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Under which conditions would your trading fail?

  • #1
  • First Post: Edited Jul 27, 2010 5:17am Jul 26, 2010 10:59pm | Edited Jul 27, 2010 5:17am
Hi all

People talk about strengths about their trading (or trading systems). But what about weaknesses?

Newbies (like myself ) seems to be drawn to the positive aspect of trading by reading TOO MUCH positive notes. I hope ya'all can share some negative aspect, your anti-edge of your trading so that more people could think about re-analysing their own trading.

What is the fallacy of your trading? Large dd's: Is there anyway you could take advantage of that? Breakout trading: What will happen to you in a trapped market? etc...

Bring some negative-positive thinking. We can make fun of and abuse each other's anti-edge. It makes the learning much faster.
Life is a school for the soul
  • #2
  • Jul 26, 2010 11:38pm Jul 26, 2010 11:38pm
I trade the market rather than a system, and if I do it well I can't fail due to market conditions. The weakness is that I must do it well. My flexibility, ability to adapt, is both my strength and weakness.
  • #3
  • Jul 26, 2010 11:46pm Jul 26, 2010 11:46pm
Quoting Mr J
I trade the market rather than a system, and if I do it well I can't fail due to market conditions. The weakness is that I must do it well. My flexibility, ability to adapt, is both my strength and weakness.
So you are saying the condition within you (your mindset) to be your biggest danger instead of market conditions. Thats an important point.

But what would be your WORST day of trading be like?
Life is a school for the soul
  • #4
  • Jul 27, 2010 3:05am Jul 27, 2010 3:05am
Quoting esuffw
Hi all

People talk about strengths about their trading (or trading systems). But what about weaknesses?

Under what cond will my system fail? Just about anytime I'm awake and actually using it. Otherwise it is guaranteed No Loss system.

I plan on writing and selling an ebook on my 100% No Loss system, and starting up a trading room so you can watch it in action... oh, I'm also managing other people's funds who don't have the balls to pull the trigger. All this despite the fact I've never had a positive week in my life
  • #5
  • Jul 27, 2010 3:13am Jul 27, 2010 3:13am
Quoting Slack
Under what cond will my system fail? Just about anytime I'm awake and actually using it. Otherwise it is guaranteed No Loss system.

I plan on writing and selling an ebook on my 100% No Loss system, and starting up a trading room so you can watch it in action... oh, I'm also managing other people's funds who don't have the balls to pull the trigger. All this despite the fact I've never had a positive week in my life
Really looking forward to your book . You can also try taking the opposite side of you own system. I forgot the name of the MA CROSS system trader who was so constant at loosing that a bank took him in to do some reverse engineering on him...
Life is a school for the soul
  • #6
  • Jul 27, 2010 3:16am Jul 27, 2010 3:16am
Quoting esuffw
Really looking forward to your book . You can also try taking the opposite side of you own system. I forgot the name of the MA CROSS system trader who was so constant at loosing that a bank took him in to do some reverse engineering on him...
That's funny. Actually, I've tried the opposite side trick, but then my subconscious kicks-in and reverses my reverse... that crafty bastard!
  • #7
  • Jul 27, 2010 3:29am Jul 27, 2010 3:29am
I try to stay out the market unless the conditions are exactly right for my system. Of course the conditions are right less often that not, so I have to be careful not to see stuff that isn't there. SO in that sense I agree that it's the stuff inside my head that normally makes things fail.

If the conditions are right, and the set up was right, but the trade still fails, it is often due to extreme volatility. It is frustrating to watch a big candle spike through a stop and then the market carry on up to the target. But thems the breaks.
  • #8
  • Jul 27, 2010 4:00am Jul 27, 2010 4:00am
Quoting Slack
That's funny. Actually, I've tried the opposite side trick, but then my subconscious kicks-in and reverses my reverse... that crafty bastard!
Thats just......... I am speechless........
Life is a school for the soul
  • #9
  • Jul 27, 2010 4:20am Jul 27, 2010 4:20am
Quoting esuffw
So you are saying the condition within you (your mindset) to be your biggest danger instead of market conditions. Thats an important point.

