Back Testing....."Paradoxically" Speaking

jem,

I think you make some good points but I don't believe the "trade what you see" idea is antithetical to your approach. If you have a method or system it is imperative to trade it, ie trade what you see, rather than override it with your emotions, ie trade what you think. It is basic that the best trades tend to be the hardest to take, because they seem wrong to our emotions. The zen stuff actually is a way of staying with your system, not a substitute for it.
 
Let me know why I am the lone fool and the zen crowd is correct. By the way there is no doubt after seeing the posts on this board that the crowd is into this zen stuff and that alone should make you concerned.

Jem, you are right on and you are definitely not a lone fool here. I've been talking for awhile about finding a methodology that gives the trader an edge first, and then apply all the discipline/execution/psychology/zen so that you are trading your edge to its best possible advantage.

You can have the best discipline/execution/psychology/zen and you won't make a dime in the markets unless you have an edge.
 
Originally posted by jem
Trade what you see not what you think. Is an oft repeated phrase from the school of zen trading.
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Can I chime in discussion of "Trade what you see, not what you think"? (VBG)

A school that I believes dooms losing traders into thinking they need to change themselves instead of their methodology
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Whoa... who is saying this? Why do you put those two concepts against each other? Both method and psychology are important parts of successful trading. Trader won't go far with any of them if another is not present. We can argue about weight of each of components, but they both are necessary. When people say that 90% of successful trading is mindset they refer IMO to the fact that trading techniques themselves are not really rocket science and trader can be fairly successful with quite simple systems - IF their mindset right that is. At the same time, aquiring of this correct mindset is much more difficult for majority. So those 90% (or whatever) refer to difficulty more than to importance, IMO.

As we know it was agreed by threei that we are not really trading without emotions but really learning how to trade with our emotions
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Let me elaborate... What I said was not about some kind of coping with our emotions but rather about using them as a mirror, as a tool for understanding crowd emotions. This allows trader to remain emotionally detached, and the power of his own emotions deems out to great degree and does not impact his own action.

Trade what you see not what you think runs contrary to one Dr. Van Tharps warnings that you do not trade the markets just your beliefs about the markets. Price charts, order flow and everything eventually has to get filtered by you.
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I don't see any contradiction here. Sure, you apply your filters, your system, your method of reading. This adage you are after is not about that. It's about trading signals of your system vs trading on perception of news, company statements, analysts opinion and all other noize surrounding the market. It's also about reacting on signals vs holding onto one's opinion formed by previous action (as in: great breakout setup, trade is taken, stock fails and breaks support - opinionated trader holds onto it because of his notion, one that trades what he sees takes his stop because reason for entry is no longer valid).

Trading what you see is consequently nonsense
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Ummm.... let's agree to avoid this kind of wording... as you can see from above it could be just about different interpretation of meaning and we need just to coodrinate the sense we put in it... And even if it's more deep disagreement, well... if this approach doesn't appeal to you, it doesn't mean it won't work for others?...

If you are prepared to climb then the psychology should take care of itself.
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Sorry, can't agree... Way too often I see traders that understand the system and cannot trade it successfully. Give any system to 10 people, will you get 10 similar results? For some it works like you say, but not for many. Perhaps it's so for you, but realize that it's certain psychological profile that you possess naturally which makes you not (or less) vulnerable to usual traps. Most are not that lucky, and aquiring of this state of mind is a work for them (it certainlly was for me).

Concerning Zen... I am not specialist in this but for me it's just certain way of perception which leads to egoless non-opinionated state of mind, open to any opportunitiy and willing to accept any possibility. Perfect for trading, IMO...

Regardless of our agreement or lack of such, you certainly make interesting and valid points. Looking forward to respectful discussion :)

Best regards,

Vad
 
Methods, as they relate to trading, are nothing more than a process of discovery. The trader discovers, methodizes, applies and repeats the process. It is only upon the traders application of these methods that they become significant. If a trader were to trade a method as simple as “Buy Low Sell High, success or failure would not be a result of the method, but rather the traders application of the method.
 
There is no doubt part of the problem comes from how we are defining concepts.

Threei- your definition of "trade what you see" is what I think of as "trade your plan".

Regarding emotions-I suspect that your definition of emotionless trading is my definition of trading while be aware of your emotions but following your plan. I personally think that there is a consensus among top performers in sport that you will experience emotion but that you should strive to perform well anyway thru preparation and confidence. (At least as applied to sport).

