Dump it Here

Skate said:

It should be noted that gaining the essential skills and experience may take some time and effort. It is vital to approach learning with a growth mentality, focusing on continuous improvement and a desire to learn from both successes and failures. While the route to success may not always be easy, the potential rewards, both financially and personally, can be great.

Click to expand...

Everyone's situation is different, determine your own timeline. Tip, don't rush it and organize your own modules to learn depending on your area of interest.

"Trading for Beginners - Skate's Practical Guide to Profitable Trading"
A daily series of posts aimed at those just starting out on their trading journey.

23. Trading is an attitude
The heading, "Trading is an attitude," oversimplifies the complexities of trading. However, a positive attitude alone is not enough to succeed in trading. While attitude can indeed help traders cope with the emotional ups and downs of the market, it’s not the only factor that contributes to trading success.

Trading is a complex activity that requires a combination of knowledge, skills, and attitude that emphasises discipline, patience, and risk management.

Trading is not a get-rich-quick scheme, and losing money is an unavoidable element of the trading game. However, by maintaining the right attitude and mindset it allows traders to make logical, informed decisions that are necessary for trading profitably.

To succeed in trading, it is critical to learn from the experiences of great traders. Reading books, trading articles and watching YouTube videos, and listening to podcasts can help you learn from the achievements and pitfalls of others.

Education is crucial for trading success since it helps traders avoid frequent blunders while developing a unique trading style or trading technique. Traders who stay informed and react to new information or events have a better chance of success.

The cowboy, Will Rogers once famously remarked, "It's not what we don't know that gets us in trouble, it's what we know that ain't so." This is especially true in the trading world. Many traders make decisions based on limited or outdated data, which can lead to poor decisions and big losses. Staying informed and reacting to new information is critical for trading success.

Anyone who maintains a disciplined, adaptive, and positive attitude can succeed in achieving their goals. Maintaining a positive attitude is essential for making informed judgements and staying ahead of the curve.

Trading education is a critical component of trading success, and those who constantly learn and adapt have a better chance of succeeding.

Skate.

"Trading for Beginners - Skate's Practical Guide to Profitable Trading"
A daily series of posts aimed at those just starting out on their trading journey.

24. The Importance of Reliable Trading Data for Successful Trading
Trading in the financial market can be difficult, and having exact and relevant information is not only useful but also required for trading success. Making informed decisions based on reliable information is crucial for avoiding costly errors and identifying patterns that allow for better risk management.

One of the most significant benefits of having accurate trading data is the ability to recognise trends and patterns. Unfortunately, many traders fall victim to relying on free internet data, which might be unreliable and unsuitable for trading. Rather than depending on hearsay or rumours, it is vital to obtain reliable data from credible sources such as Norgate Data.

For traders to make informed decisions about a company's valuation and trading patterns, they must have access to trustworthy and timely trading information. Technical analysis and system trading rely on current and exact data to assist traders in developing and refining their strategies to assist in making more profitable trades. Traders may better judge whether a company is overvalued, undervalued, or achieving new highs with up-to-date data.

Trading successfully requires a combination of knowledge, skill, discipline, and emotional intelligence. It might be difficult at times to deal with unexpected market behaviour, but traders can protect themselves from financial losses by remaining disciplined, adhering to a well-defined strategy, and avoiding rash decisions based on emotions or market noise.

Traders with access to the most recent market data and research can keep up with market trends and developments as this can help being caught off guard by unanticipated market swings. As traders gain more knowledge and competence, they can utilise this information to improve their trading strategy, discover new trading opportunities, and make better trading decisions.

The market can be unpredictable and irrational at times, so traders must stay focused on their analysis and approach. Making sound decisions requires staying informed, having an open mind, and acknowledging our limitations. Traders can handle the market's ups and downs and boost their chances of success by remaining disciplined and knowledgeable.

To navigate the market's unpredictability and avoid financial losses, it's necessary to actively seek credible sources of information and data, avoid impulsive decisions, and practice discipline to avoid costly mistakes and improve our trading skills. Trading successfully requires an open mind, concentrated analysis, and attitude, with a disciplined trading approach.

Skate.

Systematic trading strategies (Backtesting - 101)
The hyperlink below is a lengthy read but well worth the effort. The article introduces the notion of backtesting in the context of a trading strategy. Backtesting is a technique for evaluating the performance of a trading strategy by using historical market data. The idea is to figure out how the approach would have fared in the past and then use that information to make an informed decision about whether to employ it in the future.

