Hunting secrets revealed

[virtuos0]

Does this mean that you have zero probability of making a loss when you place a trade ? If so can you say more about your approach ?


Paul

I would never claim that there is zero possibility of a loss when I make a trade, but I have had entire years without a losing trade.

Unique and unusual situations are continuously cropping up in the markets, normally produced by a confluence of fundamental and market factors. I'm quite happy to take one trade a month if that is all the market wants to give me.

Think about George Soros and the ERM debacle.

 

[virtuos0]

A probabilistic trading mindset consists of 5 fundamental truths:

1) Anything can happen
2) You can make Money without knowing what is going to happen next
3) There is a random distribution of wins and losses that define an edge
4) An edge is just the greater probability of one thing happening over an other
5) Every moment in the market is unique

These aren't fundamental truths at all. I have read "Trading in the Zone" and although it does make some good points it also makes many bad ones.

1) There are plenty of situations in the markets where there is only ONE possible outcome.
2) No you can't, if you believe that then you are relying on lady luck.
3) There is nothing random about the market
4) This is true
5) This is true

 

[Black Swan]

The indicators are all just mathematical representations of what has happened after all.

MACD is merely showing you the difference between a pair of EMA's. If you use MA's & MA, then one or the other must be redundant.

Both Oscillators are roughly the same. In fact, most oscillators are the same. So - do you us these indicators because they work ?

Alternatively, do you use them because you understand the math behind the oscilators inside out and you understand why a combination of them should work based on the conditions in the market they are supposed to represent ?

Pedro good points raised. I use the Indicators because as you put it "they work" (for me) and also because I'm beginning to get to grips with (and enjoy) the maths behind the mechanism/s. I'm hoping to move onwards and upwards to becoming a totally intuitive trader; unconscious ability. I may move on to eventually become that one trade a month guy Virtuoso mentions, but for now I have to be happy with where I'm at. I'm not mechanical I'm more descretionary, perhaps still using so many indicators as a comfort blanket of sorts...😉

I couldn't possibly begin to tell you why my preferred currency pairs moved so violently last night from approx. 11pm onwards, I could speculate that it related to so many of the Asian markets falling...but whilst musing on the why I could miss out on the now. The price action was happening; whether using indicators or stripping it down to just using price action 'highs and lows' it was as slam dunk as it gets.

 

[tenbobtrader]

Quote:
Originally Posted by Black Swan
A probabilistic trading mindset consists of 5 fundamental truths:

1) Anything can happen
2) You can make Money without knowing what is going to happen next
3) There is a random distribution of wins and losses that define an edge
4) An edge is just the greater probability of one thing happening over an other
5) Every moment in the market is unique

These aren't fundamental truths at all. I have read "Trading in the Zone" and although it does make some good points it also makes many bad ones.

1) There are plenty of situations in the markets where there is only ONE possible outcome.

a certainty, no risk at all, 100 % guarenteed ? = reveal hunting secret please, then this thread really would have some substance 🙂

2) No you can't, if you believe that then you are relying on lady luck. guess you are on one trade

3) There is nothing random about the market don"t think he was refering to the market

4) This is true
5) This is true

 

[pedro01]

Quote:
a certainty, no risk at all, 100 % guarenteed ? = reveal hunting secret please, then this thread really would have some substance 🙂

Here's an example of when there is only 1 possible outcome.

Company X trading at $20/share
Pre-market, company Y announces it's intention to buy Company X at $25/share

Company X will now trade at $25. Company X will not go down.

Now - making money out of that specific certainty is a little different to knowing it will happen.

It's like in the morning when the ES futures is 20 points above yesterdays close. Guess what the market will do on the open - move straight up. Again though, this is not something you can make money out of as the market isn't moving up, it's just catching up on your chart.

 

[virtuos0]

Quote:
Originally Posted by Black Swan
A probabilistic trading mindset consists of 5 fundamental truths:

1) Anything can happen
2) You can make Money without knowing what is going to happen next
3) There is a random distribution of wins and losses that define an edge
4) An edge is just the greater probability of one thing happening over an other
5) Every moment in the market is unique

These aren't fundamental truths at all. I have read "Trading in the Zone" and although it does make some good points it also makes many bad ones.

1) There are plenty of situations in the markets where there is only ONE possible outcome.

a certainty, no risk at all, 100 % guarenteed ? = reveal hunting secret please, then this thread really would have some substance 🙂

2) No you can't, if you believe that then you are relying on lady luck. guess you are on one trade

3) There is nothing random about the market don"t think he was refering to the market

4) This is true
5) This is true

Ok I'll give you the secret.

