Admit it - your profits are based on luck | Page 14 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Why your broker is your friend and your enemy 8 replies

Why don't traders admit that they are not profitable in trading? 12 replies

Cutting your risk, letting your profits run 7 replies

Luck be a lady ... Your unlucky trades 18 replies

Attachments: Admit it - your profits are based on luck
Exit Attachments

Admit it - your profits are based on luck

  • #261
  • Sep 21, 2008 7:31am Sep 21, 2008 7:31am
Quoting Takisd
Another thread by another wash up.... Learn to trade buddy, then call it luck.. Just because any success you may have is luck based, doesn't mean everyone elses is.

Now please, do us all a favour and stop posting, you are ruined multiple threads.
Go Jerry! Go Jerry! Go Jerry! Go Jerry!
  • #262
  • Sep 21, 2008 8:56am Sep 21, 2008 8:56am
Attached Image
  • #263
  • Sep 21, 2008 9:51am Sep 21, 2008 9:51am
Quoting tdion

By the way, what does "learn to trade" mean, anyway? Nobody has been able to define that one yet...
Learn to trade, by learning to read the market - by learning to read and understand price(large subject). Then by putting in hours and hours(and more hours) of screen time. Then IMO one needs to couple that with an understanding of market dynamics(microstructure), to get a deeper understanding of why price is doing what is doing to help sway the probabilities even more. Of course this is no easy task, and most don't want to take things this far(or they stray off in their own worlds which T has pointed out many times which I agree with). Yes there are other ways to approach the market many which I don't know, I am sure. this was simply to give one definition since you didn't get one yet. Yes there are other parts to it, MM, psych, trade mgmt, but I think you have heard all that before.

Just trying to bring things back to some form of civil here guys

That is my basic definition of learning to trade. Please there is a lot of heat in this thread, and that is just my definition. FF has become a very hostile place as of late(i guess due to the size of this place?). As much as I think this subject has been brought up in multiple threads with different titles, it still shouldn't ever get to a point where anyone is attacking anyone. Let's try to keep this place what I remember it back in the day, that has done so much for me.


Best,
Mike
  • #264
  • Sep 21, 2008 10:30am Sep 21, 2008 10:30am
Quoting tdion
Last time I checked, the opposite of something being lucky was something being guaranteed..... Backed by scientific evidence that if A, then B.
Scientists at one time said Pluto was a planet. Now it is not.

Wrong, wrong, wrong. Who can we trust. Liars all of them.

Come on, this reasoning is what is wrong.

If something isn't this, then it must be that. Life is multiple choice, not A or B.

+ + + +

The is a general comment not directed at anyone in particular

"Traders" using the term loosely, lose for many reasons including hoping they get lucky. They also spell it incorrectly as loose about 95% of the time directly telling me which group they fall into.
  • #265
  • Sep 21, 2008 10:34am Sep 21, 2008 10:34am
Quoting Rabid
Dang, if I ever need another forex nickname I totally know what I'm using next...
Is that you the guitarist from U2 here on FF.

  • #266
  • Sep 21, 2008 11:00am Sep 21, 2008 11:00am
Quoting mbqb11
Learn to trade, by learning to read the market - by learning to read and understand price(large subject). Then by putting in hours and hours(and more hours) of screen time. Then IMO one needs to couple that with an understanding of market dynamics(microstructure), to get a deeper understanding of why price is doing what is doing to help sway the probabilities even more. Of course this is no easy task, and most don't want to take things this far(or they stray off in their own worlds which T has pointed out many times which I agree with). Yes there are other ways to approach the market many which I don't know, I am sure. this was simply to give one definition since you didn't get one yet. Yes there are other parts to it, MM, psych, trade mgmt, but I think you have heard all that before.

Just trying to bring things back to some form of civil here guys

That is my basic definition of learning to trade. Please there is a lot of heat in this thread, and that is just my definition. FF has become a very hostile place as of late(i guess due to the size of this place?). As much as I think this subject has been brought up in multiple threads with different titles, it still shouldn't ever get to a point where anyone is attacking anyone. Let's try to keep this place what I remember it back in the day, that has done so much for me.


Best,
Mike
Thanks Mike!


P.S. If you had any more to share on micro-structure or even a link
to more info in that direction, that would be appreciated. Thanks Again!
  • #267
  • Sep 21, 2008 11:09am Sep 21, 2008 11:09am
Quoting mbqb11
Learn to trade, by learning to read the market - by learning to read and understand price(large subject). Then by putting in hours and hours(and more hours) of screen time. Then IMO one needs to couple that with an understanding of market dynamics(microstructure), to get a deeper understanding of why price is doing what is doing to help sway the probabilities even more. Of course this is no easy task, and most don't want to take things this far(or they stray off in their own worlds which T has pointed out many times which I agree with). Yes there are other ways to approach the market many which I don't know, I am sure. this was simply to give one definition since you didn't get one yet. Yes there are other parts to it, MM, psych, trade mgmt, but I think you have heard all that before.

