Is Trading Just Guessing?

Quote from PHOENIX TRADING:

Save it for the "teach me to trade" midnight loser audience . :D
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You're the loser. Even if you don't want to trust anyone, you still have to prepare backtests in order to be succesful.

If day or swing trading is your goal, it's a necessity.

Trusting professionals to buy good companies isn't a day or swing trading method, and there is no such thing as a long term trading system.

It's day or swing, or buy and hold. If you want to trade at all only those that prepare backtests will ever be succesful.

It's very asinine to think you have to plunge into live trading without creating a plan or without having trading experience of some kind prior to this. This is the primary reason traders lose. Backtests give you reliable knowledge of the impact your trading decisions have on your net worth, and if you don't care to find out if you could lose everything you must be planning to, because without a backtest there can be no expectation of long term success without knowing the expectancies of your trading decisions.

I look at it as I want to make money doing the same thing over and over, and if I have a backtest the trades I make are for the same reasons, therefore replicable long term.
 
Quote from bwolinsky:

You're the loser. Even if you don't want to trust anyone, you still have to prepare backtests in order to be succesful.

If day or swing trading is your goal, it's a necessity.

Trusting professionals to buy good companies isn't a day or swing trading method, and there is no such thing as a long term trading system.

It's day or swing, or buy and hold. If you want to trade at all only those that prepare backtests will ever be succesful.

It's very asinine to think you have to plunge into live trading without creating a plan or without having trading experience of some kind prior to this. This is the primary reason traders lose. Backtests give you reliable knowledge of the impact your trading decisions have on your net worth, and if you don't care to find out if you could lose everything you must be planning to, because without a backtest there can be no expectation of long term success without knowing the expectancies of your trading decisions.

I look at it as I want to make money doing the same thing over and over, and if I have a backtest the trades I make are for the same reasons, therefore replicable long term.
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Quote from bwolinsky:


Robust is multithousand percent returns with less than 50% drawdowns.
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Are you sure we are talking about the same thing here ie "set ups" enabling all that you are babbling about.
 
There are many threads discussing "trading vs gambling" such as:
http://www.elitetrader.com/vb/showthread.php?threadid=47844
http://www.elitetrader.com/vb/showthread.php?threadid=150986
http://www.elitetrader.com/vb/showthread.php?threadid=222261
http://www.elitetrader.com/vb/showthread.php?threadid=212990
http://www.elitetrader.com/vb/showthread.php?threadid=223945



Besides, no one can deny the benefit of paper trading as you learn while trading using paper/fake money and whenever confident you can switch to real money. Also, doing part time trading is helpful as you will have two incomes from business and trading.

Moreover, backtesting does help you in trading, see below:
http://www.elitetrader.com/vb/showthread.php?s=&threadid=104393
http://www.elitetrader.com/vb/showthread.php?s=&threadid=108534
 
Gotta love these "questions".
Yep it's a guess just like everything in life. No guarantees with anything.
However, there is something called odds. Increase the odds of a positive outcome of a "guess" through education, practice, skill, talent.
Simple.
 
Quote from bwolinsky:

Trading can be gambling to the extent that you are prepared to make decisions about where the trade might go, but what makes them really significantly different is the more obvious point that trading or investing carries positive expectancy or is generally believed to. Gambling has negative expectancy and depending on how well trained you are and how much research you've done and how well you've done your research and what your research says about your win percentages, sharpe, and correlation you should no doubt be able to produce profits when making rational investing decisions given the amount of information you've gathered and the time you've taken to analyze it as well as how much information you have.
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Spot on!
 
Quote from xiaodre:

Guessing is not a great choice when you try to describe trading. A trade does not consist of an entry only. Are you guessing if and when you enter, guessing again if you move your stop to breakeven, and guessing again if you don't increase your target and let the trade hit your target (ie. you don't do anything)?
Entry, trade management, money management: are these guesses that put together equal one bigger guess, or a series of guesses?
The point is all of this is superfluous; it doesn't matter. What really happens is that you have a theory that you use to trade your market. And the market is a complex system whose moving parts you cannot calculate completely. Most of scientific thought is guesswork. It doesn't matter.
If you break trading down to it's prerequiste parts, then you have a few aspects of trading that are in your control, and many aspects that are out of your control.
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+1
 
Guessing: commonly refers to a conjecture or estimation. To "guess" is to make a prediction without sufficient information or knowledge.

Hypothesis: a proposed explanation for a phenomenon. For a hypothesis to be a scientific hypothesis, the scientific method requires that one can test it.

Gambling: wagering of money or something of material value on an event with an uncertain outcome with the primary intent of winning additional money and/or material goods. Typically, the outcome of the wager is evident within a short period.

Trading: engaging in the buying and selling of equity securities, in the capacity of agent, hedger, arbitrageur, speculator, or investor.

Speculating: buying, holding, and selling of securities to profit from fluctuations in price, as opposed to buying these instruments for use or for income via methods such as dividends or interest.

Investing: putting money to use by the purchase of equity securities, offering potential profitable returns, as interest, income, or appreciation in value (capital gains). This buy-and-hold long term strategy is passive in nature, as opposed to speculation, which is typically active in nature.
 
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