Traders: Do you try to predict or react to market movements?

[MACD]

Trade what you see, not what you think!

This will keep you profitable and out of trouble

 

[odds-on]

It's a bit like asking a boxer does he predict the opponent's swings or react to it.

A good boxer will study the tapes and try to understand how his opponent is likely to behave. This gives the boxer an edge in assessing the probability that a left swing will follow two right jabs. But if the left swing doesn't come, the boxer has to be prepared to counter whatever it is that the oppoenent chooses to do.

Whether you call that prediction / reaction is unimportant imo.

"You don’t think. It’s all instinct. If you stop to think, you’re gone." - Sugar Ray Robinson.

On the boxing theme, I imagine that trading for income is like being a professional boxer. Endless repetition of basic moves to hone both skill and instinct.

 

[Gringotts Bank]

I also like the boxing analogy.

Your opponent (the market) can hurt you, and you're aiming to score points against it. Two things happening - defense and attack. The mind can't focus on two things at once, but it can switch back and forth. Successful traders seem to be defense focussed (ie. capital preservation), occasionally switching to attack mode when the defense position is established..

 

[Timmy]

I have a George Foreman Grill. Does that count?

 

[Boggo]

I also like the boxing analogy.

Your opponent (the market) can hurt you, and you're aiming to score points against it. Two things happening - defense and attack. The mind can't focus on two things at once, but it can switch back and forth. Successful traders seem to be defense focussed (ie. capital preservation), occasionally switching to attack mode when the defense position is established..

An interesting article that is worth reading all the way through...
http://www.gladwell.com/2002/2002_04_29_a_blowingup.htm

 

[Sdajii]

I do not understand this, if you are so stupid to comprehend why do you need to insult? Your condition is not my fault.

I have only expressed my opinion, you have the prerogative to not agree, but insulting and accusing shows only you are a loser as much as your friends.

Where is your thought regarding the subject, what about burglar's or boggo's. You do not have one and you will never have.

Now, do you know better than I the way I trade? The way I perceive thinks? The way I act on things?

Yes, it seems that you do. Losers always do know better.

Read this about a thousand time, maybe one day you will grasp it:

No, I would not forecast/predict(guessing) or react(chasing).

What I would do is to constantly monitor and verifying the underlying condition of the market and take selective trades in the direction of the least resistance using various setups to enter.

Keep in mind that the actual setups bear no significance without the underlying condition.

Two minutes.

I think I love you <3

Please call me

xxx

 

[CanOz]

An interesting article that is worth reading all the way through...
http://www.gladwell.com/2002/2002_04_29_a_blowingup.htm

Thanks Boggo, I like Taleb, he's a bit over my head sometimes...I've read his second book 'The Black Swan', but not 'Fooled by Randomness'.

Reminds me of the level of intelligence that we're competing against.

CanOz

 

[Gringotts Bank]

An interesting article that is worth reading all the way through...
http://www.gladwell.com/2002/2002_04_29_a_blowingup.htm

I have the book Boggo, (Blink) and that section is highlighted and dog-eared from many re-reads.

 

[tech/a]

For me

When discretionary trading.
I firstly anticipate --- as a side from predicting.
I secondly react by either staying in a trade or exiting.

When systems trading.
I'm doing neither.
I'm following a set of conditions.

 

[Gringotts Bank]

The two main things I have highlighted are:

1. the bit about Soros trading by instinct (his back hurts), and yet he makes up all these rationalizations about why he is acting a certain way with his trading decisions.

2. This quote: "because to sell or to buy an option requires each party to confront the question of what it is he truly knows. Taleb buys options because he is certain that, at root, he knows nothing".

I think I once cited this book on the thread about trading books, even though it's not a book about trading. There's a lot of wisdom in Gladwell's first two books, but unfortunately his latter books aren't worth buying.

 

[Gringotts Bank]

Sorry to harp on, but whenever I read this it gets me going... in a good way.

Traders talk about controlling risk, but in reality all you can do is control how slowly you bleed to death. Position sizing and stops will determine whether you bleed to death in a week or over the course of 5 years - that is certain. But what you can never control is whether you make money or not. A system with a 15 year history of 20% pa and Sharpe ratio of 3.5 can suddenly and inexplicably stop working. You can still lose everything.