Years and years of learning, effort, experience and practice. Heard that before? it seems to have been drummed into retail traders that trading is about inventing some rules for entry/exit, money management, and psychology, then sticking to those rules with steadfast determination, and driving away in your Ferrari! The reality of profiting from the markets couldn't be further away from this.

Each trade I take is totally unique, it has its unique rules of how I'm going to enter and exit, I manage my risk depending on how I view the trade. This is a million miles harder than blindly following a set of overarching rules, both in terms of how much knowledge and effort it takes, and in terms of dealing with the psychological aspects. It may be that I see a trade coming for months and am able to plan everything clearly, or it may be that I have a matter of minutes so I have to be extremely quick to think and react. It may be that I hold a trade for an hour, or I might hold it for 6 months. Total flexibility should be the ultimate aim of a trader.

I could spend a long time going into my trading methodology, but it won't be of much use to you because my circumstances and knowledge are unique to me. But it boils down to this, trading is an art, not a science or a maths game.

By the way, I realise that the word random wasn't referring directly to the market, but it shouldn't be used in any connection to trading whatsoever!

 

[tenbobtrader]

Ok I'll give you the secret.

Years and years of learning, effort, experience and practice. Heard that before? it seems to have been drummed into retail traders that trading is about inventing some rules for entry/exit, money management, and psychology, then sticking to those rules with steadfast determination, and driving away in your Ferrari! The reality of profiting from the markets couldn't be further away from this.

Each trade I take is totally unique, it has its unique rules of how I'm going to enter and exit, I manage my risk depending on how I view the trade. This is a million miles harder than blindly following a set of overarching rules, both in terms of how much knowledge and effort it takes, and in terms of dealing with the psychological aspects. It may be that I see a trade coming for months and am able to plan everything clearly, or it may be that I have a matter of minutes so I have to be extremely quick to think and react. It may be that I hold a trade for an hour, or I might hold it for 6 months. Total flexibility should be the ultimate aim of a trader.

I could spend a long time going into my trading methodology, but it won't be of much use to you because my circumstances and knowledge are unique to me. But it boils down to this, trading is an art, not a science or a maths game.

By the way, I realise that the word random wasn't referring directly to the market, but it shouldn't be used in any connection to trading whatsoever!

yes

if your knowledge is based on the truth no unique rules are required imvho and experience ...... so not a million times harder unless .........

your wrong and trying to make it right ?

your tone suggests you presume to much imvho

your off the hook regards your methodology, good point

trading is not an art, that is a load of total BS ...... imvho of course

anyway all the best with the thread, its a better read than most threads

later

Andy

 

[tenbobtrader]

Rule of three

Humans cannot survive more than three hours exposed to extreme low-temperature.
Humans cannot survive more than three days without water.
Humans cannot survive more than three weeks without food.

more trade info here than on this thread imvho ~

Survival skills - Wikipedia, the free encyclopedia


later

Andy

 

[Black Swan]

I've been on 'ere less than a year and have lost count of the times these type of threads gravitate towards a price action v TA argument/discussion. As always the standard riposte is "even Price Action guys rely on some form of TA in order to make decisions".

It's fairly obvious that once you've traded for years then you can see things happening in the markets and act without the reliance on so many of the indicators confirmed chartists need.

If, for example, I took 62 trades last week and netted 1630 pips, someone of Virtuoso's pedigree may scoff, shake head, virtually clip me behind the ear and show how so much less effort could have realised far more profit without the grief, ensuring I could have spent a lot less time in front of the screen thinking I was learning my new trade. That big gun hunting technique will arrive in time I'm sure, I'm almost sure I'm giving too much to IG and FXCM, for now my low risk surgical strikes appear to be sitting comfortably in my pysche...and for now that has to be OK.

 

[pedro01]

Price action IS technical analysis.

 

[virtuos0]

Price action IS technical analysis.

Absolutely.

People are disparaging about indicators and in the same breath praise price action trading. What they fail to realise is that price action IS an indicator!

 

[virtuos0]

Another Livermore quote for your perusal..

The training of a stock trader is like a medical education.
The physician has to spend long years learning anatomy,
physiology, materia medica and collateral subjects by the dozen.
He learns the theory and then proceeds to devote his life to the
practice. He observes and classifies all sorts of pathological
phenomena. He learns to diagnose. If his diagnosis is correct,
and that depends upon the accuracy of his observation -- he
ought to do pretty well in his prognosis, always keeping in
mind, of course, that human fallibility and the utterly
unforeseen will keep him from scoring 100 per cent of bull's
eyes.
And then, as he gains in experience, he. learns not only to
do the right thing but to do it instantly, so that many people
will think he does it instinctively. It really isn't automatism.
It is that he has diagnosed the case according to his
observations of such cases during a period of many years; and,
naturally, after he has diagnosed it, he can only treat it in
the way that experience has taught him is the proper treatment.
You can transmit knowledge -- that is, your particular
collection of card indexed facts, but not your experience. A man
may know what to do and lose money -- if he doesn't do it
quickly enough.

