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Strategy of losers

  • #61
  • Oct 19, 2009 5:44am Oct 19, 2009 5:44am
Quoting triphop
A year ago, I read a thread by downrivertrader Why do losers lose? It’s a simple question, but to find the answers hasn’t been easy.

Will the modern financial system exist, if there are no losers?
No Fear, No Regrets A sense of purpose makes life meaningful
  • #62
  • Oct 19, 2009 5:45am Oct 19, 2009 5:45am
Quoting Limstylz
Hi Porkpie,

A greasy spoon is always likely to be busy! I agree with your sentiment that its fine to disseminate and distil the untruths but they need to be replaced with 'truths' or at least the truth as you see it. Otherwise, what are you basing a trading decision on?
but how many owners of greasy spoon cafe's have ferrari's. If you just want to be a greasy spoon thats fine but you can be a micheline star restaurant with cooking ingredients that are as cheap as a family pack of bacon/tomatoes/eggs. If you want to go the extra mile and make trading profitable then of course you would want not be a greasy spoon just cook differently (and the lessons of basic money management and any business model is to buy cheap and sell at a profit).
  • #63
  • Oct 19, 2009 6:00am Oct 19, 2009 6:00am
I 100% agree with Mark Douglas and Trading in the Zone.

If you want to see the hidden beliefs people have, check out the first few pages of the mythbuster fx thread. People go so far as to say their inner selves want them to fail! Hahahaha

Its like a con game, you invest into the con and invest so much you won't believe otherwise.

All the patience, disipline and equity management in the world won't save you if you don't have an edge.
  • #64
  • Oct 19, 2009 6:19am Oct 19, 2009 6:19am
Quoting Porkpie
but how many owners of greasy spoon cafe's have ferrari's. If you just want to be a greasy spoon thats fine but you can be a micheline star restaurant with cooking ingredients that are as cheap as a family pack of bacon/tomatoes/eggs. If you want to go the extra mile and make trading profitable then of course you would want not be a greasy spoon just cook differently (and the lessons of basic money management and any business model is to buy cheap and sell at a profit).
I am not disagreeing with you, was reaffirming your money management thoughts as a fine restaurant is more likely to have higher overheads than a greasy spoon, so therefore budget considerations are more prominent for the better class of eatery. However, in both cases, buying low and selling high (although these are not the only considerations) will produce better profits.

FYI... I dont know any greasy spoon owners who drive ferrari's, but I know one who drives an Aston.
  • #65
  • Oct 19, 2009 6:28am Oct 19, 2009 6:28am
Quoting Limstylz
I am not disagreeing with you, was reaffirming your money management thoughts as a fine restaurant is more likely to have higher overheads than a greasy spoon, so therefore budget considerations are more prominent for the better class of eatery. However, in both cases, buying low and selling high (although these are not the only considerations) will produce better profits.

FYI... I dont know any greasy spoon owners who drive ferrari's, but I know one who drives an Aston.
I didn't think you were. The Aston driver, he must have good MM

How's it going anyway Lim? What you been up to trading wise? How's the Jacko experience going. Pm me if you like. I tried to PM you a while ago but I see you don't have your PM set up.
  • #66
  • Oct 19, 2009 7:07am Oct 19, 2009 7:07am
Just sent sent you a message, Porkpie.
  • #67
  • Oct 19, 2009 1:15pm Oct 19, 2009 1:15pm
Quoting FXSurfer
I use the Market Profile theory, esp. as laid out by Steidlmeyer in Markets and Market Logic, all of the time. Basically, viewing the market as an auction process with a mix of different TF participants who shape its distribution.

