Mental Ceilings and self fulfilling prophesies

[Jake777]

Here is what I think.

Since we were born, we were told what to do. This was partly good; my mom told me to look both ways before crossing the street, and that probably saved my life many times over. Society was created so we could have rules and that was good - look how much would not have been accomplished without rules.

But rules limit our behavior (many times for good reason and good purposes) and I think somewhere along the line, we limited ourselves even in areas where we shouldn't be limited.

I think that in order to break out of it, one has to really want to break out of it. I think that if someone wants to, he/she will find a way.

The burning desire comes from love, when you actually give a damn about something. WHen you're truly passionate and you truly want to do something (I don't think this true passion comes from just making a lot of money - money is probably a means to achieve whatever passion you desire, really nothing else), I think you get the desire to break out of whatever limiting behavior(s) you have. This is because the desire to achieve something (whatever you desire as a result of caring about something) overcomes the limiting behaviors.

I'm not one of those psychology dudes, but I sound like one. My friends would have a big laugh over this one.

Bah, what do I know, anyway.

Jake

 

[bubba7]

Quote from damir00:



i have similar sizes, only with YM and a percentage point higher. the other 97% isn't sidelined, it's awaiting deployment.

since i have no way of actually knowing how much might be deployed in any 48 hour period - and i mean Knowing in the writ large sense of the word, not educated guessing - i have to be prepared for the absolute worst case. for the NoiseBox that's about 16 scale-ins over a two day period. average is only 2-3 at one time BUT...

high probability of not-happening is just another way of saying oh yeah, sh-t WILL happen. so i size for survival.

but the money management can't really be separated from the strategy: the reason i have the freedom to ignore paper losses on a trade and wait for a profit or a time-out is precisely because i have tight restrictions on how much can be bet at any one point.

it's not an approach everyone is comfortable with, but it fits my personality very well.

Thanks for your response, I appreciate it.

In equities, I view getting to cash as my highest priority to be able to rotate into a better new opportunity. the strategies for trading one market entity is different as you point out.

I was scoping out candle only from the viewpoint of the seemly high amount of capital he might be holding in reserve.

I can see how you strategically consider the sequence of situations (in their vast variety of forward implications as independent actionable set ups) lead you to have several turns rumming simultaneously.

It is the only way to see a one entity market as having segmented opportunies.

Most people in ET do not have a basis for scaling in and out other than viewing it scaling) as tangible to their initial entry.


Getting account dailies in the evneing goes a long ways toward seeing how a set of trades can be documented any way in the world other than "what you thought you did".

Not many people view black jack (single deck) as a continum like the index futures market. At anytime the "deck' favorability changes and consequently you can vary risk through money management. Overlapping contracts "in" (or scaling) offers a way to do money management continually with independent appearing segments.

What you do with with multiples of 2 to 3% scaling in up to 2 or 3 in parallel is identical to candle's 20% cummulative drawdown which could be a scaled or non scaled occurance. You are more risk adverse than candle it looks like. His not answering sort of (may) explains it as an edge he wants for himself and not broadly practiced.

To operate in parallel with several staggered entries and deal with their respective individual risk assessments vis a vis exiting, is a neat acheivement not recognized as possible by most.

I operate under NFA 208 (E) part a and as a consequence I do bunched trades that are redistributed in manners to keep accounts sanitized and free of criticisms. I have never thought of it as scaling ,howevr.

It is real exercise, maybe like playing multiple board games, to see that the boards are independant (risk caused by the market at a given time, equivalent) and at the same time play all with an optimum personal strategy.

Again, thanks for commenting.

 

[damir00]

Quote from bubba7:


I can see how you strategically consider the sequence of situations (in their vast variety of forward implications as independent actionable set ups) lead you to have several turns rumming simultaneously.


that is IT exactly. each entry has its own exit criteria and they are very much treated as independent positions. in fact they don't even all have to be in the same direction, however i have an "artificial" constraint on the mechanics for the simple reason that my brain is way too small to handle being short and long the same thing at the same time!