The process
The article walks you through the process of running a basic backtest, which includes choosing a trading strategy, gathering historical market data, applying the strategy to the data, and analysing the outcomes. The article also discusses some of backtesting's limits and drawbacks, such as overfitting (developing a strategy that performs well on historical data but does not perform well in the future) and survivorship bias (ignoring assets or strategies that have failed in the past).

Backtesting
Overall, the post is a wonderful place to start if you want to learn more about backtesting. Backtesting, however, is only one tool in the investor's toolbox and should be utilised in concert with other forms of analysis and due diligence.

https://returnoneffort.beehiiv.com/p/backtesting-101

Section 8. The Conclusion
"Backtesting is a double edged sword. Used inappropriately, it is very easy for traders to be lulled into a false sense of security as backtesting becomes just a source of confirmation bias. Typically, when a research team has faith in a strategy's soundness, but the backtest results disappoint, they don't abandon it. Instead, they suggest improvements, add rules to the trading system until the results conform to their preconceived notions. Backtests then become rife with overfitting and data snooping. In such cases, if investors allocate capital based on these backtests, the ensuing performance will likely be disappointing. When executed correctly, backtesting emerges as an invaluable tool that enhances traders’ understanding of strategy performance".

Skate.

"Trading for Beginners - Skate's Practical Guide to Profitable Trading"
A daily series of posts aimed at those just starting out on their trading journey.

25. The Importance of Market Psychology in Successful Trading
A lot of things influence the financial market, including news, economic statistics, and financial statements. The real driving factor behind the market's behaviour, however, is the collective behaviour of those who participate in it. The market is mostly a mirror of the emotions, beliefs, and psychological variables that drive traders to buy and sell shares.

Individual trader's decision-making processes are not always reasonable and objective. Instead, a number of psychological elements such as emotions, beliefs, and biases impact their decisions. For example, a trader may keep a losing position for longer than necessary in the hope that the price will recover because they are emotionally tied to the position or believe that the market will eventually turn in their favour.

Similarly, a trader may be overconfident in their ability, leading to excessive risk and poor trading decisions. These psychological elements might cause market volatility because traders may make decisions based on emotions rather than rational analysis.

Therefore, one of the most important skills for successful traders is understanding market psychology. We can make informed and sensible trading decisions by expanding our understanding of the psychological elements that govern market behaviour. Successful traders must have a clear and concentrated mindset, to regulate their emotions to avoid making snap decisions.

This can entail employing instruments like technical analysis, mathematical modelling, and other data-driven strategies to guide our trading decisions. Developing emotional intelligence, self-awareness, and the ability to control our emotions in the face of market volatility and uncertainty may also be involved.

The ability to cope with stress and regulate our thoughts is a valuable skill that can be learnt and honed. We may enhance our ability to remain collected and attentive under pressure by learning how to control our thoughts and emotions.

Increasing our emotional intelligence and self-awareness can improve our chances of market success by allowing us to change our thinking and nurture a calm and focused mentality even in the most difficult market conditions.

Skate.

Skate said:

The ability to cope with stress and regulate our thoughts is a valuable skill that can be learnt and honed. We may enhance our ability to remain collected and attentive under pressure by learning how to control our thoughts and emotions.

Click to expand...

Knowledge and experience gives you confidence which is a major factor in controlling emotions but it is very important to plan for the unexpected and then have the ability to cope with it when it happens. This is what I've come to realize as many others on this site have I'm sure. Planning for the unexpected is usually the last part we learn but it's also the part that can hurt you the most.

DaveTrade said:

Knowledge and experience gives you confidence which is a major factor in controlling emotions but it is very important to plan for the unexpected and then have the ability to cope with it when it happens. This is what I've come to realize as many others on this site have I'm sure. Planning for the unexpected is usually the last part we learn but it's also the part that can hurt you the most.

Click to expand...

I would also add in Common Sense and Foresight, without it the fll down the mineshaft is fraught with danger.

"Trading for Beginners - Skate's Practical Guide to Profitable Trading"
A daily series of posts aimed at those just starting out on their trading journey.

26. Trading is a complex process
Trading is a challenging and complex process, and many traders struggle to achieve success due to the steep learning curve and the difficulty in developing a trading strategy and executing a trading plan.

Traders must be able to analyse market data, such as price charts, news, and economic indicators, in order to detect trends and patterns that will help in making trading decisions. To make informed decisions on whether to enter or exit a position, traders must also be familiar with trading methods and techniques such as technical analysis and risk management.

