ES Journal Archive (2006 - 2008)
- Thread starter Buy1Sell2
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ARNIE
I beg to differ. The mkts have a history of overlooking the bad stuff and focus on Rosy Scenario. the kids in the mkt today have no real experience with inflation and how it can destroy consumer confidence and bring sopending to a screatching halt as consumers lock up the purse.
just in the last few years we witnessed a internet bubble, housing buble etc. The mkts are not always able to price in what is the worst expected. mkts are notorious for being blindsided from their own ignorance. Latest example is the sub-prime slim. gee, how come they failed in their pursuit to keep on passing off the risk to the next fool? They fooled themselves. happens over and over again and will continue to do so. Humans are their own worst enemy. ..
EDIT: The other morning someone asked Art cashin on CNBc about all ther players in the internet bubble. Art said : they were 9th graders. I say: Thats true for the public at tops and or bottoms..............BUT the majority are always right when the mkt feeds on itself from GREED.
I beg to differ. The mkts have a history of overlooking the bad stuff and focus on Rosy Scenario. the kids in the mkt today have no real experience with inflation and how it can destroy consumer confidence and bring sopending to a screatching halt as consumers lock up the purse.
just in the last few years we witnessed a internet bubble, housing buble etc. The mkts are not always able to price in what is the worst expected. mkts are notorious for being blindsided from their own ignorance. Latest example is the sub-prime slim. gee, how come they failed in their pursuit to keep on passing off the risk to the next fool? They fooled themselves. happens over and over again and will continue to do so. Humans are their own worst enemy. ..
EDIT: The other morning someone asked Art cashin on CNBc about all ther players in the internet bubble. Art said : they were 9th graders. I say: Thats true for the public at tops and or bottoms..............BUT the majority are always right when the mkt feeds on itself from GREED.
Quote from Buy1Sell2:
Money management helps to create positive expectancy. Proper entries sweeten the pot. A trader who buys 8 times in a row with a small loss each time and then allows the 9th trade, which is a winner to run fully, will most likely be profitable and have positive expectancy. This cannot be argued against. The problem comes in when you throw emotion in. Most traders want to be right more than 1 or 2 times out of 10. They would probably not take the 9th trade. However, that is generally the very time that they should be taking the trade. The only real edge in trading is risk management. Most traders do not focus on this, but rather look towards being correct. This is one of the reasons that so many fail with the number of failures in daytrading perhaps in the 98 to 99 percent range.
While I agree with you on giving the trade room to play out as I do often so long that it fits my risk parameters, I'm gonna have to disagree with you on the point that money management creates positive expectancy. Positive expectancy imho comes from having great timing (system), and stops are there to prevent a good system from turning bad. There are also a lot of unknowns with your second statement that you can have 8 losers in a row and the ninth helps you get it all back and more. How do you know if the ninth trade will move enough and from the outset to give you a profit to make up for the last 8 losses? Also, what if with the ninth trade you ended putting on many more contracts than you did with the other 8, placed a wide stop and got stopped out which nearly wiped your account. If you use the argument that you only risk 2% of your account on any trade, then the ninth cannot be given a lot of room and placed many contracts on it at the same time which goes against your trading methodology, no??
Lets see if we can get the triple histo D into resistance.
1970-1972 on NQ
1970-1972 on NQ
Quote from Buy1Sell2:
Money management helps to create positive expectancy. Proper entries sweeten the pot. A trader who buys 8 times in a row with a small loss each time and then allows the 9th trade, which is a winner to run fully, will most likely be profitable and have positive expectancy. This cannot be argued against. The problem comes in when you throw emotion in. Most traders want to be right more than 1 or 2 times out of 10. They would probably not take the 9th trade. However, that is generally the very time that they should be taking the trade. The only real edge in trading is risk management. Most traders do not focus on this, but rather look towards being correct. This is one of the reasons that so many fail with the number of failures in daytrading perhaps in the 98 to 99 percent range.
How are you defining "money management"? You seem to be defining it as trend following (cut losses short, let profits run).
If the system has no edge, there will be few big profits to take, but there will be many small losses. After all, one cannot get water from a dry well.
In a trend following system that happens to be applied to a trending market, the system is responsible for the profits.
Poor money management (risking too much per trade) can bankrupt a trader who happens to have a winning system. But if a trader has a losing system, or is trading in a discretionary way according to unwarranted assumptions, no system of money management can turn that trader into a winner.
This principle is the reason why casinos win (as long as they limit max bets). The casinos have the edge, so they ultimately prevail. Gamblers might have their martingales and reverse martingales, and although individual gamblers might win on occasion, gamblers overall are losers, regardless of their money management systems.
risk management and money management are two different items.
i love options...........that example you gave is bogus because it is the worst case you can come up with. no trader would do that worth his/her salt. Breakout trading is indeed about jabbing the mkt over and over trying to nail the knockout .
breakout trading is where the old saying came from about keeping the losses small and let winners run. Thats what we all strive for, thats a winning combo.
i love options...........that example you gave is bogus because it is the worst case you can come up with. no trader would do that worth his/her salt. Breakout trading is indeed about jabbing the mkt over and over trying to nail the knockout .
breakout trading is where the old saying came from about keeping the losses small and let winners run. Thats what we all strive for, thats a winning combo.
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