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How did trading change your life?

  • #141
  • Feb 4, 2011 7:54am Feb 4, 2011 7:54am
Ok now think about this:
Livermore is still considered a legend even if he lost his pants more than once, last time he lost all his money he decides to loose his life too. People looks at Livermore as a legend but wouldn’t trade like him, i think people isn’t really concerned about his trading strategy.
Let’s say Livermore at the top of his success stops trading, what will be the results? he would live his entire life as millionaire, surrounded by people asking him how to trade, he didn’t changed his way of trading, he just stopped while in the money.
If you want to make 1 million from 1k using a averaging down strategy, do it! but be conscious you’re probably gonna lose that 1k, if you will be very very lucky you’ll retire with 1 million in your pocket.
At the same time you can beat the casino, with roulette. Bet 1€ at a time and if you win martingale it! if you win 19 times in a row you’ll win 524.287€, you decide to don’t drink a coffee a day to make half million dollar. Obviously if you want to beat the casino everyday for your entire life using that strategy, well, probably you’ll be a loser...But if you will be not greedy, you’ll be able to stop with more than a half million. 500K are too few??! bet 10€ a day and you’ll get 5 million.
You know what? it’s tough to lose 1€/10€ a day for 10 years in a row, here psychology kicks in, can you handle to bleed money everyday from your wallet, without knowing if you’ll ever win some?
Now all the edge traders will say: “ah you have to bet, because you don’t have an edge” now look at fund managers statistics, most of them will not reach 10 years, losing ALL their (and their clients) money. But they don’t bet!! they absolutely know what they are doing, they take trading seriously.
While they blow up, telling you how to trade, you are still there betting 1€ at a time, you’ll never go broke, you’ll never get too much stressed, at the end you have good chance to make money...
  • #142
  • Feb 4, 2011 9:14am Feb 4, 2011 9:14am
Quoting Beman
Ok now think about this:
Livermore is still considered a legend even if he lost his pants more than once, last time he lost all his money he decides to loose his life too. People looks at Livermore as a legend but wouldn’t trade like him, i think people isn’t really concerned about his trading strategy.
Let’s say Livermore at the top of his success stops trading, what will be the results? he would live his entire life as millionaire, surrounded by people asking him how to trade, he didn’t changed his way of trading, he just stopped while in the...
well, if you wanna see trading like gambling, then do so. In my opinion trading can be more than mere gambling.
For me trading is like the insurance industry: e.g. they know that out of 100.000 people who are 60 years old, 5 people will die on average every year. Then they calculate the insurance premium for being able to pay out the 5 people. It's the large numbers they are quite certain of. If you ask them, who will die this year, they don't know, they just know that on average it is 5 people.
If we put that into context of trading, each trade has an uncertain outcome (we don't know which one will win or lose), but over a couple of thousand or tenthousand trades we can determine an almost certain outcome, be it positive or negative.
The more trades you take, the less you are relying on luck, but on ice-cold statistics.
So, if you wanna rely solely on luck, then take only a few trades or so and hope you are lucky. If you however take really a lot of trades, then there is no luck anymore, but hard statistics. And then you know if you have a positive or negative expectancy.

Same goes with roulette, maybe you are lucky over the next 20 rounds. But you can't stay lucky over 10,000 or more rounds. Statistics will kick in and cancel out the luck you had.

But anyways, just my belief. Maybe I am wrong about that.
  • #143
  • Feb 4, 2011 9:26am Feb 4, 2011 9:26am
it made me a computer slave
  • #144
  • Feb 4, 2011 9:55am Feb 4, 2011 9:55am
Quoting Custos
well, if you wanna see trading like gambling, then do so. In my opinion trading can be more than mere gambling.
For me trading is like the insurance industry: e.g. they know that out of 100.000 people who are 60 years old, 5 people will die on average every year. Then they calculate the insurance premium for being able to pay out the 5 people. It's the large numbers they are quite certain of. If you ask them, who will die this year, they don't know, they just know that on average it is 5 people.
If we put that into context of trading, each trade...