Developing the necessary skills and mindset for successful trading can be a long and challenging process when we have an attachment to making money. However, it is feasible to succeed in the markets and enhance our performance by actively striving to acquire the abilities and mentality required for effective trading.

Trading well is a long-term process that requires a commitment to ongoing learning and personal development. We may overcome the difficulties of the learning curve and succeed at trading by remaining focused and actively striving to build our abilities and refining our trading processes.

Although intelligence is undoubtedly a valuable quality in many aspects of life, it may be exaggerated when it comes to trading. Smart people may have a natural tendency to think logically and place an undue emphasis on their analytical abilities, which can be a liability in the volatile world of trading.

While analytical reasoning is important in trading, depending completely on it can be hazardous because the market is often irrational and driven by emotions. Predicting market developments solely on reasoning can be fruitless. Adopting a systematic trading technique that takes into account varied market conditions is crucial for making consistent and educated trading decisions. Traders can improve their chances of success and navigate the market more efficiently by doing so.

To accomplish this, traders must maintain discipline and calm by building a thorough trading strategy that incorporates technical research and risk management. Traders can make better decisions and consistently improve their trading success over time by creating and following a well-structured trading plan.

Maintaining attention to detail in the face of market volatility is also essential for trading success, as it allows traders to make sound trading decisions while avoiding emotional reactions that can lead to poor trading outcomes.

Skate.

"Trading for Beginners - Skate's Practical Guide to Profitable Trading"
A daily series of posts aimed at those just starting out on their trading journey.

27. The markets will always throw you a curve ball
Because financial markets are fundamentally uncertain, trading is difficult and frequently unpredictable. Even experienced traders are caught off guard by unexpected events that can have a substantial impact on the markets. Geopolitical tensions, rapid policy changes, wars, and natural disasters can destabilise the global economy, potentially undermining even the most well-developed trading strategy.

Mastering trading techniques involves a large investment of time, effort, and dedication. This includes the ability to respond to unexpected market events while avoiding emotional knee-jerk reactions that can lead to poor trading decisions. Recognising the market's sensitivity to unforeseen developments can help us manage its ups and downs by being flexible to shifting market conditions.

As a trader, you must first be able to recognise the market's unpredictability and then develop a comprehensive trading strategy. Despite the inherent unpredictability of the market, a well-tested trading strategy and trading plan can assist in managing the hurdles and capitalise on market movements. However, no one can predict the market's movements perfectly, that's why trading success is not easy to come by.

There are no shortcuts to success in trading, as there are in life. The learning curve is steep, and setbacks are unavoidable along the way. However, by keeping committed to a trading plan and staying focused on the long term, traders can manage the market's volatility and ultimately achieve trading success.

The key to trading success is to maintain discipline and adaptability in the face of shifting market conditions. This includes the ability to recognise and respond to unexpected occurrences while avoiding emotional reactions that can lead to poor decision-making. Those that are willing to put in the necessary effort and commit to their trading plan, on the other hand, can reap huge rewards.

Skate.

So a bit of a data dump that basically addresses the abstract concepts that Mr Skate has been talking about. Most are fairly self-explanatory.







jog on
duc

ducati916 said:

So a bit of a data dump that basically addresses the abstract concepts that Mr Skate has been talking about. Most are fairly self-explanatory.

Click to expand...

@ducati916 there is a lot of information to digest, thank you. It's encouraging when others post information about the topic being discussed.

I'm looking forwards to writing a piece about "how markets are constantly changing" tomorrow. We all know that adapting to these changes and understanding the complexities of trading is critical for success, regardless of our degree of experience. It's important to remember that not everyone has the same level of experience, so I'll try to be as clear and simple as possible in my explanations so that everyone can follow my way of thinking.

Skate.

Skate said:

@ducati916 there is a lot of information to digest, thank you. It's encouraging when others post information about the topic being discussed.

I'm looking forwards to writing a piece about "how markets are constantly changing" tomorrow. We all know that adapting to these changes and understanding the complexities of trading is critical for success, regardless of our degree of experience. It's important to remember that not everyone has the same level of experience, so I'll try to be as clear and simple as possible in my explanations so that everyone can follow my way of thinking.

Skate.

Click to expand...

Next dump:





jog on
duc

Lucky last



jog on
duc

@ducati916 I've just finished writing tomorrow's post while my thoughts were fresh.