Who know if that makes any sense to anyone. Oh well...
Great Brent, I'd hoped you still did. I read MoM a while back, and traded for a while with the fin-alg market profile indicator (though I can see why you might ditch that). There's some interesting solid common-sense concepts there and some day I'm coming back to them to test them systematically - it's on my list. When I do, I'll let you know; I think it's only you and Rabid on FF who look at the markets like this. All the best.
  • #68
  • Oct 19, 2009 1:18pm Oct 19, 2009 1:18pm
Quoting Ferrari
All the patience, disipline and equity management in the world won't save you if you don't have an edge.
Never in question that Ferrari - the real problem is in saying that most systems are profitable if you only follow them. They most definitely aren't.
  • #69
  • Oct 19, 2009 1:21pm Oct 19, 2009 1:21pm
Quoting Bizken
Will the modern financial system exist, if there are no losers?
Well certainly not the markets at any rate. What interests me is the distribution - a classic case of Pareto's law, where 20% of the traders take 80% of the money; time and time again.
  • #70
  • Oct 19, 2009 1:51pm Oct 19, 2009 1:51pm
I have a number of theories why the majority of traders lose, I'm not sure entirely but it certainly does seem like the market will do whatever it takes to make sure the majority of traders are wrong. I'm only talking about the Forex market here now, and I'd like to throw out two suggestions and see which (if any) people think explain the reason.

1. The Forex is a zero sum game where a few huge institutions with virtually unlimited capital are out to ensure that the money flows from the majority of (retail) traders to them. These institutions take the otherside of the majority of retail traders trades and continue to take the other side until the those retail traders are no longer the majority and lose their money to the institutions. They have the funds to do this and essentially know that they can always buy the majority of small traders out.

2. Sound trading is going long when the market is moving up and going short when the market is moving down, cutting your losses and letting your profits run. Our emotions make us do the opposite of this, we know that some trades will lose but feel that THIS trade must be a winner and will let it go deep into the red whilst we grab a quick profit before it disappears. When the market is going up or down we're wired to try and gamble by picking highs and lows rather than simply going with it.
  • #71
  • Oct 19, 2009 2:19pm Oct 19, 2009 2:19pm
Quoting triphop
Never in question that Ferrari - the real problem is in saying that most systems are profitable if you only follow them. They most definitely aren't.
I agree 100%.
  • #72
  • Oct 19, 2009 2:19pm Oct 19, 2009 2:19pm
Quoting triphop
Well certainly not the markets at any rate. What interests me is the distribution - a classic case of Pareto's law, where 20% of the traders take 80% of the money; time and time again.
Yeh its called capitalism, get used to it
  • #73
  • Oct 19, 2009 2:21pm Oct 19, 2009 2:21pm
Quoting Davidee
I have a number of theories why the majority of traders lose, I'm not sure entirely but it certainly does seem like the market will do whatever it takes to make sure the majority of traders are wrong. I'm only talking about the Forex market here now, and I'd like to throw out two suggestions and see which (if any) people think explain the reason.

1. The Forex is a zero sum game where a few huge institutions with virtually unlimited capital are out to ensure that the money flows from the majority of (retail) traders to them. These institutions...
Heres a 3rd possibility: the market does not have the probability distribution of a bell curve.
  • #74
  • Oct 19, 2009 2:29pm Oct 19, 2009 2:29pm
Quoting triphop
A bit about discipline, Mark Douglas and instinctBut I found discovering anything even resembling a useful edge is a long slog of think, research, find, experiment, question, test, dead end and start again, for literally thousands of hours. Sure, the outcome might be a dirt simple system, but the time taken to find it…
I wish I had written that. Sounds exactly how I've experienced it. One of the keys to finding that edge has been in accurately seeing the market for what it is. When I started out in the trading arena, I learned most of my trading base of knowledge from books that talked about charting and technical analysis. Unfortunately that is only one small piece of the puzzle, and not a particularly important piece IMNSHO. I used to think there are technicals and fundamentals and that was it. Much of the Market Microstructure research and developments came after I had already gone through the initial phase of learning how the markets work. Interestingly enough, I've recently been filling what I lacked in terms of foundational knowledge regarding how the markets actually operate. And to the point, I'd say that doing this first (laying the foundation) is really the key to finding that ever so elusive edge for those who are on the path.

Quote
And his focus then is on discipline and following the rules. The Chinese water torture of trading is to take a crap system and make someone trade it day in, day out for months on end. And to get nothing but a slight loss in your account for your troubles. The implication that you just didn’t believe enough in yourself mate, those times when you didn’t follow the rules, that was self-sabotage, is not only insulting, it’s not true either.