This is a very good point (i love this guy! ).
But let's think again that edge traders are just lucky, (so try to understand my point of view). You run your insurance, and let's say you're an italian one, a war happen, what happens to all your statistics? isn't it like relying on MACD? when things changes, your statistics lags, or not? so how do you understand you're wrong?
When you talk about correlation, do you mean running a worldwide insurance? so if italy is into a war, you'll lose your italian one, but you'll be able to recover with the others? but, then again, if a world war happens?

I think edges exists in the market, they aren't easy to find, but they exist.
I also think that many managers are too much glued to their edges, and when you do that you aren't able to change your mind fast enough to survive.

So i think that an edge solely isn't enough, you also need to understand that luck is much involved, this doesn't mean that you found your edge because you are lucky, but you would be lucky if your edge will last forever.
Again psychology (for me) is involved, be prepared to see all your beliefs smashed by a tsunamy, it could happen and you have to be psychologically ready for it.

For me you can still make money with a very simple strategy, relying just on luck, and your mind. But you can't make money (even if statistically, your chance are better) if you solely rely on an edge (remember most MM loose money), you need to face bad times, with bad times i don't mean to face DrawDowns, i mean when your edge will not work anymore, in other words, when a WW starts!!


p.s when i say "you", i should write "we" since i don't have "THE ANSWER"!
  • #145
  • Feb 4, 2011 9:56am Feb 4, 2011 9:56am
Quoting dragan53
it made me a computer slave
yeah, i know soap opera compared to us, are nothing!!!
  • #146
  • Feb 4, 2011 10:47am Feb 4, 2011 10:47am
Hey I like this discussion (Beman-Custos)!
You guys both have arguments that make sense (at least to me) and I can realy understand both of your views.
Life is a funny thing isn't it...it shows again and again that we all have our own different realities. I just hate if someone says to me something is impossible because I know it just means that it is impossible for him, it's just not in his reality.
I am affraid you guys won't convince each other, but discussion is alwasy good and we can all learn alot,especialy relatively now guy like me http://www.forexfactory.com/images/icons/icon12.gif
So thanks,it's been fun to read...
  • #147
  • Feb 4, 2011 1:43pm Feb 4, 2011 1:43pm
Quoting Beman
This is a very good point (i love this guy!).
But let's think again that edge traders are just lucky, (so try to understand my point of view). You run your insurance, and let's say you're an italian one, a war happen, what happens to all your statistics? isn't it like relying on MACD? when things changes, your statistics lags, or not? so how do you understand you're wrong?
When you talk about correlation, do you mean running a worldwide insurance? so if italy is into a war, you'll lose your italian one, but you'll be able to recover...
hm, let's talk about diversification (not correlation ). Yes, everything could fail at the same time, but I am just talking in terms of probabilities. If you have multiple good strategies based on multiple instruments, then the probability is extremely low that this event happens. Of course it still might happen, but the probability is extremely low.

From what I understand, most funds have to commit to ONE strategy, and that is the inherent problem of funds. They can diversify the instruments, but not the strategies used. (Please correct me if I am wrong, but I think that's how it is in the fund industry.)

And yes, you are right, it is impossible to know in advance, when an edge starts to fail. Best example:
http://grailtrading.blogspot.com/200...ent-wrong.html
read the last post of that blog.

Once you realize it, you are already deep in the red probably, but in terms of probability it is pretty hard for MULTIPLE edges to fail at once. That is why I think it is important to first of all have a couple of independent edges for multiple instruments and then use them for diversification purposes. I think diversification is actually one of the few methods that really can reduce risk. Not a lot of people on ff talk about diversification for some reason.

Well, and a personal story about me. My personal beliefs have been smashed many many times already. But once I started thinking like a researcher or scientist and started looking at the market through stats, I could establish more objective beliefs that have not failed me...YET

For some trading is art, for some it's science (and for some it's luck ). I am anyways a more analytical person, that's why I rather rely on scientific methods.
If I believed trading was purely based on luck, then I rather would go to the casino. The atmosphere there is more thrilling .
  • #148
  • Feb 5, 2011 12:00am Feb 5, 2011 12:00am
Found this article... Amazing!!!

