BASIC trading strategy that can work?

[Wysiwyg]

Oh and Wysiwyg , my signature leads to the yellow brick road
vvvvvvvvvv

My experience with the V word is a terrible case of whipsaw. Volatility up sooner or later is volatility down. When you get on a trade in the direction of volatility it is a great multiplier but gee if you hit the button when volatility reverses then your stop loss could get some (serious) slippage.

 

[tech/a]

My experience with the V word is a terrible case of whipsaw. Volatility up sooner or later is volatility down. When you get on a trade in the direction of volatility it is a great multiplier but gee if you hit the button when volatility reverses then your stop loss could get some (serious) slippage.

That's your execution

 

[Wysiwyg]

That's your execution

You're right Tech. My timing is terrible and my fear levels are hitting the roof.

 

[tech/a]

You're right Tech. My timing is terrible and my fear levels are hitting the roof.

I can understand that.

But
In my experience fear --- of loss can be deleted by trading well within you limits.

Let's take trading he DAX
If I have an account of say 100 k trading a few contracts is no issue even with a 100 tick loss.
But if I'm trading 10-20 lots with the same Account then that could be scary
Particularly if I only had $100k to my name.
If I had 20 or 50 of them then no fear at all.

Now fear of failure-----different beast.

 

[Gringotts Bank]

You're right Tech. My timing is terrible and my fear levels are hitting the roof.

Suggestion: Calculate your net trading capital. Withdraw 0.5% of it and go to the casino and play a few hours of blackjack. As you play,try to understand what "letting go of fear" really means. You have to mentally write off the cash as "gone and irretrievable" and yet still play, hand after hand after hand. That's what trading requires. If there's even the tiniest desire for the cards to fall your way, or fear that they won't, then you're not doing it correctly. Complete and utter carefree abandon combined with methodological precision. If you start to win, notice the tension creep into the body and get back to not caring. Then recall it for Monday's trading. If you lose and start to feel badly stop and walk away, regain composure and start again. You can't win feeling badly. Find an aspect of the game which interests you (other than the win/loss aspect).

 

[CanOz]

Suggestion: Calculate your net trading capital. Withdraw 0.5% of it and go to the casino and play a few hours of blackjack. As you play,try to understand what "letting go of fear" really means. You have to mentally write off the cash as "gone and irretrievable" and yet still play, hand after hand after hand. That's what trading requires. If there's even the tiniest desire for the cards to fall your way, or fear that they won't, then you're not doing it correctly. Complete and utter carefree abandon combined with methodological precision. If you start to win, notice the tension creep into the body and get back to not caring. Then recall it for Monday's trading. If you lose and start to feel badly stop and walk away, regain composure and start again. You can't win feeling badly. Find an aspect of the game which interests you (other than the win/loss aspect).

GB , great post.

 

[Quant]

GB , great post.

Not sure what going to a casino playing blackjack has to do with trading . Blackjack best case scenario expectancy ( assuming you play a probability based strategy , which maybe 1 in 100 do ) is -0.02 , if you are actually aware as a trader that is your expectancy all i can suggest is GIVE UP TRADING .. At least its commonly know you cant beat the casino without cheating so its a no brainer you arent going to get rich playing casino at their games . This is why i am so full on about expectancy because there are so many traders out there with an expectancy substansially lower than that of blackjack and are totally oblivious to it . I will never get used to losing as its statistically unlikely over the long haul . If the casino is a metaphor for your trading i think you are in the wrong game with all due respect ....

Blackjack simulation

 

[Gringotts Bank]

Not sure what going to a casino playing blackjack has to do with trading

Forget about statistics and house edge for a minute. Consider two guys playing against each other in blackjack. They have identical experience, bankroll, bet size, skill and knowledge. One of them is happy and relaxed, the other is miserable and tense. The odds are stacked firmly in favour of the relaxed, happy guy. This is the psychological edge, and it is hugely influential in determining the bottom line.

 

[Quant]

Forget about statistics and house edge for a minute. Consider two guys playing against each other in blackjack. They have identical experience, bankroll, bet size, skill and knowledge. One of them is happy and relaxed, the other is miserable and tense. The odds are stacked firmly in favour of the relaxed, happy guy. This is the psychological edge, and it is hugely influential in determining the bottom line.

Regardless of my emotional state i play blackjack like i trade , as i keep saying its about skill and probability understanding not emotions . Now if we were talking pot limit or no limit poker that might be a tad different but nevertheless poker is still significantly probability based with a bit of pysche reading . The point being is when i trade i am the CASINO

when i play blackjack i know exactly what to do before the cards are laid out , the same goes with my trading . its predetermined based on probabilities . i dont have to think about it for a second

 

[CanOz]

I liked the idea of taking a crack at the casino with.5% risk...the choice of games is where the edge is.

