Calling all "Senior Members T2W" Experienced traders! Help Newbies?

u only realize simple is best when youve been round the houses doing all the complicated stuff u thought was neccessary

Trading methods are simple. What makes things complicated is all the baggage the trader brings to the task. If I could get my hands on somebody who'd never even heard of the stock market, much less ever seen a chart, he'd probably be profitable within days.

if ever there were 2 quotes which should be highlighted in BOLD & emblazoned onto the front page of the First Steps thread, it's those!!

agree with Jon - don't desert the thread nb02........it's turning into a pretty darned good read! ;)
 
This turn has generated more interest than I thought it would. I don't know how much there is to say, but I will point out that there are a number of points which are being glossed over that should not be ignored. I'm not suggesting that this disingenuousness is purposeful, but one should at least note that there was and is more to nbo's method than "following the instructions". There was teaching going on. There were explanations. There was supervision. This teaching and these explanations and this supervision did not prevent many people from failing with this "simple" method. If it was and is as simple as it pretends to be, then why so much teaching and explanations and failure?

This simple method is a simple combination of breakouts and retracements. However, there is one itty-bitty snag to all this that determines whether or not this simple method will also be successful, i.e., profitable, implied by the word "directional", and that itty-bitty snag has tripped up some of the best traders in the world.

nbo claims that this is a simple method, a simple solution, consistently profitable, etc. However, since many people can't succeed with it, it is all these things only to those who understand it. And understanding it requires that it be explained and taught, examples provided, etc. Thus the simple becomes not quite so simple.

While I'm sure it's completely unintentional, nbo is leaving out a lot.

A lot.
 
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The question concerning trading size and if it makes any difference well the simple answer is no it does not change how you get in or how you should get out according to your description that there would be no problems with market size etc.

However that covers the technical side but when considering the emotional concern it will depend on the individual trader. For example the trader may do very well and progress to higher stake size but may stutter when they start to deal in very large sizes. One would like to think that a sensible trader who makes consistent progress and increases trade size according to good money management then this trader will have developed the skill to cope with such a pressure of large money.

While I have no experiences to quote I wonder if there have been traders who on progressing higher have as a result of serious money struggled to maintain there discipline due to fear or greed getting the better of them. While I cannot point to such a case it would seem that as these emotions do exist it tends to stand out that an individual may suffer from this. For example his balance maybe fine overall but the sums involved are such that he just cannot bring himself to lose such amounts even though it would be the normal stop. Anyway this is just MHO for what it is worth.

Regards

Kevin
 
dbp

I would like to think that the issue nbo raised within this thread was the concept that trading can be easy and should be kept simple. I feel that this is true when you have reached an acquired degree of knowledge and practical understanding. However I do believe that it is inappropriate for novice traders to leap frog over the knowledge and effort; but important for them to know that at the other side of the knowledge trail is simplified trading brought about through correct thought and relevance and devoid of emotion.

Regards

Kevin
 
This thread is a winner as far as I'm concerned. I feel it a shame that nbo is leaving.
I speak as someone who is turning a corner and who's entries and exits are becoming a little more accurate, not as a master of the universe.
Whilst many posts on here have carried pearls of wisdom, I feel the word count is occasionally a bit high.;)
 
kevin546 said:
dbp

I would like to think that the issue nbo raised within this thread was the concept that trading can be easy and should be kept simple. I feel that this is true when you have reached an acquired degree of knowledge and practical understanding. However I do believe that it is inappropriate for novice traders to leap frog over the knowledge and effort; but important for them to know that at the other side of the knowledge trail is simplified trading brought about through correct thought and relevance and devoid of emotion.

Regards

Kevin

I agree with the simple part. However, trading is never easy per se. It may have been easy for nbo, but it wasn't easy for many others who were following exactly the same program.

Unless I missed something, this thread has never been about strategy and tactics. It's been about pitfalls and potholes, and that may have made the whole business sound complicated, though I hope it also made the whole business seem difficult, which for most people, it is, primarily because few Western minds think the way one needs to think in order to find success quickly.

In any case, if participants want to talk about strategy and tactics, that's fine. That can be very simple. As long as you don't get into patterns and indicators and wave counts and Fib and so forth. But surely there are plenty of threads that address this subject.
 