However if you really believe we should be emotionless and know how to consistently teach people to be aware enough to trade and at the same time feel absolutely emotionless, hats off to you. I would like to hear about it although I wonder if it would improve performance. By the way I explored this area when I was younger and I trained myself to fall into meditation very quickly (say during changeovers in tennis) but forcing a zone is an entirely different thing. I no longer feel the need to meditate. When I am getting frustrated by my results with the market I just get up and walk away for a while. (If I didn't feel that emotion I might lose some real money on those days. )
 
sorry, somehow missed your post earlier.

I think we are getting somewhere now that we agreed to look in what's behind the words, and concepts look fairly close.

Couple things need to be said about my take on emotions. First, like we discussed before, "emotionless" is not right term and totally emotionless state probably is not reachable at all. 'Emotionally detached" would be much more correct way to say it.

Second and very important. In order to be controlled, emotions still need to be diminished greatly, faded out to some degree. It comes with experience and with correct mindset. There are two elements to this mindset that I consider vital.

1. Acceptance of the risk. Notion that one accepts the risk by the very fact of engagment in the trade is not correct. Trader has to accept it truly, within himself, realizing uncertain nature of the market and being ready to any outcome of any given trade.

2. Approach "I know (should know, must know) what market is going to do" has to be replaced with "I know how I am going to react on anything market does".
Former angle is triggering wide range of negative emotions when market does not behave accordingly to expectations. It also provokes ego to come in play. Latter take allows to form set of scenarios and follow them, providing certain cushion for emotional reactions, in a sense: if one was willing to accept any outcome and had defined plan of action, things won't come as surprise for him.

Not taking emotions away completely, it still helps fade them out and make them managable, not letting them take over.

Best regards,

Vad
 
"I do have opinions on the subject because I was once very interested in the study of it for the sake of improved performance in a sport --both mine when I played and the students that I taught after I did not make it on the tour. "

Jem Zen is not something in which you can "learn" and then go apply it to something, much like you would a trading technique... The fact that you sought it out for utilitarian purposes is the reason you could never experience it... To experience Zen, you first must become a master of self-forgetfullness... You cant very well forget yourself if you have a motive for experiencing Zen... Zen in no way can be used for accomplishing anything outwardly, only inwardly with oneself... The tennis racket (I assume thats what you were into) is only a pretext for something that could very well be achieved without it...

You asked me to define Zen as it applies to trading in a prior post, and i really couldn't and didn't want to go there, for reasons you wouldnt understand... But I want to try explain as simply as possible what Zen is in the art of trading;

you buy when the market tells you there is a higher probability of it going higher, and you sell when the market tells you there is a higher probability of it falling... You perform this buying and selling without any reflection, motives, or conceptualization; for once you allow those things to interfere, calculation becomes miscalculation... that is how simple Zen is... It is your every day natural mind, it is the simplest and purest of all things under the sky, yet this natural everyday mind is the hardest place to get to get to if you try and lay out a road plan...

I wish i had more to say to you about Zen... but thats as simple and as complicated as it gets...

PEACE and good trading,
Commisso
 
commisso- I understand and I knew a zen purist would not want to answer the question. I was certainly not going to define a concept no purist wants to define.

While I will never be able to phrase this in a manner pleasing to a purist let me say it is not the purist with whom I have the problem and felt compelled to challenge. It is the junk zen that is promoted by fakes. Fake performance coaches, fake authors, fake psychologists, in short fakes who have never participated at a high level in the thing about which they are writing. And this is the one area where in order to have a valid opinion you must be competing because zen is about the experience. (This is not aimed at threei in any shape or form or robert's dad or ed seykota(I love his pithy remarks) or even that whole other thread about why people trade. I actually thought the psychological talk on that thread was authentic.)

I believe authentic transcendent experiences are the reward for enjoying and focusing on the process. This may be in agreement with zen thought or not. And while I may not desire to qualify as a zen master I will say that I believe surfing and snowboarding in powder yield these peak experiences frequently. In fact, pulling into a barrel while surfing or charging a large wave may be unparalleled experiences as far as being in the moment. Of course I have never written a symphony so I can only speak to my own experiences and my perceptions of other's experiences.

So while I believe I have achieved self forgetfulness with the absolute best of them, I say that this has very little to do with trading for a living. I did enjoy hearing what you and three had to say on these matters. And I may even do a little work regarding acceptance of the risk, I may have been slipping a little that last few days. It is always good to review. thanks threei and commisso.

P.S. I purposely struggled to keep religion out of this reply so please accept that my comments exclude a persons interaction with God.

 
Originally posted by dozu888
Rogue,

Backtesting is about discovering reflection of human nature (which is quite constant) through price action, and find ways to limit risk.
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While I totaly agree with you regarding the first half of that statement... I would strongly urge you not to use the past to manage risk and exposure in the here & now...

"I base my calculations with the expectation that luck will be against me" ~Napolean~

PEACE and good trading,
Commisso
 
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