Monday's Post
Your final "dump" of information has given me an idea for Monday's post: "The building blocks to successful trading" which I will do my best to keep interesting as the subject is much simpler than most would realise. While trading might seem complex and difficult, the fundamentals of effective trading are actually pretty simple. These building elements fall into three categories: knowledge, skills, and mindset.

Skate.

"Trading for Beginners - Skate's Practical Guide to Profitable Trading"
A daily series of posts aimed at those just starting out on their trading journey.

28. The markets are constantly changing
Financial markets are complex, intricate and dynamic that include economics, business, mathematics, psychology, and other sciences. The combination of these components results in a continually shifting environment for traders that may be both exciting, demanding, and scary at the same time.

Traders must keep up to date on the numerous factors that might influence the markets, such as economic conditions, geopolitical events, interest rate variations, and specific factors connected to individual companies, such as earnings reports and management changes.

These factors can have a substantial impact on market performance and can make prices rise or fall abruptly. Traders must learn a variety of abilities, including technical analysis, financial modelling, and emotional intelligence, to succeed in this complicated and ever-changing environment.

Examining charts and patterns to discover trends and possible volume-related price movements is what technical analysis is all about. Financial modelling entails developing and testing statistical models to forecast market movements. Despite the difficulties of trading, those who understand the markets and possess the necessary abilities can reap considerable returns.

To succeed, traders must remain committed, interested, and prepared to learn and adapt to changing market conditions in order to thrive and survive. Emotional intelligence is the ability to control one's emotions and behaviours in response to market developments.

Human behaviour also has a huge impact on the markets. During times of market uncertainty or volatility, traders may panic and sell their positions, resulting in rapid price falls. Also, traders may be more willing to take on more risks and buy during periods of optimism, resulting in price increases.

Understanding how human behaviour affects market behaviour is critical for successful trading. Markets are constantly changing due to a variety of causes such as changes in supply and demand, technological improvements, and regulatory changes. To remain competitive, traders must stay updated about these changes and alter their techniques accordingly.

To summarise, the financial markets are a fascinating and complicated environment that demands a wide range of skills and knowledge to properly navigate. Traders can achieve success and realise the benefits of this fascinating endeavour by staying informed, and remaining adaptable in the face of changing market conditions.

Skate.

I often make a comparison between boxing and trading because those two endeavors relate so closely. I was baffled at first when @ducati916 referenced Trading and Texas Hold'em poker until I realised they also share some similarities with a direct comparison to decision-making and risk-management parallels, but they are essentially separate pursuits.

Decision-making
Trading and poker both involve strategic decisions to be made based on insufficient information. Traders must analyse market data and anticipate the future performance of assets in trading, whereas poker players must analyse their opponents behaviour and predict the strength of their cards. Both activities necessitate weighing the risks and benefits and making decisions accordingly.

Risk management
Both trading and poker require risk management. In order to minimise losses and maximise gains, traders must properly manage their portfolios. To prevent going broke and maximise their chances of winning, poker players must manage their chips and bets. Both operations necessitate a methodical approach to risk management.

Timeframe
Typically, trading is a long-term endeavour, whereas poker is a short-term activity. Trading entails holding positions for weeks, months, or even years, whereas poker hands are usually only a few minutes long.

Skill versus luck
While both trading and poker entail some amount of luck, the value of skill in trading is far bigger. good traders must be well-versed in market trends, technical analysis, and financial theory, whereas good poker players must be adept at reading their opponents and doing rapid calculations.

Similarities and differences
While there are some similarities between trading and poker, they are fundamentally different activities with distinct goals and techniques. Trading is a long-term profit-orientated activity, whereas poker is a game of chance and skill played for amusement or profit in the short term.

Boxing and trading
There are similarities between boxing and trading in terms of the skills required to succeed, such as timing, strategy, and mental toughness. Both activities require a planned approach as well as the ability to persevere through short-term setbacks while keeping long-term objectives in mind. Boxers must be able to read their opponents and modify their methods accordingly, whereas traders must analyse market data and make informed decisions based on trends and risk management procedures. Boxing and trading both demand discipline, focus, and the capacity to recover from taking a hit in order to be successful.

Skate.

At points in this thread the question of compounding position size has come up.



Which relates to statistical probabilities of streaks.

Let's take the 50% strategy. A 7 trade losing streak is a 30% probability. As is a 7 trade winning streak.




I don't know, so I would be interested to find out, where would people add capital and grow their position size. After a run of wins or a run of losses?