What you do with with multiples of 2 to 3% scaling in up to 2 or 3 in parallel.

looks like i wasn't too clear there. 2-3 is a typical number, the "up to" number is 16. regardless, i am absolutely sizing for survival, so your risk-averse statement is valid.

but i can't tell you there aren't times i'm not tempted to go for the market's jugular.

 

[bubba7]

Quote from damir00:



looks like i wasn't too clear there. 2-3 is a typical number, the "up to" number is 16. regardless, i am absolutely sizing for survival, so your risk-averse statement is valid.

but i can't tell you there aren't times i'm not tempted to go for the market's jugular.

thanks so much.

 

[AngryBull]

If you only make between 1-2 points per day on the es
you have absolutely no idea what trading is about.
Trading is about identifieng trends, 1 espoint is noise
and nothing else.
What trends do you see today?

 

[candletrader]

Quote from AngryBull:

If you only make between 1-2 points per day on the es
you have absolutely no idea what trading is about.
Trading is about identifieng trends, 1 espoint is noise
and nothing else.
What trends do you see today?

I think we are talking about long-term averages, not daily targets... it would indeed be a fool who stopped trading when he was up say 1pt on any given day because, as you rightly say, its pure noise and meaningless... on the other hand, a long-term average of 1-2pts per contract per day is actually a phenomenal annual return (under any reasonable assumptions)... even a long-run average of slightly under 1pt a day (with correspondingly psychologically manageable drawdowns) is a real achievement and is top-notch performance...

 

[murray t turtle]

I like that TV ad that showed a herd of gazelles;
& Bull elephant that got mad when he saw gazelles jump a gap the elephant couldnt jump.

It was hot enough to melt ice;
gazelles made it to the waterhole & elephant got madder ,louder as elephant still stalled at gap!

Elephant starts walking around;
knocks down a huge tree with discretion ,calmly walks accross the tree that covered the gap to waterhole.

 

[Scientist]

First,

Thanks for starting this thread, Natalie! This was one of the issues burning the most under my nails, and I'm glad it's being discussed by so many excellent, but contrarian minds on the subject.
I thought I would wait a few days and shup up in the process to see how it develops, before writing anything on here myself.

The people I've found to have made the most mature, interesting and enlightening posts on this thread are Natalie and Jack. As it turns out, these seem to be some of the very few bright minds that have survived on ET. I am greatful to be able to read their posts, they're the only people that still make it worth coming here.

I would also like to say that one of the reasons I haven't been around here much lately is the fact that ET and particularly it's notoriously self-limiting and aggressively sceptical members, i.e. the like of DT-waw (I won't mention any names), are starting to seriously annoy me.

1pt per day is all that's possible? Where does that figure come from? Come on, everybody. Give us a bloody break!

Let me just say this straight-forward: If I had a mental ceiling on trading performance, and particularly one like "1pt per day average ceiling", then I wouldn't trade anymore.
Sorry, but to me doing something that is going to be statistically fixed / unaltered in the future is not my perception of a worthwhile pursuit. One major reason why I started trading was that I eventually got bored with almost anything I pursued in my life. I wanted to do something that is exceptionally hard, challenging and with an unlimited upside potential. Finance, and trading in particular, is such a thing.

To say anything else, i.e. by setting ceilings to trading performance, is obviously contrary to that. Can I ask a few questions?

If 1pt per day is the average maximum - Then does that mean even after trading for 30 years, my performance would still be the same? Or would it mean it should take me 30 years to get there?

Honestly - How can a seasoned trader assume a daily average equal or below that of a profitable beginner as justifyable professional performance? Let's get real - There are plenty of profitable beginners out there who average 1pt per day on the ES. Why wouldn't somebody who's done it for 30 years be able to do more? Have you learnt out after 1-2 years? Think about it.

Why would you want to set yourself mental limits? The 1pt/day limit is nothing but exactly that. It's a mental barrier, a limiting belief or paradigm. As long as you obey or even consider statistics - You're going to be just that - A statistical average. Another thing - If the statistical average is 1pt, then how many people make more and how many make less? Obviously, the more there are on the "less" side, the more there have to be on the "more" side in order to balance this statistic - right? So there will have to be people constantly outperforming this?