Originally Posted by dbphoenix
........ If I could get my hands on somebody who'd never even heard of the stock market, much less ever seen a chart, he'd probably be profitable within days.
(I can't find the original post)

This is the key. Most aspiring traders were poisoned by the bull market. There was this idea that everyone could make easy money. Then it turned. How many held on to their "easy" money? I know plenty who held longs which turned into losses.
This is where UNlearning comes in. With no preconceived ideas, anyone can be taught the basics of anything. Then once they are on the right path they can develop their knowledge with experience.
This leads to 10 lots or 100 lots? Once you're comfortable with your current size, you slowly increase. This is about confidence. Everyone is different. If you are confident, you don't focus on losses, only your chosen method. You already know you are profitable. The trade becomes a numbers game rather than ££$$ flashing through your mind.
Clear your mind and NO shortcuts!
 
;) nice one Oaty....and back we come to one of the most important few words on this thread!! and maybe one of the main reasons why nb02 is still around trading today? (& ok, i'm making an assumption that nb02 isn't a relative noob)

dbp - why do you think 'not many people can succeed with it'?? .....could it be because when something simple is explained & demonstrated to most folks, and it works (in the majority of cases), they go off & tinker thinking they can improve on this simple task?....maybe squeeze a few more pips/points out of it?.....after all, it CAN'T be this easy can it?....surely it can't return these percentages ALL the time?....not possible, everyone say's the markets are too difficult/loaded with traps/biased towards MM's/?.....could the ones who fail maybe plan to fail by strangling the life out of the simple method which has been taught?

maybe they "think too much" dunno, just a thought...........................

I agree, this business is not easy, but as with any other business.......there are 2 ways of going about it, and one of em is the hard way!
 
"With no preconceived ideas"...

With no preconceived ideas

Take unlearning and apply it to that short statement and then see how simple that really is for most people ... it's certainly simple for some people....but, BUT read the BB's the latter group are the minority.... that's why the few win and the majority lose... the rest is mechanics and to be frank after that I can't think of another blessed thing worth saying so I will leave you to it.
 
Good Morning, I trust everyone is having a relaxing and enjoyable weekend.

This thread is really going well. Lots of angles and opinions being expressed. I feel sure that some of this must be helping various people, both new and experienced.

I would like to pick up on a few points which have been raised over the last day or so. There have been a number of posts advocating ‘keeping it simple’. This is quite true in respect of the ‘learner trader’. I feel however that there is a lot more to trading than just a simple approach. NB02 set out a simple way that he feels would benefit new traders. The methods, as written, do appear very simple. However, no comments are made as to the series of emotions that will be felt by the trader who starts to follow these methods. I’m absolutely certain that the method laid out is easy to understand, I have no problem with that. What I have a problem with is that there is an automatic assumption that people will be able to implement the method. I posed a similar question in an earlier post. What happens when you have a bad run ? What happens when you get 5 , 6 , 7 and then 8 trades which all hit the buffers and get stopped out ? The chances are that, the more experienced you are, the more likely you are to react positively and carry on implementing a method that you are sure of. This is not so for the new trader who feels every loss like a hammer blow. Two or three losses back to back will normally move an inexperienced trader outside of their comfort zone. This can cause a bad reaction. I’ve experienced it and I’ve seen it in others. Some people stop trading the signals and then miss a good one, while others double up on the next trade because “I want to get my money back”.

Once you’ve been trading for a few years you realise that you will have good runs and bad runs. You learn to live with them and you accept that these runs, of one kind or another, are ‘the nature of the business’. The problem is that this valuable insight and experience is not available to the new trader, instead of being in a position of being able to benefit from experience he is actually at the mercy of his immediate emotions.

I will repeat something I wrote a short while back…..People are obsessed with gaining an advantage with the ‘quality of signal’. By that I mean a method of entering a trade. I would suggest that beginners are focused 99% on this point. While I would agree that a good entry is very helpful, IT IS THE SUBSEQUENT MANAGEMENT OF THE TRADE THAT IS MOST IMPORTANT. I don’t apologise for the use of capitals. This point is missed by too many people who then go on and ask the question “why am I consistently losing money ?”.

Parallels can be drawn between flying an aircraft and trading. The most likely time that you will suffer a loss (ignoring hindsight) is at the start of a trade ie the take off. In an ideal world you would have a system where you opened the trade and it immediately started to climb. This would allow you to move your stop to breakeven and thus you would now be limited to purely frustration rather than financial loss should your stop get hit. This is not the case for most. I know from personal experience that a good many trades go underwater before then become profitable. It is how you cope with these trades that will determine how successful you are.

