2012: The Battle for Survival

Businessman · May 20, 2012

From Trading in the Zone:

Addiction to Random Rewards

Several studies have been done on the psychological effects of random rewards on monkeys.
For example, if you teach a monkey to do a task and consistently reward it every time the task is done,
the monkey quickly learns to associate a specific outcome with the efforts.
If you stop rewarding it for doing the task, within a very short period of time the monkey will simply stop doing the task.
It won't waste its energy doing something that it has now learned it won't be rewarded for.
However, the monkey's response to being cut off from the reward is very different if you start out on a purely random schedule, instead of a consistent one.
When you stop offering the reward, there's no way the monkey can know that it will never be rewarded again for doing that task.
Every time it was rewarded in the past, the reward came as a surprise.
As a result, from the monkey's perspective, there's no reason to quit doing the task.
The monkey keeps on doing the task, even without being rewarded for doing it.
Some will continue indefinitely.

ChkitOut · May 20, 2012

neke, how the heck did you make a 880% return in '05? My apologies if you've already answered that.

I loved Datek by the way, it was fast, simple, it rocked. You could short just about anything i think, they probably just didn't give a crap about finding stock to borrow.

Uncle_Ho · May 20, 2012

Neke, I know this from experience you are completely too opinionated.

We all have to be opinionated to do this job, you need conviction when your right and humility when you are wrong.

When you lose now, you are too opinionated. Let the trades come to you

I've been making a living 100% discretionary year after year. It can be done. You do not need to stop. Trading takes experience, and you got a lot now

I think you are smart enough to prevail. If you string together 12-16 weeks of some of your better weeks, and can stay strong for an extended period of time, not just a month or two. You could be making 400k-500k annually. It doesn't matter what you have in your account. I think you know this deep down, that you should be able to make 1-2% avg daily.

Do not listen to the haters, they need you to fail, to help them validate thier pathetic lives. Like thier rules really work for everyone...

ChkitOut · May 20, 2012

Quote from Uncle_Ho:

. Trading takes experience, and you got a lot now

surely the string of gains year after year after year cannot be luck (i suppose there is a small chance of that). he must have been doing something right and repeatable.

Businessman · May 21, 2012

Quote from ChkitOut:

surely the string of gains year after year after year cannot be luck (i suppose there is a small chance of that). he must have been doing something right and repeatable.

The markets have changed since the dust settled after the banking crisis.

2010 onwards has been a hard time to trade intra day patterns.

A lot of the old technical patterns dont work as well, price action seems to be more choppy.

If neke made a killing in 2008 and 2009, think about the traders he took the money from? They must of lost big time, they took a good beating and have quit the game.. will take time for them to be replaced by a new generation of dumb money and then the easy markets will return.

PHOENIX TRADING · May 21, 2012

Quote from Uncle_Ho:

I think you know this deep down, that you should be able to make 1-2% avg daily.

1-2%/day

Not on planet earth, it's nearly impossible to do that a week on a consistent basis.

2%/month with size would put you up there with the world's top Hedge Fund managers.

mastacoli71 · May 21, 2012

Quote from Businessman:

From Trading in the Zone:

Addiction to Random Rewards

Several studies have been done on the psychological effects of random rewards on monkeys.
For example, if you teach a monkey to do a task and consistently reward it every time the task is done,
the monkey quickly learns to associate a specific outcome with the efforts.
If you stop rewarding it for doing the task, within a very short period of time the monkey will simply stop doing the task.
It won't waste its energy doing something that it has now learned it won't be rewarded for.
However, the monkey's response to being cut off from the reward is very different if you start out on a purely random schedule, instead of a consistent one.
When you stop offering the reward, there's no way the monkey can know that it will never be rewarded again for doing that task.
Every time it was rewarded in the past, the reward came as a surprise.
As a result, from the monkey's perspective, there's no reason to quit doing the task.
The monkey keeps on doing the task, even without being rewarded for doing it.
Some will continue indefinitely.

Good reminder. Thanks for posting this.

neke · May 21, 2012

Quote from bwolinsky:

Neke has had an 80+% drawdown. Quite the contrary: yes, it's a blow up.

Expected by more than myself from over three years ago, and repeatedly brought to neke's attention nearly every week for 2 years...

80% draw-down? Blow-up? I believe if I pulled out all my remaining 147K from the market today, you would say I have a 100% blow-up. That is how intelligent you are.

For the sake of anybody that cares about the facts, here they are, starting from my first journal of 2/25/2007.

Code:

Result since start of first thread

2/25/2007	Starting Bal			  76000
		P/L to date			 526402   (Up 692%)
		Cash Withdrawal		        (455000)	
						------
		Curr Balance			 147402


Draw-down (from peak cumulative P/L)

10/23/2009	Starting Bal			 635000
		P/L to date			(303598)   (Down 47.8%)
		Cash Withdrawal			(184000)
						--------
		Curr Balance			 147402


Upmove (from low cumulative P/L)

3/9/2007 	Starting Balance		  64094
		P/L to date			 531308	(Up 829%)
		Cash Withdrawal 		(448000)	
						------
		Curr Balance			 147402

The blow-up was "expected by more than myself for over three years ago". Well, rewind three years ago to the week-end of 5/15/2009, and here is the performance which you can pull from the threads.

Code:

5/15/2009	Starting Balance		 270217
		P/L to date			  61185	 (Up 22.6%)
		Cash Withdrawal			(184000)	
						--------
		Curr Balance			 147402

Now you have your blow-up, you prophet of doom, can we move on?

bwolinsky · May 21, 2012

Code:
Quote from neke:

80% draw-down? Blow-up? I believe if I pulled out all my remaining 147K from the market today, you would say I have a 100% blow-up. That is how intelligent you are.

For the sake of anybody that cares about the facts, here they are, starting from my first journal of 2/25/2007.

Code:

Result since start of first thread 2/25/2007 Starting Bal 76000 P/L to date 526402 (Up 692%) Cash Withdrawal (455000) ------ Curr Balance 147402 Draw-down (from peak cumulative P/L) 10/23/2009 Starting Bal 635000 P/L to date (303598) (Down 47.8%) Cash Withdrawal (184000) -------- Curr Balance 147402 Upmove (from low cumulative P/L) 3/9/2007 Starting Balance 64094 P/L to date 531308 (Up 829%) Cash Withdrawal (448000) ------ Curr Balance 147402

The blow-up was "expected by more than myself for over three years ago". Well, rewind three years ago to the week-end of 5/15/2009, and here is the performance which you can pull from the threads.

Code:

5/15/2009 Starting Balance 270217 P/L to date 61185 (Up 22.6%) Cash Withdrawal (184000) -------- Curr Balance 147402

Now you have your blow-up, you prophet of doom, can we move on?

I never knew about the withdrawals.

nkhoi · May 21, 2012

Quote from bwolinsky:

I never knew about the withdrawals.

like I said before 'you have a reading comprehension problem'.