It should be (as long as the strategy is valid) after a string of losses. Essentially you are playing the reversion to the mean statistically. After 7 losses in a row, statistically you would expect some winning trades. Same with a run of winners, you would expect losing trades. Hence the time to add capital is after a losing streak. Not easy to do.

Of course the market is very far from a Gaussian distribution, which adds extra spice when playing a Gaussian distribution with your strategy. The fat tails can bankrupt you.

Two classics:



jog on
duc

ducati916 said:

I don't know, so I would be interested to find out, where would people add capital and grow their position size. After a run of wins or a run of losses

Click to expand...

Well, I for one ensure that all my funds are in the market. With closed profits, it increases my next bet or series of bets, with closed losses my bet size decreases. I call this pyramid positioning sizing.

"Pyramiding Explanation" (positionSize)
Pyramiding "PositionSize" is a re-balancing technique for the reinvestment of profits. "Pyramiding (re-balancing) my PositionSizes" ensures every dollar is put into the markets to fight the good fight.

How?
My "Position-sizing technique" uses the Bank balance of my trading account to calculate the size of the next bet. It's simply a way of putting every dollar to work. I have made over 140 posts on this subject detailing exactly how I pyramid into positions taking advantage of every dollar accumulated or lost during trading. The next bet is mathematically coded from the balance of my trading funds.

What is the Re-Balancing Formula?
Trading Bank Balance divided by the number of outstanding positions required to fill the portfolio = new "PositionSize". This will now be the new bet for each & every pending trade (the new PositionSize also calculates the number of shares to buy in the pre-auction)

In a nutshell
My system of rebalancing is a simple way to adjust the size of my next bet. Position-sizing (the bet size) uses my trading Bank balance feed to calculate the size of the next bet or series of bets. It's simply a way of putting every dollar to work by reinvestment the profits or resizing down due to losses.

Skate.

Do you invest /bet the same amount of money on a heavyweight as you do on a Lightweight
What is your "Ship Design" when it comes to the " Size of Sails" ??
EG: something like this


Or are they all Penny-weighted Storm Sails of the same size and weight?

"Trading for Beginners - Skate's Practical Guide to Profitable Trading"
A daily series of posts aimed at those just starting out on their trading journey.

29. The building blocks to successful trading
Three essential building blocks are required for successful trading (1) picking high-quality shares with growth potential and (2) properly exiting those positions on a sell signal and (3) Maintaining the correct mindset.

The first building block is selecting high-quality stocks with significant growth potential, as well as recognising price and volume breakouts using technical analysis and adopting risk management measures to limit exposure to potential losses, which is a critical component of successful trading. It's crucial to remember, though, that every trade involves risk, and there's no guarantee that any particular trade will result in a profit.

The second building block is successful selling. Selling at the proper time is the foundation of profitable trading. Continuous actioning sell signals when they present is not only essential but necessary for successful trading. A defined plan for reversing losses or capturing profits that coincide with your trading objectives and risk tolerance is essential for effective management. A well-defined series of exits can help to mitigate the emotional impact of market volatility leading to more logical decision-making.

The third building block is your mindset. Successful traders have a growth mindset, which means they are always learning and adjusting to changing market conditions. They have a strong work ethic and are prepared to put in the time and effort necessary to succeed. They can also efficiently manage their emotions and retain a positive attitude in the face of hardships and setbacks.

It is critical to grow these building blocks through education, practice, and experience in order to become a good trader. Traders can boost their chances of success and reach their financial goals by creating a strong foundation of information, skills, and mindset.

However, learning these building blocks is a difficult task. It takes commitment, discipline, and hard work. As a result, it is critical to remain motivated and focused to thrive in the trading game. Remember that profitable trading is a journey, not a destination.

Traders must have a combination of gained knowledge and abilities, with a solid trading plan in order to trade successfully. Educational research, risk management, discipline, and emotional control, are among the building components.

It is vital to stay up to date performing extensive research, in order to spot potential trading opportunities. To avoid potential losses, risk management techniques should be implemented, while discipline is required to stick to a trading plan and avoid being misled by emotions such as fear and greed.

To make informed trading decisions, technical analysts discover trends and patterns using precisely defined indicators. Doing so determines if the price is overvalued or undervalued. A well-defined trading plan should include precise rules about when to enter and exit a position. Position sizing, and other risk management techniques, allow traders to learn from their trading results, and adapt their trading strategies accordingly.

Finally, successful trading absolutely requires a dedication to understanding and mastering these essential building blocks. While financial markets can be complex and difficult to handle at times, traders can always improve their chances of success by sticking with their trading plan.

Skate.