Looks Can Kill You: RAMOUTAR REPORT VOLUME 11

Quote from RAMOUTAR:

Target and exit are very obvious to me. If I had a good handle on the probability of the trade's outcome, I wouldn't need a stop. I gave up on trying to predict probability years ago, but too some degree analyze the price action adn momentum indicators while I'm in the trade. The use of a stop IMHO, is obligatory in any trade. Since I'm not able to figure out probability, the price action I concern myself with rests ini the range of entry, stop and target.
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Hi,

Sorry to nitpick, but I think you made an error in your comment here. Indeed, the true probability of success on a trade can never really be known because we can never hope to know the true probability distribution of all possible outcomes. However, even if it were known, you would still need a stop loss. Knowing the probability of an outcome is not the same as knowing the actual outcome. Stated differently, even if you could accurately quantify the probability, you would still be subject to the risk of an unfavorable outcome, however low the probability may be. Whether or not we know the probability of a successful outcome (which, in fact, we do not because we are operating in an environment of uncertainty rather than true probability), we should still have a stop loss.

I have a feeling that this is what you meant.

Regards,

Thunderdog
 
Quote from Thunderdog:

Hi,

Sorry to nitpick, but I think you made an error in your comment here. Indeed, the true probability of success on a trade can never really be known because we can never hope to know the true probability distribution of all possible outcomes. However, even if it were known, you would still need a stop loss. Knowing the probability of an outcome is not the same as knowing the actual outcome. Stated differently, even if you could accurately quantify the probability, you would still be subject to the risk of an unfavorable outcome, however low the probability may be. Whether or not we know the probability of a successful outcome (which, in fact, we do not because we are operating in an environment of uncertainty rather than true probability), we should still have a stop loss.

I have a feeling that this is what you meant.


Regards,

Thunderdog
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Thanks for so much "nitpicking" :) That is exactly what I meant. I'm thankful that I don't write for a living,, my English is terrible at times:)
 
Quote from mmm:

Jai,

I've enjoyed your columns very much.

Any comments on how intuition fits in your trading, and how we can develop intuition in our own trading as well?

Thanks.

-- M
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Quote from Uni:

I'm not Jai, but your post caught my eye. You may want to check out Flavia Cymbalista's work here at http://www.marketfocusing.com/

A couple of months ago I read a series of articles she wrote in SFO about Soros' alleged "trading by gut feeling." Interesting, but I didn't find anything useful to me personally.

This is way off topic so you might want to start another thread (I'm sure there are some past ones as well).

Uni
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Thanks for the link UNI.

MMM and Uni...I don't know much about Ms. Cymbalista's dossier or works, but after looking at her bio for a brief moment, it mentions nothing about her trading. Now that's not a "deal breaker", but "I" would feel more comfortable with her if she personally dealt with psychological pressures of generating trading profits to pay for food, a medical plan, utilities, a tuition, mortgage, car(s), and a Sunday night at the movies. That "doesn't" make her services any less valuable.

In 1995, All-Tech Investment Group (the birth place of my daily madness ) took on a therapist / CSW (certified social worker) to provide a full one-day lecture to students of a five-week training class. Mary Ann Roberts was her name, and although she was NOT a trader she performed a very effective and invaluable service to the trading students on a weekly basis from '95-'01 in Montvale NJ.

Here's my advice. The biggest weaknesses in trading are your emotions, personal weaknesses and your mental health. All of them will impact your trading in some way shape or form. While Ms. Cymbalista may be great, you can just use your medical plan (if you have one) and get 10 sessions with a CSW (within your plan) for a much LOWER price. Contact your health plan rep.

Now to your question, mmm.


in·tu·i·tion ( P ) Pronunciation Key (nt-shn, -ty-)
n.

The act or faculty of knowing or sensing without the use of rational processes; immediate cognition.

Knowledge gained by the use of this faculty; a perceptive insight.
A sense of something not evident or deducible; an impression.

(I'm not trying to be cute with the definition, it just looks good here) and I really like the first definition:

The act or faculty of knowing or sensing without the use of rational processes; immediate cognition.

For me the acts of brushing my teeth when I wake up in the morning, and waiting until February 14th 6pm to buy my wife Valentine's Day cards is intuition.

I have been doing them for a long time. Repetition..over and over again. The most important things you can do to build your intuition and discipline in trading are:

1) Draft, commit to and execute a Personal Trading Plan

2) Predetermine Entry, Stop, Target, and risk:reward ratio before every trade. If you don't, you're just gambling and you will become the sole victim of the pattern you started.

3) Practice sensible risk and trade management

4) Keep a daily trading log, be honest with the entries and review the log regularly.

Intuition and discipline cannot be purchased or acquired, one's mind and will must invest in them for them to grow.
 
Hi Jai,

Thanks for your reply.

Can you provide an example of what you mean by Personal Trading Plan?

Also, if you are only trading one contract,

(1) would you still have a fixed target and exit potentially early (and miss a continued move in your favor), or ...

(2) would you look to use a trailing stop and exit late (when the market pulls back from the peak profit level), or

(3) perhaps a combination of the two, depending on the circumstances and your intuition?

Thanks again.

-- M
 
Quote from mmm:

Hi Jai,

Thanks for your reply.

Can you provide an example of what you mean by Personal Trading Plan?