Enjoy!!!
Attached File(s)
File Type: pdf Lizards.pdf   46 KB | 621 downloads
  • #149
  • Feb 5, 2011 12:36am Feb 5, 2011 12:36am
u rock man thaT WAS funny as
  • #150
  • Feb 5, 2011 12:43am Feb 5, 2011 12:43am
Quoting Custos
hm, let's talk about diversification (not correlation ). Yes, everything could fail at the same time, but I am just talking in terms of probabilities....
yes, we do have different beliefs, that's probably why market is so fascinating...
i like my strategy because i know that any day any second any trade can bring me a +10% in a blink of a eye, while to lose the same amount it takes 100 trades.
I like what you say since you prefer to be analytical and you found your niche in the markets.

People at the end what can i say? it could be that me and Custos will be millionaire next 10 years, or we could both go broke... at the end i think this: "find a road, the one you feel easiest, take some money, start trading, if you make money believe what you want (luck, great analysis, weather, planets, ecc...), just be wise, never take your profits for granted, the day you'll stop trading, that's when you can say i've been a successful trader..."
  • #151
  • Feb 5, 2011 12:46am Feb 5, 2011 12:46am
Quoting dragan53
u rock man thaT WAS funny as
Thanks mate
  • #152
  • Feb 7, 2011 2:48am Feb 7, 2011 2:48am
Quoting harvest3r
It did. You are just looking at the wrong timeframe. If you go to H1 or lower, you will see that it always comes back at least once. If not, the next rally/sell-off will bounce back. It always do. And remember: with cost averaging, you don't have one entry point. I got up to ten open positions, it could be even more if I had a bigger account balance. Sooner or later, it bounces back and the latest (biggest) position cover all the losses.




Just tested it on H4 with data from 2007 till now and it works (both for longs and shorts). It could...
I've tried something like your approach with real money. It seem to work to a certain exent but there were times when I was overexposed and an adverse move would be very very painful.

As far as the thread is concerned, while averaging and waiting PA to move to BE you are facing all the time negative floating P/L, every day. This can be very damaging to your mental state if the process takes a few weeks or even months. Don't you think? And when you get to the point when you are overexposed then it get's real messy.

@harvest3r
I've experimented with this approach and if you are interested we can share some thoughts. I don't think it's appropriate to discuss all the parameters of the approach here in the thread, since it is off topic. Maybe via PM's would be better, so PM me, I think we can have a constructive discussion.

Regards
  • #153
  • Feb 7, 2011 3:06am Feb 7, 2011 3:06am
Quoting Beman
For me you can still make money with a very simple strategy, relying just on luck, and your mind. But you can't make money (even if statistically, your chance are better) if you solely rely on an edge (remember most MM loose money), you need to face bad times, with bad times i don't mean to face DrawDowns, i mean when your edge will not work anymore, in other words, when a WW starts!!
Following this reasoning, though correct, you should say that we always lose. It's like someone said: "in the long term, we're all dead." Being alive is luck. Having a job and keeping it is luck. Being a merchant and having profits is pure luck - how do you know that people will keep buying bananas or eggs forever?

I think the correct way to see things is: we're always gambling, only the risk level may change. When you marry, you are gambling (he/she may say "I love you" today and betray you tomorrow, you can never know it in advance). When you study and become a doctor, you are gambling (your parents spent hundred$ of thousand$, you spent 15 years studying... and then you don't get the dream job, or maybe you die in a car crash just before the last exam).

As Custos said, diversification is a way to escape the bad luck. Enjoy life instead of only planning for the future. Invest in Forex but also in gold and real estate. As soon as possible, take some profits, realize them and keep them with you.

I am seriously thinking about such catastrophic scenarios. I want to keep some real estate in Europe as well as in South America. As soon as I get enough money (not too much, though), I would like to open an account in Switzerland and keep around $1000 of five different currencies (probably USD, EUR, JPY, GBP and CHF) + 5 oz of gold inside a locker. It may sound stupid, somehow it really does, but I think it's better/safer than signing some life insurance contract. If a war starts, I could escape to Switzerland, withdraw my money immediately and then move to the other continent.

If something goes wrong with Switzerland, well, EVERYBODY will suffer, and if everybody suffer, nobody has the edge anyway .
"The reason I was born and came into the world is to testify to the truth."
  • #154
  • Feb 7, 2011 3:11am Feb 7, 2011 3:11am
Quoting MyTbo
(...) you are facing all the time negative floating P/L, every day. (...)
You are absolutery right. That's exactly what I face everyday . But that's not a problem, as long as my exposure doesn't get too high. As I said before, it depends on your parameters, i.e. you MONEY MANAGEMENT...