Studies have been made into some of the commercial products which are available for purchase. Tests revealed that the average hit rate for some of the better known products, costing over one thousand dollars, was around 54%. In other words, you are gaining an advantage of 4% over the simple basic odds of 50/50. From this you are expected to show a profit. Again, these products are false prophets where the writers make their money from selling the products rather than playing the markets. They are advertised in such a fashion whereby the purchaser is lead to believe that they are gaining a far bigger advantage than is actually true.

No matter what is written or spoken, speculating in the financial markets is not easy. To simply state that ‘I have a simple method’ is not the whole story, in fact it is only a very small part.

I am actually part of a small group of people who write computer driven systems to detect trading opportunities. One of the people I know in that group is amazingly good at it. Some of the subsystems he writes are very complicated. Ultimately they work well. The problem however is following the signals. He consistently calls the trades as the system signals. Not only does the system call the trades, it also calculates the stakes and the stops. Sometimes following the signals is easy. Other times not so. The bottom line is that the system always beats us. This is because the system is trading without emotion and is purely mechanical. It is different for the trader. This difference can be the difference between overall profit and loss.

Steve.
 
oatman said:
If you are confident, you .. focus .. only your chosen method. You already know you are profitable. The trade becomes a numbers game rather than ££$$ flashing through your mind.
Clear your mind and NO shortcuts!
Agree. This is how to study and to start preparing if you want to go down the right track.
:)
 
Buk said:
dbp - why do you think 'not many people can succeed with it'?? !

I was referring to what nbo said. But it's confirmed by my own experience.

Part of it may have to do with intelligence. Some people are just too stupid to get it. But these are a very small minority.

Most fail because of a seemingly infinite varitety of self-destructive qualities. There are people on ET who have gone through as much as $150,000.00 looking for a system, a method, a strategy. And they're not new. One guy has been at this for five years, yet only recently has -- as a result of my nagging -- begun to develop a trading plan. Another has 20 years' experience, part of it as a broker, yet blew $50,000.00 on advisory services. But why do people waste their lives on drugs, or unsafe sex, or adulterous relationships, or careers for which they have absolutely no aptitude whatsoever?

I've said that trading, though simple, is difficult, and that's not entirely accurate. What I should say is that a great many people find it to be difficult, which is not quite the same thing. A great many people consider alpine skiing to be difficult. Is it? Many years ago, when I was living in Colorado, I took my 5-year-old niece and my brother-in-law skiing. My niece had no difficulty at all, from the moment she snapped her bindings shut. My brother-in-law couldn't stay on his feet for more than a count of ten. So where lies the problem (and, no, it wasn't the instruction)?

Take patience. It is simply beyond the capacity of a great many traders to be patient. To wait. To sit on their hands until the right setup comes along. Even while they're trading, they know that they shouldn't be trading. And yet they trade anyway. Is this because trading is "difficult"? Or is it because of something that's missing within themselves? Or something that's there that shouldn't be there?

Most traders would be wildly successful if they would just get out of their own way. But many of them just won't. Many of them can't.

Which is why I can't get too excited about some "simple system" that somebody comes up with (which is generally more than a hundred years old) and which requires nothing more of the trader than to "follow the instructions".
 
chump said:
"With no preconceived ideas"...

With no preconceived ideas

Take unlearning and apply it to that short statement and then see how simple that really is for most people ... it's certainly simple for some people....but, BUT read the BB's the latter group are the minority.... that's why the few win and the majority lose... the rest is mechanics

Once unlearning becomes a factor, the difficulties mount, as do the odds for failure. Someone asked just today how one is to go about learning how to daytrade unless he resorts to books. The problem with nearly all books, however, is that as soon as one has begun to read them, the amount of material he has to unlearn begins to rise like bread dough. Someone recommended Elder, parts of which are fine, but what does one do with all the nonsense about the "Elder Ray" and the "Force Index" (or whatever it's called)? Or the "Triple Screen"? All of which make it sound so easy. Someone beginning with the study of price action would probably never become involved with all that. Why should he? But I have yet to stumble across anyone who begins his exploration with the study of price action (perhaps nbo did, which might account for his success). The emphasis over the last thirty or forty years has been indicators, and that's where everybody starts. And that means a lot of wasted time and a lot of unlearning to be done.