Just trying to bring things back to some form of civil here guys

That is my basic definition of learning to trade. Please there is a lot of heat in this thread, and that is just my definition. FF has become a very hostile place as of late(i guess due to the size of this place?). As much as I think this subject has been brought up in multiple threads with different titles, it still shouldn't ever get to a point where anyone is attacking anyone. Let's try to keep this place what I remember it back in the day, that has done so much for me.


Best,
Mike
Really, you think it takes that much work to make a trader?

Would you believe me if I told you it took half a day to teach someone how to trade (after they had learned how to work the platform proficiently) and they're still trading profitably after nearly 2 years?

I think we uneccesarily overcomplicate this business, after all it's really just a 2-horse race with a bit of money and trade management thrown in. The psychology of trading is about the hardest thing to master, that bit can take a lifetime!

Oh......in my opinion
  • #268
  • Sep 21, 2008 11:15am Sep 21, 2008 11:15am
Quoting lostinspace
Really, you think it takes that much work to make a trader?

Would you believe me if I told you it took half a day to teach someone how to trade (after they had learned how to work the platform proficiently) and they're still trading profitably after nearly 2 years?

I think we uneccesarily overcomplicate this business, after all it's really just a 2-horse race with a bit of money and trade management thrown in. The psychology of trading is about the hardest thing to master, that bit can take a lifetime!
I agree to a point but say there are a lot of ways to run a race. Keeping it simple can mean many things to many people depending on their temperment/style/how much time & energy they devote to the task and how much they want to get out of it/etc etc. Too many variables to just say everyone should trade this or that way.
  • #269
  • Sep 21, 2008 11:25am Sep 21, 2008 11:25am
Quoting SunTrader
I agree to a point but say there are a lot of ways to run a race. Keeping it simple can mean many things to many people depending on their temperment/style/how much time & energy they devote to the task and how much they want to get out of it/etc etc. Too many variables to just say everyone should trade this or that way.
That's true, fair point.

Maybe having an earn-as-you-learn bread and butter system to trade while developing their own style is a good idea though, at least they wouldn't be losing valuable equity. I think most newcomers lack the patience to do the long haul learning curve thing on demo, they want to make money now! I'm a classic example, I thought I knew what I was doing and it became patently obvious I didn't, that experience cost me a small fortune!
  • #270
  • Sep 21, 2008 11:37am Sep 21, 2008 11:37am
Quoting lostinspace
Really, you think it takes that much work to make a trader?

Would you believe me if I told you it took half a day to teach someone how to trade (after they had learned how to work the platform proficiently) and they're still trading profitably after nearly 2 years?

I think we uneccesarily overcomplicate this business, after all it's really just a 2-horse race with a bit of money and trade management thrown in. The psychology of trading is about the hardest thing to master, that bit can take a lifetime!

Oh......in my opinion
Yes I do believe you

T asked for a definition so I had to give one. There are many ways to skin a cat. I know that for sure


Mike
  • #271
  • Sep 21, 2008 12:06pm Sep 21, 2008 12:06pm
And then there is this kind of stuff to contend with....... Market manipulation
Same Whore .... Different Dress
  • #272
  • Sep 21, 2008 1:28pm Sep 21, 2008 1:28pm
Isn’t the crux of the matter that all analysis methods make the implicit assumption that what has happened in the past, statistically, is more likely than not to repeat itself in the future? In other words, if a candle type, chart pattern, S/R, indicator-based signal, economic trend, or whatever, could have been exploited for profit more than 50% of the time in the past, that it will continue to be the case, going forward? If this is not so, then all analysis is futile.

With games like Craps or Roulette, the odds of a particular outcome (spin of a wheel, roll of a die) are a precisely calculable fact, known in advance, and without having to analyze historical trials. However, with market analysis, we can only use historical trials and assign what appears to be statistical confidence. Any “edge” is an assumption, because there is no absolute guarantee that the forces that drive price movement will remain the same forever. For example, if heavyweight market movers suddenly decided to focus on something other than (for example) S/R to place their orders, a new “trend” (phase, era) would begin, the herd would gradually follow suit out of necessity, and a number of previously profitable PA-based methods would need to be revised accordingly, lest they lose their effectiveness.