Peddling psycho-fluff is a cottage industry for some, and stating that any old system won't make you rich will get you the equivalent of the FF medieval treatment, shown below:

Inserted Video
  • #75
  • Oct 19, 2009 3:15pm Oct 19, 2009 3:15pm
Quoting Ferrari
Heres a 3rd possibility: the market does not have the probability distribution of a bell curve.
But why would that necessarly mean that 80%+ of people simply had to fail?

Why would that mean that somebody could likely be wrong 10 times in a row when tossing a coin would get ten losses in a row 1 in 1024 times?
  • #76
  • Oct 19, 2009 3:34pm Oct 19, 2009 3:34pm
Quoting Davidee
But why would that necessarly mean that 80%+ of people simply had to fail?

Why would that mean that somebody could likely be wrong 10 times in a row when tossing a coin would get ten losses in a row 1 in 1024 times?
I don't know man, all I'm saying is I'm pretty sure most people have got the wrong idea from the start. Looking at the past to predict the future sure isn't working for a lot of people, just look at any thread on this forum, pick a strategy and watch it fail misrably.

On an interesting side note, I have been demo-ing trading Level 2 futures (trading in the 'now' moment.) I have attached a pic of how I did today. I actually can't believe the result myself. Obviously that was before commissions, probably around 10% of my profit I would guess.

Attached Image (click to enlarge)
Click to Enlarge Name: cqg trader.jpg Size: 99 KB
  • #77
  • Oct 19, 2009 3:49pm Oct 19, 2009 3:49pm
As far as I understand it, most things in the natural world fit in to a bell curve standard devations from the mean model. Most man made things however don't.

Natural things, say a person's height for example, would fit into the bell curve model. I.e. 67% of people's height will be 1 standard devation from the mean or less, 95% of people's height will be within 2 standard devations from the mean etc... But nobody's height will be 1,000 standard devations from the mean, you won't find someone that is 500 metres tall or an adult that is 2 inches high for example.

But man made things, say, income distribution, often won't fit into the standard devation model. You will find things like people with more money than 3rd world countries with wealth 100 standard devations from the mean.

What does this mean in the markets? Well, the way I understand it, it means that extreme events are far more likely than you might think. With a bell curve model events like the 1987 stock market crash, or a currency pair that usually moves 50 - 100 pips a day moving 1,000 pips in a day might happen every thousand years if markets fitting into the bell curve model. But they don't, they happen every decade or some, sometimes more. But I don't see why this means that 80%+ of traders have to lose.
  • #78
  • Oct 19, 2009 3:52pm Oct 19, 2009 3:52pm
Quoting Davidee
But I don't see why this means that 80%+ of traders have to lose.
Because they assume the market falls into a bell curve probability distribution?
  • #79
  • Oct 19, 2009 4:15pm Oct 19, 2009 4:15pm
Quoting Ferrari
I don't know man, all I'm saying is I'm pretty sure most people have got the wrong idea from the start. Looking at the past to predict the future sure isn't working for a lot of people, just look at any thread on this forum, pick a strategy and watch it fail misrably.

On an interesting side note, I have been demo-ing trading Level 2 futures (trading in the 'now' moment.) I have attached a pic of how I did today. I actually can't believe the result myself. Obviously that was before commissions, probably around 10% of my profit I would guess....
I don't want to rain on your parade but how do you know that result you have is from trading 'correctly' as opposed to just luck. Its only 2 trades.

I remember the first morning I started trading before my 9-5 job. I made about $2000 in 30 mins before work. Over leveraged and I didn't have a clue what I was doing. That day was probably the most damaging day of my trading career. I soon blew my account after that. It was just luck.
  • #80
  • Oct 19, 2009 4:21pm Oct 19, 2009 4:21pm
Quoting Porkpie
I don't want to rain on your parade but how do you know that result you have is from trading 'correctly' as opposed to just luck. Its only 2 trades.

I remember the first morning I started trading before my 9-5 job. I made about $2000 in 30 mins before work. Over leveraged and I didn't have a clue what I was doing. That day was probably the most damaging day of my trading career. I soon blew my account after that. It was just luck.
Take a closer look, the long and short columns is the total amount of contracts traded.
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