There are plenty of people, of course, who think that everything I've just said is the exact opposite of what is, and that indicators are the saviour of traderkind. Which is fine. I don't much care about that any more, largely because so many people are abandoning indicators and finally studying price. Whether that lasts or not, I have no idea. I suspect it won't because of all the unlearning that has to take place. And because studying price doesn't do a thing about the self-destructive tendencies that lead to failure, regardless of the route taken to get there. But few people speak up for price nowadays, and it takes no effort on my part to be one of them as long as I avoid becoming involved with anyone plagued with the aforementioned self-destructive qualities (which, according to the dictates of probability, I used to do with depressing frequency).
 
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Once you’ve been trading for a few years you realise that you will have good runs and bad runs. You learn to live with them and you accept that these runs, of one kind or another, are ‘the nature of the business’. The problem is that this valuable insight and experience is not available to the new trader, instead of being in a position of being able to benefit from experience he is actually at the mercy of his immediate emotions.

steve, quite right.....which is true of most things in differing situations/circumstances. There are many comments relating to this point on various threads within this board alone. The interesting observation is, that how ever many times this one fact (encountering + & - runs) is explained, folks still dismiss it & trek off insearch of some other fandangled method/system which will produce a higher winning ratio?! instead of sticking to their guns & riding out the obsevation process.

whatever trading method one utilises, price & the patterns (call them what you will) will not work ALL of the time....and instead of adhering to the tried & tested risk/money management practices (also well documented on this board), folks wander off aimlessly in their continued quest for the 'grail' & the endless stream of 'winners'

emotions/psycho strength/confidence in the "signals" - however you term it, along with finding a simple, consistant workable strat encompassing 1 or 2 repetative patterns (to begin with) at key clips on the chart appears far TOO easy to most folk?.....they seem to feel the need to complicate the process tenfold with masses of indicators, in depth analysis of this, that & the other.....

I also feel that most psycho babblers merely fuel the feeling of inadequacy in most noobs, with all this "ooooh be careful - the markets out to get you" nonsense......I'm not advocating a stance of contempt or lethargy towards the market, merely coming at it from a position of respect, and awareness that over complication = confusion. PRICE is & always will be KING.....THAT is the one thing which should be studied above all else.
 
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Well said, dbp.
There are only two factors in the markets.

The trader
The market

One you can control
The other you can't

The bottom line for all traders is SELF CONTROL and UNDERSTANDING THE MARKET.
Without BOTH of those, you WILL fail, because you do not recognise your own faulty behaviour or lack of understanding what drives markets.
A hundred indicators, books, web sites will not help you, although 95% believe they will.
That's why 95% fail.
Richard
 
DBP,
Unlearning is always a factor for most people and it has nothing to do with trading or reading books specifically... it is how they do their thinking first and foremost...when they have tackled that they can take it anywhere..trading , business..wherever
 
Richard,

That is the highest failure% I have seen. I have seen it written in the past that 70 to 80% of traders fail and I have seen a few people quote a higher number but 95% seems a bit extreme.
 
Another factor which guarantees failure is being enticed away from the simple.

I had first hand experience of this as I watched a complete newbie being taught to trade. The chap concerned had no knowledge or information about the markets - he knew absolutely nothing, had never seen a chart, and it was painfully slow while he was taught the difference between the bid and ask, what a stock and a future were, how to place a trade, etc. But within one month he was able to grasp the simplistic way he was taught, and within two months he could make profitable trades every day.

He was warned countless times not to look at websites, news, financial pages of newspapers, books, etc, because he had been taught everything he needed to know about being consistently profitable 85% of the time.

And then he decided to attend a traders' exhibition. He was warned not to go, and I too pleaded with him not to go. But he went. And his eyes popped out of his head at all these things called indicators, and strategies, and tipsters newsletters, etc. He came back full of 'wonderful indicators such as MACD and stochastics', and the rot set in. Within a further month he had completely screwed himself up mentally, and within six months he was completely out of the market.

He had been instructed in the best, easiest, and most simplistic way to trade profitably and had proved for himself that he could be consistently successful. But by being led astray from the simple, he had sealed his fate and couldn't resurrect himself.

He was solely responsible for this outcome, and it was certainly not the fault of the tutor who had told him repeatedly not to go to the traders' exhibition. Both the tutor and I knew what would happen if he was exposed to the 95% of losers, and we were proved right.

He had been taught by one of the 5%, but had allowed himself to be enticed by the 95% majority that their ways were better.

A sad, but true, tale.

It's also an example of:
what a newbie needs to know is not what they want to know
what a newbie wants to know is not what they need to know.
 
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