Everybody's looking at statistical averages. They're far from optimal performance - In anything. I read somewhere that for a very long time it was said that running 100m in less than 10s was impossible. Sprinters only ever just touched that "magical" barrier. One day, the barrier was broken, and the year thereafter, it was broken several times by other athletes as well! What does that tell us about mental barriers?

Personally, I have been studying and studying, testing, redesigning and tweaking trading systems, trading discretionary, swinging, intraday-trading, microtrading, scalping, done hundreds of hours on the futures simulators just to observe and test new strategies. I never stop, either - I'm still doing it everyday. Full time! I get up in the morning (in case I actually left my office to sleep in my bed, that is), study, read and test systems all day, do my pre-market analysis, all while monitoring globex for the first 6 hours of the ES before open, synchronously with the SPI (Sydney Futures), then trade the US Open for 1h on 15s-charts, then go into "slow mode", put my screens on 1&3min-charts, run parameters through trading systems on other platforms and browse ET to find more new information. I learn so many new things everyday, that after about every 1-2 weeks, I think that I didn't know anything a month ago and shouldn't even have traded!

Do I do all this for nothing? I mean, is it like as if all the work is for nothing, since my "limit" on the ES is 1pt per day? I better stop right now, before I waste anymore time, since I've already exceeded that 1pt-per-day limit - I better stop before the statistic-god punishes me! Honestly, what is the point in setting limits?

I remember all the ET discussions on these limits. How much poo-poo would I get just for saying that more than 1pt per day is possible? It's sheer unbelievable, and I'll say this here straight away - With an attitude like this, "AverageTrader" is a lot more appropriate than "EliteTrader" - Isn't it? I mean, what is the purpose of this site? I would get bashed for saying that my current goal is to average 5 points per day. Regardless of how much I'm making right now, this goal is achieved more and more often. I am planning to make it a long-term average as soon as possible, and then I want to move on to average 10pts per day. Whether this is possible, I don't give a flying hoot. It's certainly better to set very high goals and not fully achieve them, than to set low goals, even if you do achieve them!

By having committed myself to this goal, I have ALREADY outperformed every other sceptical "ET", since it's a total limit to them, but for me it's just another goal! Does this make sense? It's about psychology. You people who follow statistics have no idea. If statistics were applicable to trading, then computers could fully trade on our behalf. This is nonsense. Exceptional trading performance is psychological, nothing else. It is psychology that made Marty Schwartz return 2,000%+ per annum. Not knowledge or statistics. He was drilled, he was an ex-Marine - He was determined to achieve, and he set himself no mental limits!

So if psychology is the main factor in exceptional trading success, then what is a psychological limit going to do to your trading success??? No further questions.


Compliments,
~The Scientist

 

[Scientist]

LOLOLOL!!!

Finally, got DT-waw with his pants down! Was only a matter of time, wasn't it? And you want to criticize ME??? Check out this lame post:

Quote from DT-waw:

I think explanation is through real performance. You can also look at hypothetical backtesting results. My optimized systems produce up to 1.7 point/day on S&P index data (swing and intraday trading systems). For example:

Full stop. If your system only returns 1.7 pts/day, throw it away. If your system performs so bad on historical data, what's it gonna do in the future? You've always got to expect your system to perform worse in forward test than in backtest, period.

Plus, you can't test a system on the SPX and call it valid on the ES - That simply doesn't work! Far too inaccurate.

And you're telling me and everybody on ET that my "claims" as to performance are lies? Get a life man! :eek:

System based on 5 minute bars, optimized parameters.
Slippage & commish: 0.3 pts/round-trip
# trades: 1372
Period: 14-Nov-2000 to 7-Feb-2003
Net profit: 952 pts

Uh oh oh... 0.3 pts/RT for BOTH slippage and commish? That's a very optmistic outlook, to say the least I'd account for a minimum of 0.5pts on ANY timeframe, even a 1-or-3-minute system. Below is just wishful thinking. Assuming you get in & out at market, you're already 0.5pts out the money, and your system is a failure. But generally, I expect my systems to perform under extreme fire, that is account for 0.75 to 1.5pts slippage& commission for a 5-min system. My 5-min systems look extremely good with the 0.5-figure, to say the least...