If markets are driven primarily by sentiment, then I can think of three underlying possibilities as to why chart-based entry methods might work: (1) their somehow being able to transparently measure crowd behavior, (2) self-fulfilling prophecy, (3) they align themselves with market manipulation. Fibo retracements are a good example. Some folk believe that Fibos can predict reversal points accurately because (like other patterns that occur in nature) traders’ brains/emotions are likewise wired “fibonastically”, i.e. point (1). Others (like me) believe that they occasionally ‘work’ because they are a known to be a pervasive concept, and are therefore watched, and acted upon, by many traders, i.e. point (2). If the heavyweights decide to move price at these points, and they carry enough influence to do so, then point (3) would apply.

The outcome of any one trade can not be predicted, and is therefore “luck”. The outcome of a large sample of trades may or may not be luck. How you see it depends on whether you believe that it’s possible to have an “edge” that’s guaranteed to last indefinitely.

David
  • #273
  • Sep 21, 2008 1:44pm Sep 21, 2008 1:44pm
Quoting SunTrader
Kiss, kiss.

Why start a topic then?

To stimulate a conversation, but should it all be one point of view.

Why start the thread at all---well that is a good question. I can think of 2 good reasons (although this list is ceratinly not exhaustive):

1)Pure Entertainment-- just the sheer enjoyment of asking a simple question and watching the huge number of ridiculous, illogical resopnses. It is fun to watch people dance and hem-haw around, trying to eloquentley explain something that they believe in their heart to be true, but just cannot seem to grasp and quantify sufficently to explain to someone else. As always, the problem lies in their inabilty to articulate, not with the underlying premise itself. It is pitiful, but entertaining. Please, if you are in this number, save yourself further embaressment. Just because you belive something does not make it true. Just because you have anecdotaly made a few successful trades (or a few hundered, or a few thousand) does not make it true. Just because you may have started an account with $1,000 and now have $20,000 in it 3 months later does not make your beliefs true. All these can be explained easily by statistical fluctuation. Unless you have a definable, measurable edge that can be duplicated over and over, and the ability to clearly articulate this method, you have nothing! Your success is based upon staistical varicance (luck) and cannot be sustained.

2) Maybe, just maybe, there is someone out there who has an idea that can be further develpoed into a method that could yeild a definable edge. Maybe legitamate, adult discourse (not purile attacks) can further our chosen field of study. Maybe someone can actually make a contribution of substance, not rehash all the same old methods of EMA's, Stochs, RSI, Elliot Waves (I will not go on, but you can fill in your favorite voodo) that have failed so many times before, in so many other markets--not just Forex.

Yes, there are people making vast sums of money in this market--but to say that these profits are not, at least in part, based on luck simply defies logic. Tdion has asked anyone who can prove diffently to kindly step forward and reveal such a method, but of course no one has. Why not? Because no one can!
  • #274
  • Sep 21, 2008 1:46pm Sep 21, 2008 1:46pm
Quoting fourth
I tend to agree with tom. Outside arbitrage, and to an extent mean reversion systems typical 'pick a direction' trading IS luck. To an extent. To me being lucky is nothing more than being on the positive side of randominity.

The technique a trader uses will aim to filter out the noise and achieve something better than 50% (assuming an even statistical distribution). The trouble with chart pattern watching to me is that people interpret charts in non random ways so they often don't even get 50% win rates because the market is often just a bunch of people trying to fake out everyone else, and they are better at faking you out then you are in picking a system that bypasses it.

If I were to start scalping, lets say LinuxTroll's system and get good at it my extremely short term predictive capabilities would probably be fairly good 75-90%. In that kind of time frame there is simply too much entropy for interbank dealers and other big boys to stop hunt you, fake you out, 1-2-3 fake outs, etc, etc. I don't scalp by the way, but if I was going to trade off charts I'd want to stack the odds my favour by starting with at least 50% winning chance before picking a system.

In developing a system I believe what we're attempting to do is to reduce randominity to a lower proportion of our results. That why I try to trade system where I don't need to have a market opinion(up\down).

"the egomaniacs will not concede that luck is a factor in their trading."

If I were a person who took market positions and had opinions I would call that taking responsibility for my decisions. I would try to fight the existence of luck, because luck would take from me the responsibility of running my system and give it to the market.
Fourth, nice post, IMHO.

I especially like the part "the market is often just a bunch of people trying to fake out everyone else, and they are better at faking you out then you are in picking a system that bypasses it."

It also reminds me of the "willing buyer, willing seller" concept, i.e. when I'm confident in my analysis that tells me that price will rise, there's a trader out there who's equally confident in his analysis - for whatever reason, and across whatever time frame - that price will fall. Otherwise there would be nobody willing to take the opposite position.