 

[tech/a]

If I'm staking against an opponent with unlimited funds and a known edge I'm being reckless

If I'm Kerry Packer with unlimited funds and no fear of loss I can win purely by being lucky with size.

But I'm gambling.

If I'm trading with an edge I'm not gambling.
I'm running a business. Just as any casino is

 

[Triathlete]

If I'm staking against an opponent with unlimited funds and a known edge I'm being reckless

If I'm Kerry Packer with unlimited funds and no fear of loss I can win purely by being lucky with size.

But I'm gambling.

If I'm trading with an edge I'm not gambling.
I'm running a business. Just as any casino is

+1..

 

[Trendnomics]

I find it strange how some posters have completely misconstrued Gringotts Bank's post.

His post outlined an excellent technique, that can be used to explore and analyse your own level of loss aversion (using real money) - trading psychology: the negative emotions experienced from a loss is far greater, than the positive emotions experienced from a gain.

Clearly trading psychology is Wysiwyg's main obstacle, I'm sure after 10 years on ASF, he has the fundamental knowledge required to succeed, but perhaps he needs to re-adjust his relationship with money and improve on his emotional intelligence.

For those who dismiss the importance of trading psychology, I doubt your trading ability.

 

[Quant]

Firstly the only thing that judges my ability as a trader is my P&L so whether someone doubts my skills due to the fact i discount trader psychology ... MEH care factor zero

Once again i will say it , if you work and develop an empirically tested rules based systemtatic approach with a robust expectancy with a rock solid set of definable parameters all your stress becomes a moot point . You know the prime reason traders stress ... Their method is not sustainable with a discipilined approach , its broken , its **** . If it wasnt there would be nothing to stress about , of course there will be exceptions and maybe these people need to seek a head doctor but in the main its all about method . There is nothing more to say

previously i was a **** directionless discretionary trader and now i am not and it was freaking hard work , but ALL the work was on METHOD

 

[Quant]

Reality is confronting but it is the only TRUTH

 

[Wyatt]

Reality is confronting but it is the only TRUTH

Love your work, I take it you're a mean reversion type of guy, but I may have got that wrong, maybe you have a number of strategies. Any chance of posting some backtests/results to give the rest of us an idea where the the bar is set?

Cheers,
Wyatt

 

[minwa]

For those who dismiss the importance of trading psychology, I doubt your trading ability.

One of those rare occassions I agree 100% with you

Before AI have a mind of their own, there is ALWAYS human input behind ANY mechanical system. The temptation to alter rules is always there, the doubt to hold through draw downs is always there, the greed to increase position size/trade more markets on good runs is always there. Not to mention human factors that is always present hindering performance of every trader - nagging partner, sick child, fat finger typing input mistake, coding error, technical outages.

Any that claim they have no emotions are machines - therefore you are not motivated by money but only sole existence is to follow orders programmed upon you.

 

[tech/a]

One of those rare occassions I agree 100% with you

Before AI have a mind of their own, there is ALWAYS human input behind ANY mechanical system. The temptation to alter rules is always there, the doubt to hold through draw downs is always there, the greed to increase position size/trade more markets on good runs is always there. Not to mention human factors that is always present hindering performance of every trader - nagging partner, sick child, fat finger typing input mistake, coding error, technical outages.

Any that claim they have no emotions are machines - therefore you are not motivated by money but only sole existence is to follow orders programmed upon you.

Again I'm in Quants camp.

I'm not motivated by money
I'm motivated by the challenge and the acceptance of that challenge.
Success or failure is measured in P&L

Trading,Property,Civil construction company
All businesses all completely free of emotion.
I've found all of those who I come in contact with who look at business---any business----as a challenge to be answered without fear of loss staked against a strong tested and proven plan---which may alter from business to business----enjoy success.

Have I and others had losing months and losing years----of course
Do we need to visit a psychologist --- no---- we learn from experience and embrace all challenges.

Fear for some is confidence for others---these are those with experience.

 

[minwa]

I'm not motivated by money
I'm motivated by the challenge and the acceptance of that challenge.
Success or failure is measured in P&L

But P/L IS money ?

Fascinating..let me know why you think P/L is not money - real or demo.

 

[tech/a]

But P/L IS money ?

Fascinating..let me know why you think P/L is not money - real or demo.

It's certainly money

It's not the motivation it's the record of failure Or success.

If you successfully answer the challenge of ANY business the money comes.
If you simply want more money you need to know how to accept that challenge.
The better you become the more money you will find flows into your business.