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KISS

  • #1
  • First Post: Mar 27, 2010 9:51am Mar 27, 2010 9:51am
I want to start a thread for discussion (i.e. I wont ban people for having opposing views) on why some traders go down the path of complicating trading, when there is so many possibilities that require only some experience and a bit of risk/trade management.

I don't necessarily want to talk about actual trading setups, just in general.

There are many ways to trade, the most common boil down to S/R bounces, breakouts of S/R.

Now to trade these just requires some charts a few line tools and practice.

There are others who want to understand how/why/who/where/when/color of socks etc.... price moves, suggesting once they know this they will trade risk free, or with high rate of wins.

They will study all sorts of theoretical stuff on order flow trying to understand complex maths and other complex material

I am suggesting that people keep it simple, stupid.

Would a poker player learn how cards are made, in which factory, who made them etc. It might be nice to know, but pointless to his performance

Discuss...

Regards

Mark
Economists have forecast 9 out of the last 5 recessions
  • #2
  • Mar 27, 2010 11:29am Mar 27, 2010 11:29am
Good idea for a thread.

I'll lend this sign that I like which makes a good wallpaper.

Have a good weekend!
Brent

http://www.loudpoet.com/wp-content/u...7/Simplify.jpg
  • #3
  • Mar 27, 2010 11:39am Mar 27, 2010 11:39am
Quoting FXSurfer
Good idea for a thread.

I'll lend this sign that I like which makes a good wallpaper.

Have a good weekend!
Brent

http://www.loudpoet.com/wp-content/u...7/Simplify.jpg
Thanks Brent, nice!
Economists have forecast 9 out of the last 5 recessions
  • #4
  • Mar 27, 2010 12:37pm Mar 27, 2010 12:37pm
Interesting topic, makes a change from the usual!

I think some people work under the assumption that there is a correlation between the high failure rate and the high percentage of people who use simple tools like the ones you mentioned, maybe some of them have even used similar tools themselves, and failed. So they go off on a mission to find something smarter, more exclusive, more complex than the majority are using because they believe it will give them an 'edge' over the majority. Unfortunately most of these people will still fail, regardless of how much they learn or understand about the market and it's participants. It's not the market they initially need to learn and understand, it's trading.

Soros's simple quote I think explains it far better than I could, "It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong". That, in my experience, is what trading is all about. Again the majority are looking for something to help them be 'right' when that's not actually what separates the consistently profitable traders from the consistently unprofitable ones.

It sounds too simplistic to say 'make more money than you lose' but when you actually think about it that is what we should all be trying to do, rather than trying to find those illusive tools, systems, or knowledge to help predict future price direction and be 'right'. Get that part down and it won't really matter what you use, within reason!

-
  • #5
  • Mar 27, 2010 12:49pm Mar 27, 2010 12:49pm
Quoting pipmutt

It sounds too simplistic to say 'make more money than you lose' but when you actually think about it that is what we should all be trying to do, rather than trying to find those illusive tools, systems, or knowledge to help predict future price direction and be 'right'. Get that part down and it won't really matter what you use, within reason!

-
"One of the shrewdest statements that I ever heard on this was that the only way to make a million dollars in trading (as opposed to investing) is to make 10 million dollars and lose 9 million dollars (in concept, at least: some of you may well be making 10 million and losing only 8, or 7, or 6.2...)"

Not my words, but worth reading imo here
  • #6
  • Mar 27, 2010 12:57pm Mar 27, 2010 12:57pm
Great posts guys, I think finding an entry point is not the most difficult part of trading, its what you do once you in there.

One quote I heard off a trader on another board is his holy grail is to get 100% of his account into a trade with no risk.

So adding to a position when its going in your favour, and locking in profit at sensible places. The fact is that non many trades are going to be runners, so you need to get as much out of it when you are right and limit as much when you are wrong.

