A Truth on Trading.**Everyone, please Read**
- Thread starter Bullz n Bearz
- Start date
Isn't that "inferior behavior" ? (Just kidding, reminded me of the other thread, LOL. )
Don
I think a better title of the thread is "A truth of unrealistic expecations of newbie traders"...
It always looks easy until you actually try and then hit some bumps and then it is a scam or impossible to do.
It always looks easy until you actually try and then hit some bumps and then it is a scam or impossible to do.
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One of the strangest ,perhaps widespread patterns in all of trading;
the tendency to trade too large, too soon.
Some of the wisest traders/investors started smaller than 1 ES contract
Actually i wish i had started with 1 or 2 SPY contracts[about$300+ dollars];thank God i didn't try to learn with 1 ES contract. Even if it does take more capital than $300,
much rather learn with some GE or QQQQ than ES;
even if you eventually do trade ES ,or YM
I wish it were as easy as putting faith in Bollinger Bands or 50dma;
not against either TA indicator,
but that's not it ,putting faith in BB or 50dma
"Regarding "backtesting" - over the years I've found that backtesting tends to lead to a false sense of confidence in a strategy. (Not being critical, it "can" help talk you out of things that may not work). "
i've found the EXACT opposite.
Again, I understand you primarily trade stocks (pairs) whereas I trade futures (I invest in stocks, though).
By backtesting setups, I *know* what their positive expectancy is. I *know* that if I stick with them, they work X% (varies by setup) of the time, for Y points.
On strategies I have backtested, it gives me the confidence to STICK with the trade, and let my parameters take me out (stopped out, or first target met) vs. subjective measures. Once you are in the trade, it is nearly impossible to be objective, since you have a position. You can talk yourself out of a good trade by taking profits too early, or jumping out of the trade, etc.
Since I know my stops and targets and the setup are logical and have positive expectancy (which I learned through backtesting), it gives me the confidence to FOLLOW the setups. This helps with patience - waiting until the setup presents, and letting the setup play out.
I also should note that when I backtest my strategies, I test them using a real market (DIA) as well. In other words, I backtest and forward test.
DIA has inferior fills, and higher commission ($1 per lot, which equals 1 full tick vs. just under $2 per contract which is 2/5 a tick). So, if a strategy works with DIA, I can be assured it works with YM.
DIA is a great training tool for prospective YM traders.
i've found the EXACT opposite.
Again, I understand you primarily trade stocks (pairs) whereas I trade futures (I invest in stocks, though).
By backtesting setups, I *know* what their positive expectancy is. I *know* that if I stick with them, they work X% (varies by setup) of the time, for Y points.
On strategies I have backtested, it gives me the confidence to STICK with the trade, and let my parameters take me out (stopped out, or first target met) vs. subjective measures. Once you are in the trade, it is nearly impossible to be objective, since you have a position. You can talk yourself out of a good trade by taking profits too early, or jumping out of the trade, etc.
Since I know my stops and targets and the setup are logical and have positive expectancy (which I learned through backtesting), it gives me the confidence to FOLLOW the setups. This helps with patience - waiting until the setup presents, and letting the setup play out.
I also should note that when I backtest my strategies, I test them using a real market (DIA) as well. In other words, I backtest and forward test.
DIA has inferior fills, and higher commission ($1 per lot, which equals 1 full tick vs. just under $2 per contract which is 2/5 a tick). So, if a strategy works with DIA, I can be assured it works with YM.
DIA is a great training tool for prospective YM traders.
well, i've had one down year in the 8 since i've been trading, and if i had my current brokerages / pricing-per-trade/share system, i'd have zero.
so i don't know why *you* think that's far fetched.
mind you, i've had a couple years in the 8 that i could have been working a non-trading job and earned more, but that's not what you were so critical of.
Part of the truth is that trading is real confusing to beginners.
When we use the words: "Play", or "game" to describe the market, it gives mixed messages to beginners, when everyone is telling them that trading is NOT a game, yet they go out and say things like "I didn't play that stock yesterday" or "This game swallows most who walk through its doors".
Trading is what you want it to be. If you make money by thinking of the markets as one big game, then so what?. Everyone has their own style and learns at their own pace.
cm
When we use the words: "Play", or "game" to describe the market, it gives mixed messages to beginners, when everyone is telling them that trading is NOT a game, yet they go out and say things like "I didn't play that stock yesterday" or "This game swallows most who walk through its doors".
Trading is what you want it to be. If you make money by thinking of the markets as one big game, then so what?. Everyone has their own style and learns at their own pace.
cm
a hunter doesnt randomly shoot into the woods hoping he hits something.
patience is what a lot of people lack secondary for the need to make money everyday.
you should be able to walk up to the game your hunting and shoot it from point blank range. Otherwise the odds are against you.
so these opportunities persist during very short periods of times, its where runaway fear and greed create a one way market on the chart.
then risk reward becomes skewed, and you register gains with very little risk.
trading is a scam in that, the setups are there based on how much risk your willing to take. And in terms of risk I dont mean leverage. Some of the best traders will take immense leverage in a oneway market knowing full well those gains will feed them for the rest of the month.
patience is what a lot of people lack secondary for the need to make money everyday.
you should be able to walk up to the game your hunting and shoot it from point blank range. Otherwise the odds are against you.
so these opportunities persist during very short periods of times, its where runaway fear and greed create a one way market on the chart.
then risk reward becomes skewed, and you register gains with very little risk.
trading is a scam in that, the setups are there based on how much risk your willing to take. And in terms of risk I dont mean leverage. Some of the best traders will take immense leverage in a oneway market knowing full well those gains will feed them for the rest of the month.
so whats high probability setup?
when your making money while someone else is puking a position. When your opponent has no choice but to exit at a premium.
when someone else's stops get hit, daily highs lows, weekly highs lows. Breaking resistance/support points, resistance support points are a manifestation of the market participants psychology.
the trick to avoid becoming market fodder.
when your making money while someone else is puking a position. When your opponent has no choice but to exit at a premium.
when someone else's stops get hit, daily highs lows, weekly highs lows. Breaking resistance/support points, resistance support points are a manifestation of the market participants psychology.
the trick to avoid becoming market fodder.