Quoting MyTbo
I don't think it's appropriate to discuss all the parameters of the approach here in the thread, since it is off topic.
You are right again. Let's exchange some PMs.
"The reason I was born and came into the world is to testify to the truth."
  • #155
  • Feb 7, 2011 3:22am Feb 7, 2011 3:22am
Quoting harvest3r
Following this reasoning, though correct, you should say that we always lose. It's like someone said: "in the long term, we're all dead." Being alive is luck. Having a job and keeping it is luck. Being a merchant and having profits is pure luck - how do you know that people will keep buying bananas or eggs forever?

I think the correct way to see things is: we're always gambling, only the risk level may change. When you marry, you are gambling (he/she may say "I love you" today and betray you tomorrow, you can never know it in advance). When...
i generally agree about what you said, usually i don't compare "real" life with market, i think in real life you still have many choices, things usually doesn't change that fast. If you are a merchant and you sell something, you'll normally be able to see a problem coming before you get broke and you can find a logic and rational solution to it. Market doesn't give a rational solution at the problem, so actually you keep trusting your edge or your gut... but these are only minutiae, i agree that luck is very very involved in our life...
  • #156
  • Feb 7, 2011 3:23am Feb 7, 2011 3:23am
Quoting MyTbo
I've tried something like your approach with real money. It seem to work to a certain exent but there were times when I was overexposed and an adverse move would be very very painful.

As far as the thread is concerned, while averaging and waiting PA to move to BE you are facing all the time negative floating P/L, every day. This can be very damaging to your mental state if the process takes a few weeks or even months. Don't you think? And when you get to the point when you are overexposed then it get's real messy.

@harvest3r
I've experimented...

if you guys prefer you can talk about it in the thread, no problem, if you prefer keeping it private, i understand!
  • #157
  • Feb 7, 2011 4:08am Feb 7, 2011 4:08am
Quoting harvest3r
Following this reasoning, though correct, you should say that we always lose. It's like someone said: "in the long term, we're all dead." Being alive is luck. Having a job and keeping it is luck. Being a merchant and having profits is pure luck - how do you know that people will keep buying bananas or eggs forever?

I think the correct way to see things is: we're always gambling, only the risk level may change. When you marry, you are gambling (he/she may say "I love you" today and betray you tomorrow, you can never know it in advance). When...
its like friends,if u only have 3-4 friends in one group that u hang out,and u stop being friends with them,then ur left alone,
but if u have many friends in different groups,then if one group that u mostly
hang out stops hanging out with u ,u can always fall back on the other groups

im talking from experience
  • #158
  • Feb 7, 2011 11:22am Feb 7, 2011 11:22am
Quoting harvest3r
Following this reasoning, though correct, you should say that we always lose. It's like someone said: "in the long term, we're all dead." Being alive is luck. Having a job and keeping it is luck. Being a merchant and having profits is pure luck - how do you know that people will keep buying bananas or eggs forever?

I think the correct way to see things is: we're always gambling, only the risk level may change. When you marry, you are gambling (he/she may say "I love you" today and betray you tomorrow, you can never know it in advance). When...
I only partly agree with your statement. I agree with all the gambling stuff about life. Yes, everybody can die within a second if an asteroid crashes on earth and your wife can cheat on you and so on.

What I don't agree with is the taking profits fast statement. I like to differentiate between trading and investing. In trading taking profits makes sense, but in investing, you wanna compound your returns. You wanna find a good company which you think (after a thorough analysis) will do good in the next 50 years, and keep your money there. Same goes with real estate, you want to buy real-estate and let it become a passive income stream.
Taking profits in investing doesn't make sense.

And well, if a war among the rich countries really ever started, then we will anyways all die due to a nuclear holocaust and probably only a few would survive. Then all the houses and gold you bought are useless, since more immediate things are of concern like survival of the human race. (Just my science-fiction thoughts )

cheers
  • #159
  • Feb 11, 2011 5:09am Feb 11, 2011 5:09am
Quoting Custos
What I don't agree with is the taking profits fast statement. I like to differentiate between trading and investing. In trading taking profits makes sense, but in investing, you wanna compound your returns. You wanna find a good company which you think (after a thorough analysis) will do good in the next 50 years, and keep your money there. Same goes with real estate, you want to buy real-estate and let it become a passive income stream.
Taking profits in investing doesn't make sense.