Also, if you are only trading one contract,

(1) would you still have a fixed target and exit potentially early (and miss a continued move in your favor), or ...

(2) would you look to use a trailing stop and exit late (when the market pulls back from the peak profit level), or

(3) perhaps a combination of the two, depending on the circumstances and your intuition?

Thanks again.

-- M
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mmm,

Although I have said that I will post an example of Personal Trading Plan sometime back here on ET, I haven't. Please remind me via PM, and I will get it off to you.

In your post you referred to "contract". I don't trade futures but I can say that (barring vehicle related nuances and differences) technical strategies are pretty much the same. 90+% of my trades are Nasdaq , the balance is NYSE, so keep that in mind when you read the reply. (your questions bold and italicized, my answers in regular font).

(1) would you still have a fixed target and exit potentially early (and miss a continued move in your favor), or ...

I do a great deal of scaling. Meaning that I add to the position as it moves in my favor. My initial opening position is 200 shares (or around 5-10% of total position). If I'm not stopped out, I increase the position at or around the intitial target. I try to stick to the old trading adage, "average up on good longs and average down on good shorts", many times I will do the opposite if the trend transverses into a significant support or resistance area.

(2) would you look to use a trailing stop and exit late (when the market pulls back from the peak profit level), or

It depends on: chart pattern, price action relative to support and or resistance zones, black box action in Level II (again Naz stocks), etc. As I replied to question #1, I may use that area to add to a position or scale out.

(3) perhaps a combination of the two, depending on the circumstances and your intuition?

Yes either or combination of the two. When answering your questions I tried to reflect back on a few swing and intra-day swing trades from week's past. I don't have any "current" (few days) annotated charts to share at this point. At some point this week, I will make some available in this thread as indicated in the initial post.

I have sent you a link to an animated powerpoint presentation. I don't know if or how a .ppt can be uploaded to ET. The trade shown is from Jul 2003 (a scaling swing trade on QCOM), but I think it will answer all of your questions. Again, a Nasdaq stock, TA (IMHO) is universal.
 
Thanks for your reply Jai, especially since my question was geared toward trading one futures contract, rather than multiple lots of shares.

I'm going to print out your reply and give it some more thought.

Have a good day and week!

-- MMM
 
Quote from RAMOUTAR:


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Thanks for the link UNI.

MMM and Uni...I don't know much about Ms. Cymbalista's dossier or works, but after looking at her bio for a brief moment, it mentions nothing about her trading. Now that's not a "deal breaker",

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jai,

comparing dr. cymbalista's work and practice to a "social worker" is akin to comparing a yugo to a ferrari. there is absolutely nothing similar in what dr. cymbalista does and what a social worker / basic therapist does.

dr. cymbalista works with substantial size money managers assisting them quantify their intuitive processes so that their techniques can be understood and perhaps taught to others in their firms.

she is highly educated and intuitive, holding advanced degrees in finance and psych. what she does and how she thinks is a far cry from a social worker or typical therapist.

I know dr. cymbalista personally and strongly recommend her if you are seeking to quantify your intuition or simply take your trading to the next level.

best,

surfer :)
 
Quote from marketsurfer:

jai,

comparing dr. cymbalista's work and practice to a "social worker" is akin to comparing a yugo to a ferrari. there is absolutely nothing similar in what dr. cymbalista does and what a social worker / basic therapist does.

dr. cymbalista works with substantial size money managers assisting them quantify their intuitive processes so that their techniques can be understood and perhaps taught to others in their firms.

she is highly educated and intuitive, holding advanced degrees in finance and psych. what she does and how she thinks is a far cry from a social worker or typical therapist.

I know dr. cymbalista personally and strongly recommend her if you are seeking to quantify your intuition or simply take your trading to the next level.

best,

surfer :)
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I agree with MS. I never heard of her, what are her fees. Big bucks?
 
Quote from marketsurfer:

jai,

comparing dr. cymbalista's work and practice to a "social worker" is akin to comparing a yugo to a ferrari. there is absolutely nothing similar in what dr. cymbalista does and what a social worker / basic therapist does.

dr. cymbalista works with substantial size money managers assisting them quantify their intuitive processes so that their techniques can be understood and perhaps taught to others in their firms.

she is highly educated and intuitive, holding advanced degrees in finance and psych. what she does and how she thinks is a far cry from a social worker or typical therapist.

I know dr. cymbalista personally and strongly recommend her if you are seeking to quantify your intuition or simply take your trading to the next level.

best,

surfer :)
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Thanks for the insight, Dave. As I said I don't know the Dr., and your opinion has helped me to learn more about her. As someone who attended City University (without a degree), I am in no position to criticize the dr.'s credentials. However, IMHO degrees regardless of where they're from, are not the indications of mastering trading skill and or its related psychology.

I now see my mistake in the previous post, by putting the dr. and CSWs in the same class. My intended point, a CSW may help the trader identify and deal with the personal (not trade related) issues that may affect the trader's focus and peformance from 9:30am-4pmET.

In July 1999 I lost my first child (1 y/o) and 4 trading colleagues. My trading took a nose dive. Without the intervention of a CSW then, I'm not sure what the outcome may have been.

The dr. must be doing something right, she's got and endorsement from Soros and the Surfer:p. Wish I knew of her back then.
 
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