Great Posts By Great Traders

david on color decor......

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The sure thing almost nobody plays

Imagine you are looking around a deluxe, well appointed casino. Off the lavish entry foyer, there are two ample gaming wings, one hued in reds, the other in muted greens. The red wing looks more enticing, but just for now we'll have a look at the green wing as it is much less crowded.

At first you think you must be in the wrong place. The tables are almost empty, everyone is plainly dressed, the table limits aren't particularly high, but everyone seems to be sitting there behind this enormous pile of money.

Then it comes to you, everyone is winning. In fact, as you walk around you can hardly find a losing player. You know that in most casinos the odds are stacked in favour of the house, but here everyone seems to be gaining at a rate of 60% to 40%. You count again and the results are the same.

A pit boss appears at your shoulder. You ask him if this is really true, that the odds really favour the players?

"Yes, indeed. The odds in the green room usually run 60 to 40. It's been that way since we opened."

"But...most of the players must go away winners!"

"They sure do. At those odds, we calculate that 9,999 out of 10,000 make money. At our high-stakes tables at the back, they do even better, with winners running about 20,000 to 1. It's a good thing we get so few players, or they'd break the house."

Realising that you have not a minute to lose and knowing that the few dollars in your wallet aren't going to get you very far, you hurry out to the foyer to go draw out some money.

Before you do though, you glance into the red room. The action level is much higher. Excited punters make huge bets, they frantically change their cash to chips and there is laughing and crying and entreaties to the gods of luck, but no one seems to be winning. In fact the longer you watch the more it seems that people are losing money with every hand they play. You turn to another pitt boss and ask about the odds at these tables.

"60 to 40 in favour of the house", she says, "This room coins gold for the casino, the chances are 9,999 in 10,000 rounds that we wind up winners."

Shaking your head at the stupidity of the players here, you leave quickly to go draw out your life savings. You return to the casino with your fistful of money, excited, eager for action, all the time figuring how you'll do even better at the game.

But then a strange thing happens, you walk into the red wing and start to play.

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i'll be there..... waiting on ya......h

Read this about a year ago, only just found the author. Short statement but contains some very useful information for a trader.

chuck, on adaptive steps in random walks.....

The first step in achieving better accuracy in our profit taking is to use profit objectives expressed in units of average true range (ATR).

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sound footings......h

"Stay calm, be brave, wait for the signs." - Jasper Friendly Bear

kimberly, on net addictions......

But right behind those is online-trading addiction. Kimberly Young, a Pittsburgh psychologist and founder of the Center for Online Addiction, says compulsive online traders are overwhelmingly young and male, are big risk-takers and trade heavily on margin (using money borrowed from their brokerage).

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nahhh...... i can quit anytime...... but until then.....h

Hope is not a strategy..

day-trading-mind, on staying focused in the game......

Self-destructive behavior can easily manifest itself in the markets ,,,,,,,,
you can start to feel like it's playing with you....

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if you think your alone, your not.... the market drag's us all through the brush.... even those tough guys......

tag..... your turn....... i had last week remember.......h

Learning a lot about myself from you guys thanks. Keep em coming.

"of course there are reasons for the flactuations,but the tape does not concern itself with the why and wherefore.it does not go into explanations.i didn't ask the tape why when i was fourteen,and i dont ask it today at forty". Jesse livermore

Here is one of the best posts I've seen on this forum. I can't remember the screen name, but the guy only posted about 40 times and disappeared.


I think that it is impossible to ever 'predict' the movements of the market. Its funny, when people ask me something like "what do you think the dollar is going to do in whatever period of time", I always say that I have no idea. This sometimes causes people to look at me with disbelief, presumably wondering how someone who seemingly has such impressive returns knows so little about what the market may do. Ironically, it was that very realization - and figuring out to how translate that into a practicable, mechanical format - that finally afforded the kind of profitability that I wanted. And this is a statement that many, many traders would disagree with, which is precisely why I think that the vast majority fail to make significant money, and why the analysts seem wrong nearly as often as they are right.

