It all nails down to the fundamental: If you can invent/develop a system (especially a mechanical/automation system rather than a discretionary!) that signals trades with 90% of probability of winning, then psychological part is less important; However, all 60-75% probability systems need to struggle very hard everyday in the psychological part to make it profitable.
five years later (the previous 5), still struggling!
- Thread starter momoNY
- Start date
It all nails down to the fundamental: If you can invent/develop a system (especially a mechanical/automation system rather than a discretionary!) that signals trades with 90% of probability of winning, then psychological part is less important; However, all 60-75% probability systems need to struggle very hard everyday in the psychological part to make it profitable.
That an erroneous example and here's why. You and I know the casino can play hundreds of hands at one moment so their frequency will be much higher. No individual trader can do such. And the casino hires ppl to play their money, no emotional attachment. The best a trader could do would be to automate in that sense.
We'll agree to disagree. Frequency is important. Go to casino they are playing hundreds of simultaneous games which Joe retail could never do so their edge, sometimes small in BJ is multiplied greatly. Even a system with positive expectancy that has low frequency may have great problems.
Overtrading has nothing to do with a specific number.
I'm trying to explain that if you get, for example, 2 valid trade signals via your trading plan for a particular day but you took 3 trades...that's overtrading.
However, if the next trading day, for example, you get 15 valid trade signals via your trading plan for that particular day and you took only those 15 valid trades...that is NOT overtrading. Thus, overtrading is when you take MORE trades beyond the number of valid trades that appeared on any given trading day. Thus, overtrading is a result of a trader that lacked discipline to stick to the trading plan. Further, you'll see such in words used sometimes like "the next trade was a revenge trade". That's another way of saying I took a trade on the whim that wasn't a valid setup.
Therefore, when momoNY said something like the following...
He/she had imputed a difficult element into issues involving discipline. Thus, using a fixed number to manage discipline problems creates many problems.
That's why it's prefer to just say...I will only take valid trade signals via my trading plan. Thus, for example, if you only take 2 trades but there were 4 valid trade signals when you were trading but you only took 2 of them...that's still a discipline problem and saying I stayed below the number 5 is a false conclusion of being discipline.
The other thing I notice is a sign of addiction...the need to keep the computer turned on even after reaching your profit goals for the day. If you know you're consistently profitable in the morning but you give it all back in the afternoon trading session...
You have a BIG problem (addiction) if you can't turn off your computer. I see more evidence of the addiction via the following statement...
Too many traders with discipline problems listen to those that don't have discipline problems while saying if you've reached your profit goals for the day or you're profitable in the morning...milk it via keep trading. That statement of milking it is not for those with discipline problems. In contrast, it's for those that have mastered their discipline and know they will stay focus while they're in the zone sort'uv speak.
Simply, no matter how many chime in...your discipline problems will continue until you get professional help from someone (e.g. psychologist) to help you resolve that addiction or inability to control your emotions while trading.
Mark
I'm trying to explain that if you get, for example, 2 valid trade signals via your trading plan for a particular day but you took 3 trades...that's overtrading.
However, if the next trading day, for example, you get 15 valid trade signals via your trading plan for that particular day and you took only those 15 valid trades...that is NOT overtrading. Thus, overtrading is when you take MORE trades beyond the number of valid trades that appeared on any given trading day. Thus, overtrading is a result of a trader that lacked discipline to stick to the trading plan. Further, you'll see such in words used sometimes like "the next trade was a revenge trade". That's another way of saying I took a trade on the whim that wasn't a valid setup.
Therefore, when momoNY said something like the following...
He/she had imputed a difficult element into issues involving discipline. Thus, using a fixed number to manage discipline problems creates many problems.
That's why it's prefer to just say...I will only take valid trade signals via my trading plan. Thus, for example, if you only take 2 trades but there were 4 valid trade signals when you were trading but you only took 2 of them...that's still a discipline problem and saying I stayed below the number 5 is a false conclusion of being discipline.