Acknowledging and accepting that risk on a really deep level is (to my way of thinking), the holy grail of trading. It sets your mind free to see "what is", as opposed to "what should be".

 

[CanOz]

Sorry to harp on, but whenever I read this it gets me going... in a good way.

Traders talk about controlling risk, but in reality all you can do is control how slowly you bleed to death. Position sizing and stops will determine whether you bleed to death in a week or over the course of 5 years - that is certain. But what you can never control is whether you make money or not. A system with a 15 year history of 20% pa and Sharpe ratio of 3.5 can suddenly and inexplicably stop working. You can still lose everything.

Acknowledging and accepting that risk on a really deep level is (to my way of thinking), the holy grail of trading. It sets your mind free to see "what is", as opposed to "what should be".

Great post and something that has been on my mind since i started developing and testing systematic trading methods.

An equity curve switch, another way to control how slow you bleed to death. Handy if your system stops working, and eventually it will, its inevitable. How else do you prepare your self for that?

CanOz

 

[Trembling Hand]

Sorry to harp on, but whenever I read this it gets me going... in a good way.

Traders talk about controlling risk, but in reality all you can do is control how slowly you bleed to death. Position sizing and stops will determine whether you bleed to death in a week or over the course of 5 years - that is certain. But what you can never control is whether you make money or not. A system with a 15 year history of 20% pa and Sharpe ratio of 3.5 can suddenly and inexplicably stop working. You can still lose everything.

Acknowledging and accepting that risk on a really deep level is (to my way of thinking), the holy grail of trading. It sets your mind free to see "what is", as opposed to "what should be".

Hows that all working out for you?

 

[Gringotts Bank]

How else do you prepare your self for that?

CanOz

I think the preparation is more to do with the mental attitude, as opposed to something that you action (even though action will spring from the attitude). A constant dedication to being open to, and accepting of, the possibility of failure and disaster.

That's trading psychology, as I see it.

 

[skc]

Sorry to harp on, but whenever I read this it gets me going... in a good way.

Traders talk about controlling risk, but in reality all you can do is control how slowly you bleed to death. Position sizing and stops will determine whether you bleed to death in a week or over the course of 5 years - that is certain. But what you can never control is whether you make money or not. A system with a 15 year history of 20% pa and Sharpe ratio of 3.5 can suddenly and inexplicably stop working. You can still lose everything.

Acknowledging and accepting that risk on a really deep level is (to my way of thinking), the holy grail of trading. It sets your mind free to see "what is", as opposed to "what should be".

Sounds like living knowing that you are guaranteed to be dead one day.

Does that set one's mind free to live in the moment, and hence achieve more than otherwise?

I guess it all depends on the individual.

 

[Gringotts Bank]

Hows that all working out for you?

It's works ok when I remember to apply it, or when I am able to apply it with some level of skill.

Remember that there are golf coaches who can dissect Tiger Woods' swing down to the nth degree, and they can apply that to their own game to some small level. But they could never go a round in 15 under par the way Woods does. It doesn't necessarily negate the theory if they blunder around the course at 10 over par.

As a contrast, if you asked Tiger how he does it. he may well answer: "I don't know, I just hit the ball long and straight".

 

[Trembling Hand]

Remember that there are golf coaches who can dissect Tiger Woods' swing down to the nth degree, and they can apply that to their own game to some small level. But they could never go a round in 15 under par themselves. It doesn't necessarily negate the theory if they blunder around the course at 10 over par.

So then its a waste of time. It certainly doesn't prove it either.

 

[Gringotts Bank]

A waste of time for most people, yes. Although it depends on your commitment. You could dedicate your life to it and be well rewarded.

 

[tech/a]

This thread is a perfect example of Humans complicating the simple.

 

[Gringotts Bank]

This thread is a perfect example of Humans complicating the simple.

Profitable trading is not simple. If it was, we'd all be rich.

Then you would come back with "well you just need to be smart about it and apply some maths and statistics". How many quants make it onto the Forbes or BRW rich list each year? None. What percentage of managed funds beat the index year in year out? A tiny fraction, and yet they have access to the best and brightest Ivy League graduates.

What I'm saying is that there's a missing element that never gets talked about.