Even if every trader was to act predictably and consistently according to his own rules, a method is doomed to lose occasionally, simply because it can't possibly know which participants are viewing the market, at any point. Hence every method implicitly assumes some kind of "collective averaging".

David
  • #275
  • Edited 2:41pm Sep 21, 2008 1:56pm | Edited 2:41pm
Quoting FX-Petra
.........
Just because you belive something does not make it true. Just because you have anecdotaly made a few successful trades (or a few hundered, or a few thousand) does not make it true. Just because you may have started an account with $1,000 and now have $20,000 in it 3 months later does not make your beliefs true. All these can be explained easily by statistical fluctuation. Unless you have a definable, measurable edge that can be duplicated over and over, and the ability to clearly articulate this method, you have nothing! Your success is based upon staistical varicance (luck) and cannot be sustained.
.........
Well stated, IMHO.

"Unless you have a definable, measurable edge that can be duplicated over and over, and the ability to clearly articulate this method, you have nothing! Your success is based upon staistical varicance (luck) and cannot be sustained." That's exactly the point I was trying to make back in post #273. They key lies in whether it's possible to have an edge that's sustainable indefinitely.

But I'm afraid that this argument can never be satisfactorily resolved. There will always be those who claim that their method provides such an edge, and that their sample size (e.g. 1, 2, 5, 10, 20 years of profitable trading) is proof of its sustainability. Then there will be those who say that no matter how large a sample size is, it is not large enough.

David
  • #276
  • Sep 21, 2008 2:54pm Sep 21, 2008 2:54pm
Quoting mbqb11
FF has become a very hostile place as of late(i guess due to the size of this place?).
Must be the volatility.
  • #277
  • Sep 21, 2008 3:10pm Sep 21, 2008 3:10pm
Excellent posts David! I couldn't agree more.

I would say that conceptually most successful trading systems capitalize on capturing herd behavior; the edge is simply derived from quantifying and mechanizing this behavior. If the herd change how they collectively react to these various factors, then there goes your edge. The bet - or, I suppose, the lucky or uncertain element - is the belief that aspects of human nature dictate that the crowd will always react in this way (obviously given a sufficient sample size, etc). It is merely a belief and that is all it can ever be.

The part that puzzles me about this whole debate is that it really seems no different than any undertaking that isn't governed by completely fixed rules and probabilities. Casinos and certain card games fall into this category; the long-term statistical outcome may not be favorable for the participant, but at least it can be accurately relied upon. In all other cases, you simply do the best you can, making reasonable extrapolations from the data available to you. If you are starting a business, for instance, you would determine all of the various supply and demand factors that might contribute to your success: other competitors in the market, demand elasticity for your product, etc. Does this ensure your success? Of course not, since any of these things could change at any time.

So, I agree with Tdion in the sense that 'luck' plays a role in trading, as it does in pretty much everything. As Merlin said, though, it is about having a market premise(s) that you believe in, and that you don't feel is broadly subject to change. Once you have that, even though it COULD stop working, the feeling that you are simply being lucky goes away and is replaced by a humble gratitude that your system continues to capture your broad understanding, and that your understanding itself is still holding true. Either that, or your edge involves some specific loophole (like darkstar with oanda) and you hope that it never becomes widely exploited and dries up.

Btw, congrats on being up 4000% in 9 months. I had never given much thought to such a high return/risk strategy with a small amount of truly risk capital, but it certainly has its merits. I have found that when managing clients, people are far happier not having large drawdowns than they are with industry-exceptional returns; if anything, they are actually incredulous if you're returns are fairly high. Sad but true. For a portion my own capital, however, I think that I may just try such an approach!

Best,

Chris
  • #278
  • Sep 21, 2008 8:32pm Sep 21, 2008 8:32pm
Quoting topherhk88
Excellent posts David! I couldn't agree more.
........
Btw, congrats on being up 4000% in 9 months.
........
Chris, I assume that I'm the "David" that you're replying to. The first part of your post seems to fit. If so, thanks for your reply. It's always reassuring to find somebody who feels similarly to the way that I do.

I guess it's a reasonable assumption that if John Citizen has been trading profitably for several years, that crowd behavior won't change too much going forward, and hence his method will continue to deliver. But it is nonetheless an assumption, and the bottom line is that anything can happen.

Not sure where you got the idea that I was 4000% up in 9 months. If only it was true!

Best wishes,
David
  • #279
  • Sep 21, 2008 8:41pm Sep 21, 2008 8:41pm
That was my claim.

Quoting hanover
Not sure where you got the idea that I was 4000% up in 9 months. If only it was true!
  • #280
  • Sep 21, 2008 8:42pm Sep 21, 2008 8:42pm


Quoting fxterrapin
Must be the volatility.
0 traders viewing now