When you first see that certain technical trading setups go a certain direction more often than not, you start to subconsciously believe that any such setup WILL or SHOULD go in that direction, instead of that it merely has a slightly higher than x% chance of going in that direction. It is a key distinction that most traders - including many great technical guys that I have known, who are able to expertly read the complexities of price movements, and who sometimes even give theoretical lip service to these very concepts - fail to ever substantively realize, or at least effectively put into practice.

It is ultimately about ego. So many get caught up in trying to be so clever with their charts and indicators, in an effort to win all the time. I certainty did myself, reveling in my winning trades and chastising myself for the losers. "I should have seen the resistance at 1.3729, and it was obviously breaking out of the trend line, especially when I draw it like that. How could I have missed that factor - I'll never make that mistake again." This, however, implicitly assumes you are somehow responsible for that loss; that you were somehow ever actually in control of what the market was going to do. It is a dangerous mentality to have, and one that is unfortunately born from the equally instrumental realization that you can actually make money from trading the market.

I even think the basic tool of drawing a support or resistance line on a chart is potentially hazardous, as its exact placement is really so arbitrary, but once you put it there it suddenly seems so authoritative - like a constraint that you have craftily imposed upon the market. I prefer to passively OBSERVE concepts like support and resistance in the functioning of my systems, rather than trading based on my imperfect, arbitrary, and surely biased understanding of their specific placements.

Unlike many traders, I don't even set targets for trades, since I believe that even that would be forecasting. I exit the trade reactively when the market tells me to. It could be at a large profit, a small profit, breakeven, or a small loss - and I couldn't care less about which one it turns out to be on any given trade; only that the statistical outcome over many, many trades is within the appropriate range. 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...)

In essence, one could view this as a debate between proactive and reactive modes of thinking. In many - if not most - areas of life, proactive behaviors are rewarded. CEOs and heads of industry are generally proactive people - decision makers who exercise control over their situations and environments. It is the reactive people that society generally doesn't reward: the guy who waits for life to present him an opportunity rather than actively trying to create one. I myself am a control freak - a trait that served me well in life until I encountered the insanity of the markets. I wanted so desperately to control them - to be smart, to be right, to win, to see the complexities in a movement that others 'foolishly' missed and bask in the resulting accolades - and nearly drove myself crazy in the process.

My closing advice is not to do this, although I think it is almost an inevitability of the learning process - I am forever envious of those that don't have to go through this, or who can somehow consistently profit from it. In short, it is understanding that randomness and making money from the market aren't nearly as mutually exclusive as it would intuitively seem. To the diversified 'buy and hold' guys as to many an active trader, they are seemingly incommensurable opinions - but I have found that it is a complete surrender to the randomness of any one trade that allows for a grounded confidence in a statistically significant outcome over many instances.

Best of luck,

Chris

Found it.

http://www.forexfactory.com/showthread.php?t=67217

danielle, on setting profit targets......

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Experienced traders don’t just wake up in the morning and say, let’s make 25 pips today and that’s it. Setting a target should not be based on thin air. The prediction should be derived from your trading system, which includes lots of parameters and overall past experience.


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danielle seems to have written close to 130 articles.... first 10 are listed, remaining accessed at bottom of page.....h

td himself, on rock collections.....

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DeMark left no stone unturned in his search for viable technical trading approaches. What he found under those stones is another story.
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Aside from unearthing such “wack jobs” that were all too prevalent in the technical world, DeMark made what he considered a disquieting discovery about many of the respectable technicians of the period: They were all using very similar techniques.
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When asked to summarize his techniques, DeMark quickly responds, “They’re all original, all mechanical and all objective.”

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wonder how many snakes he found under those rocks..... or snake oil salesmans, as the case may be.......h

teresa on mission ispossible......

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In 1987, a newly minted university graduate, I joined a brokerage firm. I could not find anyone who consistently traded profitably. I blew out my account twice in the early days,

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These people were trading their egos. I thought it would be a good idea to just trade like Forrest Gump and make money instead

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perhaps the 95% rule does not discriminate......h

Hey Dopey,

Thanks for posting, an interesting read.

