Having a system vs freewheeling

[Handle123]

Systems don't take human psychology into account. It's better to understand the markets and go with your intuition than to have a system.

You are joking, right? Some reason markets move at all are based on some kind of emotions, fear and greed and of course each of these have different intensities. I am basically a chop trader and counter-trend long term, sometimes counter but within a long timeframe trend. My whole premise of entering has been at stages of "people giving up". Traders slam the markets down of late cause of fear, bonds go up cause of fear. It might have been ten years into my trading I started asking myself "why", why does the market do this or that, it has always been based on emotions. I often think reasons people lose in trading cause it takes forever to understand oneself own emotions.

I am sure both have "patterns" in their head of what should happen when this happens, they have rules, it might not be a testable trading plan but works for them.

 

[tomdavis]

Good trading boils down to understanding market context. Different traders do this in different ways.

Every successful trader I've met believes that understanding market context is central to his/her strategy, whether it's a "system" or "freewheeling."

 

[NoDoji]

The Documentary. PTJ tends less to trade on some mechanical system and more on instinct or empathy with other traders fear & greed.

Systems don't take human psychology into account. It's better to understand the markets and go with your intuition than to have a system.

HFT systems may not care about fear and greed (which is just another form of fear), but the sort of systems an ordinary trader looking to generate a profit from directional price moves would trade (or program to trade) are based on the behavior of price which reflects other traders' fear and greed.

 

[trader198]

intutive trading is the right choice.

you should forget about the system.

market is keeping evoloving. the edge human being has over a mechical system is HUMAN being has instincts. I remeber when I first started trading, I immediately sensed when the market was dropping, I ran away. when the market was rising, I cannot resist buying.

that is instincts. the machine or a system will give you signal, if the market is dropping, the system may give you"oversold" signal, but your instinct tells you the company is heading into chapter 11, so we traders or human beings, " jack, the boat is sinking, run". or the market is going nowhere, but the machine or the system will try its best to deliver you a nice afterfact explaination, for example a support line or a resistance line, or whatever,oscillator, you name it!

when you are on the market a while, you will easily develop the sixth sense of the market next big move. while a machince or a system will not evolve, they will not have this sixth sense, they will just keep plotting EMAs, happily give out signals, nice and smooth, just useless.

of course, only those guys who are truely market orientated. otherwise, even years and years on the market, they still cannot develop this sixth sense.

subtle clues often lead to BIG profit. the way how you interpretate all depends on your sixth sense. did you notice those rats/earthworms know earthquake far more than human beings' most advanced quake detector machine?

I have a joke to share with your guys.

back to 1960s' in state X, local indians of a small tribe famous for wheather forcasting. they elected a President, the new leader wanted to show how he takes care of his tribe, he called X state's whether service center whether this winter will be cold or warm. he got told this winter would be cold. so he asked his tribe to collect hays to prepare the incoming cold winter. after two weeks preparing, he called the X state's whether center again, he was warned this winter will be exceptionally cold. then he asked his tribe to collect Hays as much as they can. after another two weeks, he called X state's wheather center again, he was alarmed that this winter will the coldest historically in a century. this leader got annoyed, and aksed why:

the x state's whether center replied: " did you notice those local indians, they collected hays as crazy as we never see before, so we concluded this winter will the coldest historically in a centry!"

those indicators are always wrong. EMA, Oscillators, MCAD, ... you are monioting the wrong thing to trade, of course you lose.

only when you realize seeking a system ormagic mechic method is fruitless, you then start to develop the sixth sense, you are heading toward the right trader growth path, or your turning point to become a consistentlyprofitable trader!

 

[jalexander]

Well, then, whatever other traders do or don't do is of no importance with regard to your trading. You'll learn quickly if you don't already know whether you prefer a mechanical approach or a more discretionary approach. You'll also learn quickly if you don't know already what bar interval you like, if you're going to use charts at all.

That may or may not be helpful but at least it will save some time.

DB, your stuff (straight line, Wyckoff etc) is intriguing.

