Is Trading Just Guessing?

Quote from J.Joseph:

Like Alexander Elder says, "Manage your losses. The winners will take care of themselves."
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This is the best saying in trading !!!
like i always say: "Control your risk, then the profits will come from alone !!!"

I had and will have many losses, but they are so small in comparison to my winners, so i am profitable....

There are 4 kinds of trades:
1. Good Winners
2. Bad Winners
3. Good Lossers
4. Bad Lossers

regarding to risk/win ratio and overall odds of the setup !!! for each and one trade !!!
 
Quote from J.Joseph:

Like Alexander Elder says, "Manage your losses. The winners will take care of themselves."
More...

How does Alexander know when to exit with a loss? These things are easier said than done. If you have no formula to offer it is better to shut up.
 
Quote from ronblack:

How does Alexander know when to exit with a loss?
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No, he does not. That is why he writes books.
I could also say something general like " Trading is not about losing but how much you make when you win." .i.e. your loss does not need to be "managed" after a trade is made
because it should had been planned ahead but its the stages of profit taking that you should focus on that would enhance your P/L ratio for each trade.
Then we may conclude that it is not guessing if expectancy >0, but ,then again, expectancy is not a fixed constant because 'past results does not reflect future performance' such that win/loss ratio is a changing variable.
 
Quote from virtualmoney:

No, he does not. That is why he writes books.
I could also say something general like " Trading is not about losing but how much you make when you win." .i.e. your loss does not need to be "managed" after a trade is made
because it should had been planned ahead but its the stages of profit taking that you should focus on that would enhance your P/L ratio for each trade.
Then we may conclude that it is not guessing if expectancy >0, but ,then again, expectancy is not a fixed constant because 'past results does not reflect future performance' such that win/loss ratio is a changing variable.
More...

Yes, not the loss must be managed.

First, you have to manage the risk.
Then, second, you have to manage the profits.

Nobody trades to make a loss.
Ok, nobody "want" to make a loss.
But the most make losses and thats why the rest can win....
 
Quote from Pekelo:

There is guessing (coin will end on top) and there is educated guessing (Knox is most likely innocent).

The difference is the available info at hand. A guess is just trying to figure out a random outcome. An educated guess is weighting information and making a logical decision/statement based on that.

Trading should be educated guessing, when there is an edge based on previous price action, information on the firm,etc. Unfortunately several times it is just a pain old guess....
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Back to the original question, that's kind of what I was getting at.
Are there traders that can be successful by just using "educated guesses" & "logic" to enter & exit trades, or do you have to have a structured process with specific setups & entry/exit rules & all that?

I could see where relying on "educated guesses & logic" could be problematic due to so many things going on in the markets. It would be hard not to get distracted by information overload.

Specific setups & specific rules would tend to lead to more focus & less susceptibility to all of the distractions out there I think.
 
Quote from macattack:

Back to the original question, that's kind of what I was getting at.
Are there traders that can be successful by just using "educated guesses" & "logic" to enter & exit trades, or do you have to have a structured process with specific setups & entry/exit rules & all that?
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I think the 2 go together. The educated guess strategy kind of includes the specific setups and rules.
But to elaborate, you can have an educated guess strategy that is profitable and backtested/forward tested, but if you don't apply the specific rules correctly, you still end up losing money. So having an educated guess strategy is one thing, correctly implying it is another.
This is when some traders say they could publish all the rules of their strategies in the Sunday paper, and still, most people wouldn't get it right...
 
Quote from macattack:

Back to the original question, that's kind of what I was getting at.
Are there traders that can be successful by just using "educated guesses" & "logic" to enter & exit trades, or do you have to have a structured process with specific setups & entry/exit rules & all that?

I could see where relying on "educated guesses & logic" could be problematic due to so many things going on in the markets. It would be hard not to get distracted by information overload.

Specific setups & specific rules would tend to lead to more focus & less susceptibility to all of the distractions out there I think.
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well then, the question is, could a profitable system be devised that used only random entries?

If you watch the Texas Hold em tournements on TV, there are some players who only play good cards (they are not guessing) but some players will play any two cards, believing that as the hand devolopes, they will arrive at an equally unguessed deciscion.
 
Quote from oldtime:

well then, the question is, could a profitable system be devised that used only random entries?

If you watch the Texas Hold em tournements on TV, there are some players who only play good cards (they are not guessing) but some players will play any two cards, believing that as the hand devolopes, they will arrive at an equally unguessed deciscion.
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as old poker fan, i must post this.:p u can use it all for trading...

The strong point in poker is never to lose your temper, either with those you are playing with or, more particularly, with the cards. There is no sympathy in poker. Always keep cool. If you lose your head you will lose all your chips. (William J. Florence)

If, after the first twenty minutes, you don't know who the sucker at the table is, it's you.

"Aces are larger than life and greater than mountains." (Mike Caro) ....(i think guessing is over then)....

It's not enough to succeed. Others must fail." (Gore Vidal)

"I've always had confidence, but I never let my ego get to the point that I think I'm the superstar, because I know.
That ego has destroyed many a poker career." (Jim Boyd)

Well, I'll just pretend I was playin' with someone else's money. (Annabelle in the movie Maverick)

"Nobody is always a winner, and anybody who says he is, is either a liar or doesn't play poker." (Amarillo Slim)

"I hope to break even this week. I need the money." (VETERAN GAMBLER)

"A Smith & Wesson beats four aces." (American Proverb) LOL

"At gambling, the deadly sin is to mistake bad play for bad luck." (Ian Fleming Casino Royale - 1953) - WOW, so true....

"Neither I nor anyone else can guarantee you will win. If someone tells you they can, do not believe them. Run making sure you have a death grip on your wallet." (Ken Pearlman)
"Your best chance to get a Royal Flush in a casino is in the bathroom"
"The smarter you play, the luckier you'll be." (Mark Pilarski)

"Gambling: The sure way of getting nothing from something." (Wilson Mizner)

"For the true gambler, money is never an end in itself. It's a tool, like language or thought." (Lancey, The Cincinnati Kid)

"If I lose today, I can look forward to winning tomorrow, and if I win today, I can expect to lose tomorrow. A sure thing is no fun." (Chico Marx)


PEACE and good night !!!


IMO, Pokerstars would be the best traders, thats the only education you need, the pokerfacemind....:cool:
 
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