The other thing I notice is a sign of addiction...the need to keep the computer turned on even after reaching your profit goals for the day. If you know you're consistently profitable in the morning but you give it all back in the afternoon trading session...
You have a BIG problem (addiction) if you can't turn off your computer. I see more evidence of the addiction via the following statement...
Too many traders with discipline problems listen to those that don't have discipline problems while saying if you've reached your profit goals for the day or you're profitable in the morning...milk it via keep trading. That statement of milking it is not for those with discipline problems. In contrast, it's for those that have mastered their discipline and know they will stay focus while they're in the zone sort'uv speak.
Simply, no matter how many chime in...your discipline problems will continue until you get professional help from someone (e.g. psychologist) to help you resolve that addiction or inability to control your emotions while trading.
Mark
Just a quick follow-up to my prior reply.
I myself had the exact same discipline problems when I first started trading. It would go away for a few months and then reappear to cause a disaster.
The only way I resolved it permanently instead of temporary was getting several trading buddies in person to help each other enforce remaining discipline when trading with whatever issues we had and we had different discipline problems in comparison to the other. It was a great learning experience and consistent profits had arrived. Further, I did get professional help with dealing with several issues in my personal life that was causing that addiction to trading.
It took a few years to fix and afterwards I knew when it was time to milk those profits (continue trading when valid signals appeared while in the zone) and when to shut it down even with a little profit or small loss even though I didn't reach my goals for the day. Thus, the time of day is a temporary solution while the number of trades is a poor solution (creates other problems) while being addicted to trading.
Therefore, I strongly agree with shutting down after the morning trading session until you find a fix (solution) to your discipline problems that manifest itself in your afternoon or p.m. trading session.
Trading will reveal all of our weaknesses and if we bring any baggage (not related to trading) into our trading...we'll never respect any trading plan no matter how cleverly crafted.
Mark
I myself had the exact same discipline problems when I first started trading. It would go away for a few months and then reappear to cause a disaster.
The only way I resolved it permanently instead of temporary was getting several trading buddies in person to help each other enforce remaining discipline when trading with whatever issues we had and we had different discipline problems in comparison to the other. It was a great learning experience and consistent profits had arrived. Further, I did get professional help with dealing with several issues in my personal life that was causing that addiction to trading.
It took a few years to fix and afterwards I knew when it was time to milk those profits (continue trading when valid signals appeared while in the zone) and when to shut it down even with a little profit or small loss even though I didn't reach my goals for the day. Thus, the time of day is a temporary solution while the number of trades is a poor solution (creates other problems) while being addicted to trading.
Therefore, I strongly agree with shutting down after the morning trading session until you find a fix (solution) to your discipline problems that manifest itself in your afternoon or p.m. trading session.
Trading will reveal all of our weaknesses and if we bring any baggage (not related to trading) into our trading...we'll never respect any trading plan no matter how cleverly crafted.
Mark
Sorry to say.I think you should first automate your strategy and back test it against a large sample with unfavorable challenging conditions. If you find a concrete proof for an edge so you could trade.
This is my 2c.
This is my 2c.
I will keep this very short and simple. PLease dont do as most do and think its too simple so it must not work. Length of explanation has no corellation with its validity.
1. Stop fucking daytrading.
2. Stop fucking daytrading.
3. See #1 and #2.
4. Throw away multiple time frames, too lagged and too many things have to "line" up to make it work.
5. Dont ever open another 2 or 5 min chart !!! HFT-bots have changed that world, it is not for you or I, anymore.
6. No charts under 15min time frame, with 30-60 minute time frames being superior. Hell, daily charts works well too.
7. trade one time frame
8. trade small for 6 months, stops will be a little bigger, but you will be surprised, not much bigger than the daytrading junk stops.
9. After 6 months of trading large time frames profitably, add size.
10. Test your system/methodology back for 10years of triggers, notthing less. (very important)
11. Chances are you wont do this and you will keep feeding money to HFt bots, you will never beat them
12. Tired of typing, you have it laid out, JUST DO IT.
Shortcut: just do 1-12.
EF