Do you have an order for reading your stuff that you can point me to? Right now I'm seeing tens of different threads across different trading forums. Maybe you have it compiled in A to Z format?

 

[actionzip54]

OP, look at it this way. If you wanted to be a golfer and I gave you Tiger Wood's swing and sent you out to play some golf you wouldn't shoot anywhere close to the scores Tiger can shoot. Why? Because there are so many things you just have to be able to experience in order to perform at a high level doing anything. You might have Tiger's swing but you wouldn't know how to manage your game etc.

It's just not as easy as this system or that. Some guys are very mechanical others are pretty intuitive. Either way it's the trader that is making the money, not the system.

 

[ronblack]

OK now. You mentioned some outliers that made it big but what about those who lost everything? More importantly the guys you mentioned are not your normal trader but exploit opportunities that require big money. Soros went against the Bank of England and won. You won't do that thing with any method available to you. You'll have no chance. If you have no system eventually emotions will get you and you will pull the trigger the wrong time. Then this bad experience will be etched in your brain and you will start feeling fear every time something similar happens. Slowly you will become incapable of trading unless you have a lot of money to spend and you do not care of losing. Subconsciously you will start making random decisions to get over with this because you want to lose it all and stop this senseless activity. Then after 5 years from blowup you will start learning programming. Nowadays if you do not know how to program do not even try to trade. You may be wasting your time, money and possibly your mental stability. System is hard but the way to go.

 

[SIUYA]

While PTJ and Soros might not have systems as such....they have very clear ideas about how markets move and what moves them, and then how they can participate in them. I would not think they are free wheeling in any way what so ever.
Those guys also seem to have exceptional short term memories for losing trades as well.

IMHO - these are key to either having intuition or a system.....or what ever you wish to call it.

The system is really just the implementation after working out how you think markets move and how you can cope with them.

.......................
........................as an aside....my 2 cents.....

If you like the look of DBPhoenixs info - which I think is great but dont necessarily use - then take particular note of this post....#904
http://www.elitetrader.com/vb/showthread.php?t=279387&page=23

and this sentence....

"There are those who literally cannot go through the observation phase without thinking about entries and exits. While I won't say that it's impossible that they will ever find success with this, it is extremely unlikely."

There is a lot to wade through but you should always keep in mind, its not necessarily about providing a system its about allowing you do develop your own in sync with the market.

 

[trader198]

those who seek systems are freewheeling traders.

intutive trading is far more suprior than those systems. intutitives mean prcossing information forward (can immedaitely factor in new clues new developments). system is built-in, it can use its old knowledge.

when drive on a road, yes. most time the road conditions are pretty familar,can be free wheeling, or programmed. but in reality, driving on the same road needs alert/tracfic conditions awarness (those new conditions are not in your system, but you must consider those new changes, only human being can handle those sitiuations, like sudden tracfic rule changed, drive in opposite direction, or detour, unexpected brdige broken). in an unexpected broken bridge, your system will lead you to continue driving, while an alert/danger aware driver can easily stop when he/she can a bridge broken before him)

most people think emotions are the culpits of the trading failures. actually not, this is just a "looks sound EXECUSE".

people will seek whatever reasons to blame for because of their incompetency or laziness.

EMOTIONS are the EDGE we human beings have! in trading, I monoitor my emotion to sense what the market is doing. if I long, and the market is dropping, I am not happy, that is true. so when I feel I am unhappy,I sell or short. then I see my loss from red much to red a little, then green, I am happy. when I am happy, I short more, and I green more. when I see my green is decreased, I am unhappy again, I reverse, and ...

SYSTEM is useless!

 

[trader198]

Execuses are sins we human beings are born with.

when Adam commited sins, he blamed Eve, then Eve blamed the serpert,...

come on, when your system does notwork, I bet you will say "I fail since my system is not good", no matter what, all faults are from outsiders.

EXECUSES are the best sign for failures.

always work diligently, system can do some work, but do not rely on it for your trading.

make your own decision even emotional ones, better than system decison, this is the first toward trading success. RESPONSIBILITY!