But what would be your WORST day of trading be like?
Yes, but I'd say it's the same for everyone. A trend trader who tries to apply their system to a ranging market also suffers mental failure. It wasn't the market conditions that were a danger, but the decision to apply a strategy that wasn't appropriate for the conditions. It's always an issue of adapation and just a matter of whether we trade it well, or make a sensible decision to sit out. Someone who trades all conditions would want to do the former, while a trend trader would want to do the latter. I'm quite happy to sit out myself.

My worst day? If I completely lost the plot I suppose I could blow an account, but if I feel my head isn't in the right place I'll set out and go for a walk, or just leave it for the day. Mistakes are going to be made though, and a mistake is the reason for my signature. It sits on the screen taunting me, reminding me never to forget my stupidity.
  • #10
  • Jul 27, 2010 5:03am Jul 27, 2010 5:03am
Ha-ha. First I need to figure out under which market conditions I can make money at all.
forget about tomorrow, just steal away into the night
  • #11
  • Jul 27, 2010 5:34am Jul 27, 2010 5:34am
Quoting Mr J
Yes, but I'd say it's the same for everyone. A trend trader who tries to apply their system to a ranging market also suffers mental failure. It wasn't the market conditions that were a danger, but the decision to apply a strategy that wasn't appropriate for the conditions. It's always an issue of adapation and just a matter of whether we trade it well, or make a sensible decision to sit out. Someone who trades all conditions would want to do the former, while a trend trader would want to do the latter. I'm quite happy to sit out myself.

My worst...
I think you already have different market conditions mapped out inside your head, therefore you will be constantly able to adopt to the current market conditions. So your mind becomes the one factor which can break or make you trades.
Life is a school for the soul
  • #12
  • Jul 27, 2010 7:39am Jul 27, 2010 7:39am
My strategy: Trend follower:
My entry style: Buy/sell on pullbacks.

When will my system fail: Most of the time, when the trend is flat or at tops or bottoms.

By nature of pullback entry and trendfollowing, you will never get many bad trades even during flat times. but the bend is the killer. Luckily that doesn't always last very long.
  • #13
  • Jul 27, 2010 7:44pm Jul 27, 2010 7:44pm
Quoting esuffw
I think you already have different market conditions mapped out inside your head, therefore you will be constantly able to adopt to the current market conditions.
I don't think so. I don't want to think of the market as being in a certain condition - why would I want a fixed opinion in a fluid environment? Anyone who places labels on the market will have the problem of recognising change, and the periods of greatest change are usually the most profitable! I want to change as the market changes. I don't think this requires a knowledge of conditions, but an understanding of the core language. If I can understand basic market action, I don't need to adapt to conditions - the market does that for me.

Quote
So your mind becomes the one factor which can break or make you trades.
Again, I'd say that is true for all traders. We trade well, or we don't. We adapt, or we don't. If we use a system (and to an extent we all do), and the system fails, it's still our minds that have failed.
  • #14
  • Jul 27, 2010 8:55pm Jul 27, 2010 8:55pm
Quoting Mr J
I want to change as the market changes. I don't think this requires a knowledge of conditions, but an understanding of the core language. If I can understand basic market action, I don't need to adapt to conditions - the market does that for me.
It is reading wise words like these that makes browsing these forums worth the time for me.

Thank you!

Quoting Mr J
I trade the market rather than a system, and if I do it well I can't fail due to market conditions. The weakness is that I must do it well. My flexibility, ability to adapt, is both my strength and weakness.
Same here I would say.
  • #15
  • Jul 27, 2010 9:11pm Jul 27, 2010 9:11pm
Quoting hagenson
I try to stay out the market unless the conditions are exactly right for my system. Of course the conditions are right less often that not, so I have to be careful not to see stuff that isn't there.
Yes, this is a very important matter to be aware of. It ties in with patience and greed, and is the NUMBER ONE issue I have with my trading.

Let the setups form and prove, and don't be too hasty to "see" the "early" entry.

