If the politicians put a 1/4% tax on every trade - then it's goodbye trading as we knew it.
I like and agree with a lot of the answers on here such as over trading to large for the account and phycology, but I think they are off topic. I think DT wants to look at market behaviour rather than the behaviour of the loosing trader.
DionysusToast said:You don't explain why volatility would quash a random system, which is what a newb would use without realizing it.
Oh my God !
What a pleasure to read this thread !
There really are intelligent life forms on t2w !
Great posts by Toastie, Bramble, the hare et al.
Richard
What is market behavior? What makes prices move? People do. There's no market without people trading it. Trading is based largely on emotion and sentiment of those trading that market. Prices go up or down because large groups (or large money) believe there is value or no value at the current price.
What is market behavior? What makes prices move? People do. There's no market without people trading it. Trading is based largely on emotion and sentiment of those trading that market. Prices go up or down because large groups (or large money) believe there is value or no value at the current price.
What is market behavior? What makes prices move? People do. There's no market without people trading it. Trading is based largely on emotion and sentiment of those trading that market. Prices go up or down because large groups (or large money) believe there is value or no value at the current price.
No-one is saying the markets are random.
What I am implying is that the markets may have multiple negative edges because newbies should effectively display the effects of random 'coin toss' trading.
I have outlined one negative edge.
Peter thinks it's a psych issue but I am not convinced...
Capiche?
This is such a valid point with respect to automated trading.You could probably lump the trading programs into the "large money" that I referenced in my statement. We can go into an interesting thread about trading programs but for here it's very probable that there is a human behind each one of them turning them on and off at whatever point some human or group of humans deem relevant. Large companies don't use trading programs in the same way retail punters use ea's.
So suddenly, you went from a 50/50 win/loss ratio to something else. You went from 2 tick stop and target to something else. A 1 tick down to stop you out and 3 ticks up to realistically get you filled on the upside.
I don't understand this. Why are you allowing an extra tick for a realistic fill on profit but not for the stop? I'm a longer term cfd guy so this is all new to me.
I like and agree with a lot of the answers on here such as over trading to large for the account and phycology, but I think they are off topic. I think DT wants to look at market behaviour rather than the behaviour of the loosing trader.
I think the markets act in a way to make you do the opposite that you should do. I think it does this buy almost constantly returning to, or very nearly returning to the same price.
So your entry is often revisited, so is your stop, so is your take profit. Like the waves on a beech. Returning to the same place, you could stand there for ages and not really be able to tell if the tide is coming in or going out.
I think this happens because to the market a stop loss and an entry is exactly the same thing, so price is drawn back and forth to nearly the same point. At this point the market makers fine tune the gap to make a market, receive their commission, cream a bit off (stop run) and the end result is getting stopped out to the pip.
No-one is saying the markets are random.
What I am implying is that the markets may have multiple negative edges because newbies should effectively display the effects of random 'coin toss' trading.
I have outlined one negative edge.
Peter thinks it's a psych issue but I am not convinced...
Capiche?
Why would a newbie trading demonstrate the effects of a random coin toss while trading?
Yup - you are on more on the same page as me in terms of what I think the issue is. That is not to say that we are right and all the psychs are wrong.
I've been struggling the past few days on the ES. Once again we are down to the low hundreds on each level on the DOM but we've still got good volume going through which obviously makes it much more volatile. Now my stops are usually in the region of 8-10 ticks and after getting burnt a few times, I decided to widen this to take into account the volatility. The result - slaughtered!
Now - in this situation, with additional volatility, what is the one thing you would expect to NOT work? For me, tightening up the stops & targets is something I would expect to not work in this environment. Still, this is exactly what I did. I focused on the trades coming through on the Tape/DOM and at the first sign of a pause, faded the move with a 4 tick target and 4 tick stop. The result? Worked like a dream.
The reason I put this out there is that the market for some reason is counter-intuitive in many respects. Even when you think you know what you are doing, it throws a curve ball at you like this and forces you to re-assess some of the 'givens' about the markets.
Giving more room vs tightening up was not a psych issue. I tried giving more room but whilst I was doing that, I was very focused on what was going on (as you do when you are losing $$$) and it was this focus that made me notice the way the market was behaving. I would probably have missed it if I'd been making money...