Mark
Economists have forecast 9 out of the last 5 recessions
  • #7
  • Mar 27, 2010 1:00pm Mar 27, 2010 1:00pm
Quoting AstonDan

Not my words, but worth reading imo here
Scrap my post and read that one, it's an excellent post, thanks for the link Dan!
  • #8
  • Mar 27, 2010 1:34pm Mar 27, 2010 1:34pm
Quoting AstonDan
"One of the shrewdest statements that I ever heard on this was that the only way to make a million dollars in trading (as opposed to investing) is to make 10 million dollars and lose 9 million dollars (in concept, at least: some of you may well be making 10 million and losing only 8, or 7, or 6.2...)"

Not my words, but worth reading imo here
Just reading this post, very good, pity he didn't post more!
Economists have forecast 9 out of the last 5 recessions
  • #9
  • Mar 27, 2010 3:04pm Mar 27, 2010 3:04pm
Quoting markmm
Great posts guys, I think finding an entry point is not the most difficult part of trading, its what you do once you in there.
OMG the time we spend looking for the Holy Grail of the perfect entry.

Try this simple method instead and see if it doesn't work at least as well as a more "technical" approach:

"Hum. Sure looks like there is some serious interest on the part of Sellers at around the 1.3425 area. Let's throw a small short in along with these guys and see how far they can take it."
  • #10
  • Mar 27, 2010 3:09pm Mar 27, 2010 3:09pm
Quoting FXSurfer
OMG the time we spend looking for the Holy Grail of the perfect entry.

Try this simple method instead and see if it doesn't work at least as well as a more "technical" approach:

"Hum. Sure looks like there is some serious interest on the part of Sellers at around the 1.3425 area. Let's throw a small order in along with these guys and see how far they can take it."
Yep why mess about with indicators order flow when you can just look and see.

Im finding this guys posts interesting.

http://www.humblemoney.com/?p=91
Economists have forecast 9 out of the last 5 recessions
  • #11
  • Mar 27, 2010 3:21pm Mar 27, 2010 3:21pm
Quoting markmm
Would a poker player learn how cards are made, in which factory, who made them etc. It might be nice to know, but pointless to his performance

Mark
I'll definitely keep an eye on this thread . Just wanted to mention that this comparison is pretty weak if not invalid. Understanding how cards are made has no bearing on the performance of an individual poker player... yes this is definitely true.

But people are not inanimate poker cards. At its simplest level merely understanding where people often put orders and why will definitely improve a speculator's chance of being profitable.

Understanding that most market participants don't like to hold positions over the weekend will definitely help an individual speculator understand why there might be sudden profit taking before the weekend and the small rally that ensues because of it.

Understanding that options are defended and can explain why prices are rejected at seemingly arbitrary values can definitely be helpful.

Just a few examples but I think I have established that the comparison is invalid.
  • #12
  • Mar 27, 2010 3:22pm Mar 27, 2010 3:22pm
Quoting markmm
order flow
Not to get started on this subject but, when you have a term like "order flow" being used as jargon it really over complicates things. You end up with everyone having their own definition of what it is. Doesn't help simplify things. LOL!

(As a side note: I personally am finding the study of market structure, of which order flow is a part, very useful. Extremely useful - if not essential. Just want to clarify that personal belief.)
  • #13
  • Mar 27, 2010 3:27pm Mar 27, 2010 3:27pm
Quoting Deusomega
I'll definitely keep an eye on this thread . Just wanted to mention that this comparison is pretty weak if not invalid. Understanding how cards are made has no bearing on the performance of an individual poker player... yes this is definitely true.

But people are not inanimate poker cards. At its simplest level merely understanding where people often put orders and why will definitely improve a speculator's chance of being profitable.

Understanding that most market participants don't like to hold positions over the weekend will definitely...
Ok the analogy was questionable, maybe it would be a better one would be - :

You go to a poker game with millions of players and you have no real information on how they are going to play, so you try and analyse all of there expressions, mannerism etc.

My point is, you have no real information on orders placed, unless you are inside.

If your not inside then you outside!