Similarly, don't bail from a winning position because you think you "see" the end of the run. Again, let it PROVE it's reversing, rather than just retracing or taking a small breather.
  • #16
  • Jul 27, 2010 9:32pm Jul 27, 2010 9:32pm
Quoting ToeCutter
Let the setups form and prove, and don't be too hasty to "see" the "early" entry.

Similarly, don't bail from a winning position because you think you "see" the end of the run. Again, let it PROVE it's reversing, rather than just retracing or taking a small breather.


In other words, capitalize on something that is happening, not something that you're predicting/guessing will happen.
  • #17
  • Jul 27, 2010 9:35pm Jul 27, 2010 9:35pm
Quoting Mr J
I don't think so. I don't want to think of the market as being in a certain condition - why would I want a fixed opinion in a fluid environment? Anyone who places labels on the market will have the problem of recognising change, and the periods of greatest change are usually the most profitable! I want to change as the market changes. I don't think this requires a knowledge of conditions, but an understanding of the core language. If I can understand basic market action, I don't need to adapt to conditions - the market does that for me.

Again,...
I agree with your flexability. It just like driving. The road conditions are contantly changing and a good driver will be able to adopt all the time. But for newbies who are starting out, we find it hard to have none of the "dont do this when this happens, do this when this situation comes up".

It also depends on the car we are driving. If we are driving a car (style of trading) with no ABS brakes (breakout trading), we will be highly likely to unable to brake effectively during wet days (ranged). For a skilled driver, he KNOWS he should drive very slowly and not following cars right to its butt, but for a new driver, he first need to TASTE failure or having sombody to tell him the hard facts.

The rigid part comes before being able to be flexable, because flexability is the FEEL and FEEL needs to be developed by a million do's and dont's. Also, there are many traders who will never reach such stage of flexability simply because of their systemic believes.

Take Richard dennis for an example. Ever heard of TURTLE SOUP? The turtle soup is bang on in its name simply because it cooks the turtles. Turtle trading can have long periods of loosing trades and DD's can become quite big until a big run comes. What the TURTLE SOUP does is to turn the turtle's DD into it's own profit. When the big run comes, it cuts out the bad trade much faster then the turtle letting its profit run. Again, adaptation is the key as you said, therefore negative feedback is needed (trying to promote more negative thinking on one's trading).

I am glad to hear you are already on your way to flexability thou.

Regards
Life is a school for the soul
  • #18
  • Jul 27, 2010 9:38pm Jul 27, 2010 9:38pm
Quoting ToeCutter
Similarly, don't bail from a winning position because you think you "see" the end of the run. Again, let it PROVE it's reversing, rather than just retracing or taking a small breather.
I had a hard time while learning that. I used to WORSHIP lines and levels even before they show any sign of intrest.
Life is a school for the soul
  • #19
  • Jul 28, 2010 12:16am Jul 28, 2010 12:16am
Quoting Marv
It is reading wise words like these that makes browsing these forums worth the time for me.
Even a broken clock is right twice a day .

Quoting esuffw
But for newbies who are starting out, we find it hard to have none of the "dont do this when this happens, do this when this situation comes up".
I think a new trader needs some sort of rules, and preferably a system. Ideally I think they should have spent some time studying, and come up with their own system based on a concept that appeals to them. It may not be a good system, but as long as they are open to changeand have the potential, they'll eventually develop something that works.

I find this particularly rewarding. There's not really anyone to teach us, so our success falls on our ability to learn for ourselves. Most of the material out there isn't of much help, and even if it is, there's a good chance we either won't understand it, can't replicate it, or that it won't appeal to us. We also tend to jump into the deep end, trading without much study and really just looking to make a quick buck. This will have us looking for crutches and short-cuts. It works out pretty well though, as those who have the potential to learn will probably grow out of that mindset, and those who aren't willing to put in the effort won't reap the rewards.
  • #20
  • Jul 28, 2010 2:49am Jul 28, 2010 2:49am
Initially, I developed a system that only worked in the smaller timeframes and I was primarily a shorter. This was a tremendous limitation to my trading. To increase your chances of success, you have to have a system that works well in all timeframes (scalar) and you have to get comfortable shorting or going long.
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