 

[rathcoole_exile]

Absolutely.

People are disparaging about indicators and in the same breath praise price action trading. What they fail to realise is that price action IS an indicator!

technical analysis does not equal indicator

 

[Black Swan]

These aren't fundamental truths at all. I have read "Trading in the Zone" and although it does make some good points it also makes many bad ones.

1) There are plenty of situations in the markets where there is only ONE possible outcome.
2) No you can't, if you believe that then you are relying on lady luck.
3) There is nothing random about the market
4) This is true
5) This is true

..from Commodities legend Paul Tudor Jones:

“I see the younger generation hampered by the need to understand and rationalize why something should go up or down. Usually, by the time that becomes self-evident, the move is already over. When I got into the business, there was so little information on fundamentals, and what little information one could get was largely imperfect. We learned to go with the chart. Why work when Mr. Market can do it for you? These days there are many more deep intellectuals in the business, and that, coupled with the explosion of information on the Internet, creates the illusion that there is an explanation for everything…..There are young men and women, graduating from college who have a tremendous work ethic, but they get lost trying to understand a whole variety of market moves….[at the end of a bull market or bear market] there’s typically no logic to it; irrationality reigns supreme, and no class can teach you what to do during that brief, volatile, reign.”

 

[virtuos0]

technical analysis does not equal indicator

You're wrong, TA as a whole is just an indicator of reality, and a poor one at that. I prefer to cut out the middleman and trade reality.

 

[virtuos0]

..from Commodities legend Paul Tudor Jones:

“I see the younger generation hampered by the need to understand and rationalize why something should go up or down. Usually, by the time that becomes self-evident, the move is already over. When I got into the business, there was so little information on fundamentals, and what little information one could get was largely imperfect. We learned to go with the chart. Why work when Mr. Market can do it for you? These days there are many more deep intellectuals in the business, and that, coupled with the explosion of information on the Internet, creates the illusion that there is an explanation for everything…..There are young men and women, graduating from college who have a tremendous work ethic, but they get lost trying to understand a whole variety of market moves….[at the end of a bull market or bear market] there’s typically no logic to it; irrationality reigns supreme, and no class can teach you what to do during that brief, volatile, reign.”

I couldn't agree more with Paul Tudor Jones, there is no possibility of understanding everything that happens, or rationalize why the market goes up and down, 99% of the time. If anyone could successfully do that they would be the worlds first trillionaire in very short order, and I would be making a hundred trades a month rather than one or two.

Unfortunately PTJ then makes a false jump of logic in thinking that if you cannot understand the market all the time, you shouldn't ever try to understand the market. What a pants head.

 

[tenbobtrader]

"Unfortunately PTJ then makes a false jump of logic in thinking that if you cannot understand the market all the time, you shouldn't ever try to understand the market. What a pants head. "

perhaps he just values his sanity and does not want to end up wearing his pants on his head ?

 

[cpngtw]

You're wrong, TA as a whole is just an indicator of reality, and a poor one at that. I prefer to cut out the middleman and trade reality.

And how about Fundamental Analysis - Fundamental Indicators?

Although different, but FA and TA both use fundamental & technical indicators to do analysis, respectively.

Then based on your logic, just replace TA by FA then you have FA as a whole is just an indicator of reality, and a poor one at that. I prefer to cut out the middleman and trade reality too ???

What do you say?

If you use neither TA or FA, then probably fortune teller?

 

[Technically Fundamental]

Why not just trade technically and be aware of fundamentals or trade fundamentally and be aware of the technicals. It would be idiotic to not consider fundamentals for trade direction or general sentiment etc just as it would be daft not to consider chart/tape based analysis for an entry. Unless you've got millions and don't mind being in the red for a while I suppose.

 

[zupcon]

3) There is nothing random about the market

I agree that markets are not random, (not that it would worry me in the slightest if they where) but I think you are misinterpreting point 3.

Douglas doesnt really imply that the markets are random. He states that the distribution of wins and losses for a given edge is random, and he is of course correct. Its simply a consequence of trading a probability based approach, and to be honest, the majority of traders do just that, despite their beliefs otherwise, and realising the truth of that reality isnt necessarily a bad thing.