Mental Ceilings and self fulfilling prophesies

Quote from DT-waw:


Breakout systems aren't better
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since most of the time the market isn't really going anywhere, that is to be expected, right?

if you're going to build a mechanical system, build one that reflects things that matter to the market itself. the market doesn't know jack about the 20 bar MA or whatever.

maybe more later, have to go babysit this open YM position.

and good luck to you, this is probably the best current discussion on ET right now.
 
Quote from damir00:



since most of the time the market isn't really going anywhere, that is to be expected, right?
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We may also say market always goes somewhere :)
I prefer to call it non-linear type of movement. In the sea of noise and chaos these systems try to catch over-shoots, hence profit targets. If you have something better, we're all ears.
 
Quote from DT-waw:



We may also say market always goes somewhere :)
I prefer to call it non-linear type of movement. In the sea of noise and chaos these systems try to catch over-shoots, hence profit targets. If you have something better, we're all ears.
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what are the odds ES trades 2 pts higher than it is right now at some point over, say, the next three days?

what are the odds ES trades 2 pts lower than it is right now at some point over, say, the next three days?

think through the implications.
 
Quote from Girlpower:



Thanks AAA,

So you are saying that the psychological issues play a much greater role in this than any of us suspect. So the question I would immediately ask from that is how to overcome the psychological issues long term? (more a rhetorical question and thought, and not directed towards towards you).

I think much of this goes to the heart of trading long term and being consistent long term. I'd love to hear more of your thoughts on this.

Best

Natalie
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Well, you're assuming the psychological issues have to be overcome. Not all of them are destructive. Some psychological issues could be beneficial, say for example an aversion to taking large losses.

Actually, I am of two minds about this topic. On the one hand, I think as a professional trader you have to have the discipline to overcome hangups and trade your method. That's the difference between a professional and a hobbyist.

On the other hand, we know our minds can be very inventive in getting us to avoid situations that we find uncomfortable. Maybe it's letting our account get bigger than a certain size, maybe it's holding trades for the full profit potential, maybe it's not hanging onto losers. So we have to be alert to the possibility that we are fooling ourselves.

I think one test is whether or not we are achieving results that are roughly comparable to what a strict application of our methods would have yielded. If we are constantly falling short, that is a warning flag that we are engaging in self-limiting behavior.
 
Quote from damir00:



it may be "optimized", but it uses MA crossovers so it by definition is going to be a relatively poor performer. you might want to think about looking beyond such a limited tool. ie, revamp the mental limits. :-)

at least shorten up the MA periods as much as possible.
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You make a great point. Girlpower is speaking to how a person may be open to succeeding.

The MA trap is an example of limited strategic thinking.

We all view charts from some vantage point.

Some guys pull set ups out of hats by the bunch.

The market gives us a potential for making money. It's our job to extract it.

If you are happy with 1 pt a day from the H/L range available fine.

I think anyone could start off by dividing the day into two parts and taking 1 point out of each part independently.

By starting with a simple concept like doubling the opportunity, you might get to dividing the day into 3 parts then 4 parts.

the limit is to trade continually and seamlessly. SCT.
 
Quote from bubba7:



You make a great point. Girlpower is speaking to how a person may be open to succeeding.

The MA trap is an example of limited strategic thinking.

We all view charts from some vantage point.

Some guys pull set ups out of hats by the bunch.

The market gives us a potential for making money. It's our job to extract it.

If you are happy with 1 pt a day from the H/L range available fine.

I think anyone could start off by dividing the day into two parts and taking 1 point out of each part independently.

By starting with a simple concept like doubling the opportunity, you might get to dividing the day into 3 parts then 4 parts.

the limit is to trade continually and seamlessly. SCT.
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Ok here is an idea to work with. What about setting out to caputre 1/3rd of the range of each 1 hour bar/candle? Start with the 10.00 EST bar/candle and work onwards from there? Or start at 09:30EST and leave out the last 45 mins?

Since they mostly have a range of >3 that leaves a reasonable amount of manoevering space?

Can that be done on a relatively low risk basis?

Best

Natalie
 
Quote from bubba7:





If you are happy with 1 pt a day from the H/L range available fine.
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I take whatever the methodologies I use are able to extract from the market... under current market conditions, the medium to long-term per contract average daily gain that I and my associates average is anywhere from 0.75 to 1.5pts a day (for those of us making an average at the higher end, we suffer a correspondingly higher and more volatile equity curve drawdown scenario)... the fact that today (8/5/2003) I have personally extracted over 10 points per contract is inconsequential, since today's results hardly change my long-run average gain...

Knowing my long-run average caused no mental ceiling whatsoever on my performance today for, if it had, I would have stopped trading when I had made 1-1.5pt of profit... days like today simply contribute to my long run average, and if I didn't allow profits on days like today to occur, my long-run average would swiftly decline... as I have just demonstrated, there need be no mental ceiling on a given day from knowing your average per contract gain per day...

Knowing your long run average simply serves to put a given day's performance into a longer-run context...
 
Quote from candletrader:




I take whatever the methodologies I use are able to extract from the market... under current market conditions, the medium to long-term per contract average daily gain that I and my associates average is anywhere from 0.75 to 1.5pts a day (for those of us making an average at the higher end, we suffer a correspondingly higher and more volatile equity curve drawdown scenario)... the fact that today (8/5/2003) I have personally extracted over 10 points per contract is inconsequential, since today's results hardly change my long-run average gain...

Knowing my long-run average caused no mental ceiling whatsoever on my performance today for, if it had, I would have stopped trading when I had made 1-1.5pt of profit... as I have just demonstrated, there need be no mental ceiling on a given day from knowing your average per contract gain per day...

Knowing your long run average simply serves to put a given day's performance into the context of longer-run average performance...
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I understand your point completely Brother Candle. So what is it that brings the daily avarage down to 1.5 ish? Is it mechanical restriction? because clearly it is not a psychological restriction...

Best

Natalie :confused:
 
Quote from Girlpower:



I understand your point completely Brother Candle. So what is it that brings the daily avarage down to 1.5 ish? Is it mechanical restriction? because clearly it is not a psychological restriction...

Best

Natalie :confused:
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My Sister,

You use the words:

"brings the daily average down to 1.5 ish"

as if somehow 1.5pts a day is an inferior performance!! (back it out over the course of the year and convert it to a % return using any sensible assumptions, and you will see that it is anything but inferior) ... I am able to get such a high average because I take some crazy risks, that my more conservative associates are not willing to take... as a result, I have some large drawdowns and a volatile equity curve, which go hand in hand with the 1.5pt average...

I am seriously considering scaling back on the size of % risk that I often put on, in order to smooth out my equity curve... doing so will probably adjust my average to under 1pt a day, without the hassles of needing to dig myself out of numerous drawdowns (psychologically draining) during my bad trading periods...

Candle
 
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