The different perceptions of the experienced is certainly interesting , in the end though the path always leads to the same place ( presuming you can stay on the path long enough ), the realisation that all the markets are is a vehicle to making money, nothing more nothing less....

Ja.

dan on controls or lack of......

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A trader who doesn’t understand the difference between the aspects of trading he controls and those he does not is in for a rude awaking. In general, people try to control a situation in order to get what they want or in order to avoid surprises and the experience of fear.

This approach does not work when applied to trading. The trader soon finds out he does not control the market’s behavior. Even large traders’ influence on the market is only temporary. The fact is, no trader can control the market, and this lack of control can be unsettling for some. A trader may hesitate putting on a trade, or feel that he is out of control and doesn’t know how to take the next step.

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sounds like dan the man has found control..... or at least knows where it used it last.....h

kathy on lasting relationships.......

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If you need instant gratification, trading on daily charts may not be suitable for you. On the other hand, if you are a more relaxed and patient person, you may not be able to stomach the volatility of 5- or 15-minute charts. Money can and has been made trading any time frame, just make sure you find one that is right for you.

Step 4: Know your Strategy like Your Best Friend

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so what's it gonna be young feller..... one night stands or long term commitments.......h

british intelligence from 'the intelligent investor' himself......

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“The determining trait of the enterprising investor is his willingness to devote time and care to the selection of securities that are both sound and more attractive than the average. Over many decades, an enterprising investor of this sort could expect a worthwhile reward for his extra skill and effort in the form of a better average return than that realized by the passive investor.” Ben Graham in “The Intelligent Investor”, 1949.

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it takes time..... and you have it......h

Hey, hayseed!

The quoted part made me want to read the rest of the article as well, but it appears that the servers cannot be accessed. Fortunately Google keeps a cached file for a limited amount of time. That cached page will disappear from the results one day so I'm posting a .pdf file with the full article (the quoted part above can be found in yellow). I'm also attaching a .pdf file of the second part of the article.

You've got a great thread mate, keep up the good work!

iDouble from Forex Factory posted on March 6, 2012.

“No doubt, I like the idea of sharing trading ideas and concepts. But, to share an entire trading system (if it truly is a full blown trading system) is not only unwise, but in most all cases it will be as close to impossible as anything else.

Real trading systems have lots of moving parts. Each of them could be uncomplicated as a simple one line mathematical function that derives a single value. Or, a part of a trading system could be an entire cluster of mathematical functions, algorithms and signal processors – just to make-up one component of an even larger trading system.

Trading Systems, are really not the same as Trading Methods, Trading Tactics and/or Trading Strategies. A system by definition is the integration of several (many) lower-level functions, methods, calculations, inputs, filters, scanners, etc. To describe how one uses just one of those components, could take an entire semester. To layout a full blown trading system, could take years in an online environment such as this.

For that reason, I opt to talk about trading concepts that have made me a consistently profitable trader. To that, I would add several key concepts that I learned from a serious trader about 7 years ago. That person showed me the futility of attempting to trade any market without making certain that my trading system could account for the following concepts:
a) Timing
b) Direction
c) Magnitude
d) Framework
e) Probability

I learned from that individual the importance of trying to account for each of these core elements to successful trading and how ignoring any of them would lead to ultimate de-optimization of my trading system.
When you stop to think about it – each one of these core components go hand-in-hand. I was shown that:
Timing = Maximizing profit
Direction = Minimizing draw-down
Magnitude = Identifying profit potential
Framework = Minimizing psychological draw-down
Probability = Maintaining positive expectancy

Trying to trade without these core components, de-optimizes the entire process of trading in general. To prove it to yourself, simply take the inverse of each one and say it out loud to yourself:
“Minimizing profit”
“Maximizing draw-down”
“Failing to identify profit potential”
“Increasing negative trader psychology”
“Maintaining unreliable and unstable expectancy”

You would not willingly attempt to blend any of those things into your trading routine. Yet, many traders do this all the time without ever realizing it, by failing to properly account for these core elements by their own design.

Thus, whatever the trader can do to ensure that they have accounted for these core elements in their trading habits, routines and systems, is time well spent.”

Well constructed and well said.

dcginc