When I was talking about quick profit taking, I meant in Forex. You are absolutely right with the trading/investing issue.

What I mean is: trade in order to invest. You cannot invest if you don't have the money. So how do you make money? Trading (or having a regular job, if you wish). Some people may see Forex as an investment but that's another subject.

Keeping cash in a Swiss bank locker is an investment. This investment may not even return anything, but that doesn't always matter (security is my "profit"). Same with real estate: you can by a house in an increasingly valuable area, and then after 20 years this area will be forgotten and lose value. You missed the change of taking profits and may even have a net loss, but if you are happy with the house, it doesn't matter. Not every profit is material.

By the way, once I read something like this: "the objective of investment is not multiply treasures, but maintain it."

Quoting Custos
And well, if a war among the rich countries really ever started, then we will anyways all die due to a nuclear holocaust and probably only a few would survive. Then all the houses and gold you bought are useless, since more immediate things are of concern like survival of the human race. (Just my science-fiction thoughts )
Actually it's not a joke. What you wrote is not science fiction or the Apocalypse. Those who really want to invest in an intelligent way must think about such scenarios. It may never happen, but if it does... you may have a way out. Some years ago, everybody would laugh if a guy would speak about a huge wave killing 200,000 people. And now?

Sometimes a quick death may be a bless; the ones who survive have a hard time! We don't even have to think about atomic bombs. Just think about the Jews. Ok, money possession was one of the reasons for their persecution, but at same time was the salvation for some of them.

That's why the diversification must be taken to the limit. Go buy some land in southern Chile, of course with some drink water around.

I see a very big danger to humanity in the next 10-20 years: waves of hunger. People are flocking to the big cities and take for granted that food and clean water will be provided to them (because the money is there and money buys everything we need). That's extremely dangerous. The current civilization take for granted the huge logistics behind production. If some big thing happens and all the logistic chain is interrupted for some few days, we may see millions of people dying just like that. I am not talking about some Hollywood scenario, some Ebola virus or mega-tsunami. Maybe something relatively simple (some Internet interruption) may have a disastrous impact.

Maybe that's a subject for another thread...
"The reason I was born and came into the world is to testify to the truth."
  • #160
  • Last Post: Jul 5, 2015 8:17am Jul 5, 2015 8:17am
well trading definetely change my life...since i involved in 2009...
it was a hell for me for the first years and it continue until few years on....
everthing started to change since 2011....it was a total turnover.......
i knew who is am from top to toe......more on personalities that i would never knew about.....

how irresponsible how i was....
how greedy i was....
how hot-tempered i was....
how un-organize i was....
and few other things that i was not proud of.....

all the fear seeing the falling of each trader by each one....make me stronger......
all the complicated things i have look in the chart trying to know what is going on.....
all the endless night studying the system and trying to match with my personalites.....
i almost give up.....really!but i would never....started what i can't finished....that makes me going forward.....

now trading is a part of my life.....i would not know what else to do....without it.....
the mild thrill it gave me......the consistent of my judgement thru my trades.....
and the turn-around plan if things are not working out.....
and i would never regret on what i have planned.

i only trades when the market give me my chances....and would never-ever disrecpesct the market.....
will all of my lay-out plans.....never ever.....
knows where is my limits and my stands between the market and a swing trader like me......

trading is not for everybody....
if you think that you have the money and trading is your thing....
well....you're making the worst mistake in your life.....other than marrying a bitch!
it will suck all the good things and spit all the blood out.....
would be making you lose few friends and few love ones.....

but if you manage to pass all the test.....
things would be easy for you....not only for trading....but all you decision where works is related....
your decision would be more smooth, simple but yer effective......
it was what i have went thru for 6 years solid....never stop trading even tho my capital is small....
small margin....we roll small.....big margin we roll big....
but of course.....either one....think and re-think....always think of something unexpected.....
good night lads.....and good luck to all new trader....
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