so that we are covered eventhough chances are we won't get sick/hurt.

even like driving to work, even if we took the same route everyday at the same time, we won't know if someone might accidentally knock into our car or meet the same neighbour going out.

luck is saying i don't know how i can win but i still want it - that's more like roulette. successful trading is about if i did this and avoid that, CHANCES are i will get what i want.

in short, it's not about luck, it's more about probability.

over to you guys

Edmond
  • #153
  • Sep 20, 2008 10:30am Sep 20, 2008 10:30am
You get it man, finally a very good post cheers
  • #154
  • Sep 20, 2008 11:33am Sep 20, 2008 11:33am
Quoting merlin
...if you can come up with a premise based on human observations (in regard to trading and the markets, not talking vodo crap here), and then the data tells you its legit, chances are you got winner on your hands.
hi

if possible i like to hear a definition of what "vodo crap" is here.

because normally it is associated with: Gann, Fibonacci, Astrology and Pictforks.

but:

i think you respect smjones as a great trader and even consider he as a friend: smjones traces fibos even in ACD points.

i think you consider Suntrader a great trader too. And basis of what he trades are Fibos, and he does'nt believe that it works due self-fulfilling profecy.

same for Diallist (member since 2004) and endorse Skunny's method.

the examples above is they that i could read in the past your opinions as example of great traders.

but in your vouch list there are many others that uses only fibs and others that uses lunar cycles, astrology, Pitchforks, etc.

one that is not at your vouch list but looks like today is considerad one of the best traders that came here is TRT, this a system he teachs and is listed in one of his PDFs:

"Longer term trading method based on
Gann-. I've traded it in all markets for more than 20
years. The most powerful edge in trading available."


Quoting merlin
newbies attacking me because i stepped on their foolish expectations LOL.
same here. Take Diallist 20% claims using Knife and James comments about get rich a couple of years taking only PBs on daily charts can be called foolish expectations?

and back to the other inssue (voodoo) when you asked James if he uses only PA or if he uses some tape rading he said:

Quoting james16
yes, pink floyd and joe walsh are two of my favorite


quoting Twoblink:


"Let's do the math:

if Forex is a negative sum game, and the "winners" take from the "losers",and 95% are "losers", then that means:

95 / 5 = 19

That means the average "winner" in the Forex market makes 19x his/her money on average. The 95% is there to pad the 5%'s wallet.

Now if your goal is to "make a little money on the side", then I suggest you stop reading now; because chances are very high (95% confidence actually) that you are nothing but cannon fodder for the other 5%. Your GOAL should be to be the 5% and make 19x ROI on your money. If this is not your goal; stop reading now, and go eat some ice cream; and be content with being a 9 to 5 slave for the rest of your life. Or else, look at other options such as starting your own business or real estate or marrying someone rich."

only trying to choose the right patch here.

sorry for my bad English.
  • #155
  • Sep 20, 2008 2:07pm Sep 20, 2008 2:07pm
If luck is defined by one of two happening i.e. good or bad then that would give every trader a 50/50 chance of winning or losing.

If that's the case then why do 95% fail and 5% succeed. It's got to be because the 5% have more skill, intuition, knowledge call it what you want but they have an edge.
  • #156
  • Sep 20, 2008 2:14pm Sep 20, 2008 2:14pm
any system that is not based on cause/effect is luck. triangle breakouts, 123 patterns, fibs, etc. the reason: market trends can change at any time.

therefore, your probabilities change without warning.

take the EURUSD this past week. the ATR has been above 0.80 all week.... never this high in at least 13 years or so.... and my system lost 600 pips. it had made 19,000 pips from 2001 until the present, but the unforseen change in market behaviour caused my great probability system to fail.

Quoting rfbu
in my opinion, trading is not about luck. it's about having a system which has a good chance(high probability) of giving profit over time.

...

in short, it's not about luck, it's more about probability.
  • #157
  • Sep 20, 2008 2:20pm Sep 20, 2008 2:20pm
i think its more like a lottery distribution. you have several very small winners, and one or two very large ones.

Quoting giraia_br
quoting Twoblink:


"Let's do the math:

if Forex is a negative sum game, and the "winners" take from the "losers",and 95% are "losers", then that means:

95 / 5 = 19

That means the average "winner" in the Forex market makes 19x his/her money on average. The 95% is there to pad the 5%'s wallet.

Now if your goal is to "make a little money on the side", then I suggest you stop reading now; because chances are very high (95% confidence actually) that you are nothing but cannon fodder for the other 5%. Your GOAL should be to be the 5% and make 19x ROI on your money. If this is not your goal; stop reading now, and go eat some ice cream; and be content with being a 9 to 5 slave for the rest of your life. Or else, look at other options such as starting your own business or real estate or marrying someone rich."
  • #158
  • Sep 20, 2008 2:20pm Sep 20, 2008 2:20pm
Quoting tdion

take the EURUSD this past week. the ATR has been above 0.80 all week.... never this high in at least 13 years or so.... and my system lost 600 pips. it had made 19,000 pips from 2001 until the present, but the unforseen change in market behaviour caused my great probability system to fail.
That's not bad luck. That's poor money management
  • #159
  • Sep 20, 2008 2:22pm Sep 20, 2008 2:22pm
that is a matter of philosophy. large swings are acceptible if i am trading aggressively.

Quoting lostinspace
The aim is to have a relatively smooth equity curve, slow but sure and without big swings.
  • #160
  • Sep 20, 2008 2:23pm Sep 20, 2008 2:23pm
i didn't say how much money i lost, so how is it poor money management?

pips are pips, will. expect to lose several hundred at a time.

Quoting willf
That's not bad luck. That's poor money management
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