Is Trading Just Guessing?

Quote from oldtime:

...The simple use of stops can protect you against bad luck and open you up to good luck. So theoretically, even if you are just guessing, you have limited loss and unlimited profit potential.
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This is the key to good profit in my opinion and this brings the old saying of "let winners run" to its bare basics.

As someone above posted the key to trading is the stop loss placement. I would agree completely but I would also add "exit management" in general which would encompass not only stop loss orders but also exiting winning trades correctly.
 
Both of these are possible with in game betting. Depending on where the horse is at any point in the race the odds will change to reflect that. Otherwise you would really be on to something!
 
Quote from macattack:

Isn’t the decision to enter a trade nothing more than a guess?

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U should post this quote below on your fridge:


More than 90% of small traders lose. They just lose!!
 
Quote from emg:

U should post this quote below on your fridge:


More than 90% of small traders lose. They just lose!!
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emg you idiot, why don' you post your crap on the other site that 90% of small traders read?
 
Quote from N54_Fan:

This is the key to good profit in my opinion and this brings the old saying of "let winners run" to its bare basics.

As someone above posted the key to trading is the stop loss placement. I would agree completely but I would also add "exit management" in general which would encompass not only stop loss orders but also exiting winning trades correctly.
More...
if you don't know how to use a computer like I don't, one way to do it is just enter a position in a paper account with a trailing stop that fits your account risk .Because the market doesn't know or care how much my account is worth so just because 1% loss makes sense to me it may not make sense to the market. So if you want to get in, if possible watch it until the stop makes sense and then if the entry still makes sense enter in the real account.
 
Sure it's guessing. But that's where money management comes into the picture. If you roll a dice and 1,2,3,4, or 5 are winners but 6 is a loser, would you be "guessing" that it would not land on a 6? Absolutely. But it's a good highly probable guess. No matter how many times it does NOT land on 6, though, eventually it will. And in the course of a million rolls of the dice I don't have to guess that it will hit 6 approximately 1 in 6 times. It's when you reduce the game to one specific roll of the die that it becomes guessing. If I bet 100% of my account on each roll of the dice I'll win 5 times out of 6 but when that one loser comes it'll wipe me out. So the question is not "is it guessing or is it knowing," the question is "how much should I put down on this guess?" And for 5/6 odds, the answer has to be less than 100% or that one loser will wipe you out. In fact, for 5/6 odds, the chances of hitting 6 twice in a row is only 1/36. So betting 50% is also too much.
For long term survival in such a game, take the odds of losing x number of times in a row and match it up against the number of trades you plan on doing in your career. If you do 100 trades per year with a career of 10 years, that's 1000 trades. And with 5/6 odds, you have a 1/1296 chance of losing 4 times in a row and being wiped out. So, betting 25% per roll is still too much.
Money management is where it's at. It's not about being right all the time, just about having a winning plan.
 
Although you're right to an extent that everyone 'guesses' to some degree or another, the word 'guess' should not imply a binary system.

No one is either 'guessing' or 'not guessing'. There are degrees of 'guessing'. And that's where the difference lies between longterm winners and losers.

The winners are better informed and base their 'guesses' on data and analysis. Those that have more/better data and better analysis will be be better 'guessers' and will make more profit.

My strategy has generally been to look for two (or more) linked markets where one is more efficient than the other. Then I use the analysis from the more efficient to trade in the other. Its been a profitable methodology for a number of years.

To re-write an old adage - 'the harder I work, the better my guesses become' :)
 
Yes it is guessing.
Its about predicting the future, so what else could it be.
Its the same in wheather forecasting.

Therefore it is also a kind of gambling, of course.
But the big difference is that you can win on the long run, because you can have the edge and not the casino.

You can learn to understand the probabilities of the different hundrets of market price situations and build a trading strategie around it.

So in the end, it is guessing, gambling and betting on high probability scenarios, --- togehther withy advanced risk + trademanagment, it becomes a business---and is no gambling anymore---and of course everything becomes a business, when it makes a lot of money.
If you have a winrate of lets say 90%, then you are not really guessing anymore, than you know what happen, and the 10% uncertainity of the future, can lick your ass.

:p
 
Quote from ammo:

its guessing with a cheatsheet,if you see ants,you put your picnic blanket somewhere else, a blind man wouldn't have that advantage,in this case eyesight would be an edge,it's a bad setup and you avoid it,the more setups you see,market tipping it's hand, the better guesser you become
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Wow, that is a very cool post.

Being blind sucks hardcore !!!:p
 
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