Mark
Economists have forecast 9 out of the last 5 recessions
  • #14
  • Mar 27, 2010 3:29pm Mar 27, 2010 3:29pm
Quoting FXSurfer
Not to get started on this subject but, when you have a term like "order flow" being used as jargon it really over complicates things. You end up with everyone having their own definition of what it is. Doesn't help simplify things. LOL!

(As a side note: I personally am finding the study of market structure, of which order flow is a part, very useful. Extremely useful - if not essential. Just want to clarify that personal belief.)
I agree it is good to understand market microstucture, just like its good to understand money management or other aspects of trading. However it will not make you any more profitable.
Economists have forecast 9 out of the last 5 recessions
  • #15
  • Mar 27, 2010 3:34pm Mar 27, 2010 3:34pm
hmmmm .... I see hanover viewing this thread right now... great stuff to come...

I will dare to post before him...

My simple thought is that there's a point (usually at the beginning) when we are never satisfied... sometimes we build a plain and simple, good system... but the losers still bothers us too much. We don't see it as part of the bills you have to pay to run your business.

We take the market personally, as if it would care a dime about our positions... We do revenge trading, and that "let me put this thing on the chart and see if I could have filtered that painful last loser" kind of thinking.... Soon you twisted the system, and it works for the next two trades... Then you hit another looser... "Damn"... "the market is bad only to me?"... and we start again to think that "let me put another thing on the chart, to filter a bit more.." ... and so on... until you messed the whole thing...

I remember some time ago when I used to do that... I realized that it was a complete mess when I was saving my templates on MT4... the original system was 01.tpl, the first tweak was 02.tpl, and when I was saving the 08.tpl modification I realized it had NOTHING to do with the original... then I switched to the original and saw a clean chart, maybe just on indicator and felt a relief feeling.... like a fresh air breathe after whole day trapped in the basement.... deleted all the others, of course...

Cheers!
Many share my views with me. But I don't share them with them...
  • #16
  • Mar 27, 2010 3:42pm Mar 27, 2010 3:42pm
Quoting markmm
I agree it is good to understand market microstucture, just like its good to understand money management or other aspects of trading. However it will not make you any more profitable.
Well, I'll disagree with you there. Besides, trading is about profits right? What's good about understanding it if not to increase profits?

There may be another general point that we may not agree upon:
Seeking a functional understanding of the markets that you're trading isn't over complicating things.

This is all that the study of market structure is.

Yes? No?

Anyway, don't ban me yet. Ha!
  • #17
  • Mar 27, 2010 3:50pm Mar 27, 2010 3:50pm
Quoting FXSurfer
Well, I'll disagree with you there. Besides, trading is about profits right? What's good about understanding it if not to increase profits?

There may be another general point that we may not agree upon:
Seeking a functional understanding of the markets that you're trading isn't over complicating things.

This is all that the study of market structure is.

Yes? No?

Anyway, don't ban me yet. Ha!
I'm not against understanding market microstructre it is interesting. If it was just a case of learning loads of stuff then you become profitable then there would be more than 5% making money.

I wont ban you for having another viewpoint, unlike others.
Economists have forecast 9 out of the last 5 recessions
  • #18
  • Mar 27, 2010 3:55pm Mar 27, 2010 3:55pm
Quoting markmm
I'm not against understanding market microstructre it is interesting. If it was just a case of learning loads of stuff then you become profitable then there would be more than 5% making money.

I wont ban you for having another viewpoint, unlike others.
Likewise if trading was simple then err well you know
  • #19
  • Mar 27, 2010 4:00pm Mar 27, 2010 4:00pm
Quoting Deusomega
Likewise if trading was simple then err well you know
Not saying its simple, but if you start complicating needlessly then you chances are reduced.

Just copy this guy

Inserted Video
Economists have forecast 9 out of the last 5 recessions
  • #20
  • Mar 27, 2010 4:13pm Mar 27, 2010 4:13pm
Quoting markmm
Just copy this guy
"Only in the movies."
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