But let's just call it... Optmistic

Optmized Parameters? Oh-oh...

Your backtest period for the final, executing system is too large. Market parameters change too much over time. I.e. in the case of a 5-min-system, I wouldn't allow a backtest longer than 2 months - at an extreme. 2 weeks to 1 month is what I use on 5-min systems - Constantly re-adapting! Looking at your backtest period of almost 3 years (LOL!), I'm not surprised it's a lame duck.

I tend to test my latest 5-min systems on 1,680 bars, which is 7h/day(84)X5(days a week)X4(weeks), sometimes I use 6 weeks.

Going beyond 2,400 bars seriously blunts all your systems - You want recent market data, not the review of the 1929 Wall Street Journal, for chrissake.

If anything, You can trust me on this one. I've been tweaking my trading systems for days and nights, thousands of hours, trying absolutely everything, every backtest period, countless optimizations and their effects, all the backtest periods, accuracy, annual percentage returns, sterling & sharpe ratios, forward test periodicities and probabilities. If you talk parameters - I'll throw you a million.

Equity curve:
1) Flat since 05-Jul-2002 (7 months)
2) 14-Nov-2000 to 30-Oct-2001: Net profit 777 pts (3.24/day)
3) 30-Oct-2001 to 7-Feb-2003: Net profit 185 pts (0.59/day)

Throw the system away and develop a proper one!

I don't know whether results will be similar on ES futures data. You can throw out these statistics and just start to trade for maximum profit. IMO, trading should be more defensive than offensive. It's easy to overtrade esp. if you're trying to catch all these small intraday swings. Finally, it depends on intraday volatility.

No the results won't be the same on the ES, unless you're swing trading maybe.

Yes, in YOUR humble opinion trading should be defensive. IMHO trading cannot be defensive, at least not intraday. In fact, defensive intraday trading is an oxymoron! If you had any idea how scalpers think, and how I make money everyday making a market for day traders (that is, selling when they buy and buying when they sell), you would just cringe in your naivity. You would never attempt to trade again. I'll post something on scalping sometime to give you an idea how it works. You'll also understand why it's -really- called scalping and who's actually being scalped.

Regarding "overtrading" - It's only a problem if you don't know what you're doing. Regarding "all these small intraday swings" - What a condescending remark from you again! :eek:
If you had any comprehension of the idea of fractals (see Mandelbrot theory), you'd realize that in fact the smaller the timeframe, the more money you can make.

Just look at your recent transgression again:

Quote from DT-waw:
please let's get real now: Girlpower wrote "I know people whose avarages did not dropped below 5..." :eek

What? Are you accusing her of being a liar? :eek:
You're asking for trouble again, buddy...

Trade 1 contract for every $5k. Start with $50k, make 2 points /day (one ET member claims it's his long-term average... ha ha ha)

I know exactly who you're referring to....

You simply have NO IDEA of what is possible on the ES.

If I was a scalper, and just scalped during amateur hour, making a mere 1-2 points (average). And then attempted to make another 1 pt pre-lunch between 10:15 and 12:00, and then another point in the afternoon 2:30-3:30. And then another 1-2 scalping the close-squeeze. I mean, many people just specialize on these times and trade no other, making their 1pt per day - right? If you did all these, wouldn't you already be way ahead of your 1-point average? Christ, doesn't any of this make sense?

Stop doing this, DT-waw. You're the worst "returns sceptic" on ET by far. What is your problem?

Stop your anti-daytrading and particularly anti-scalping nonsense once and for all. I don't want to hear it anymore, and I'm still awaiting your apologies. In case you have any sense of self-respect that is.


All the Best,
~The Scientist

 

[Scientist]

Quote from DT-waw:

This system is optimized. Not much room for improvement. I haven't found anything better than that.

Latter sentence all speaks for itself, and the quality of this guy's contributions, doesn't it?

"This system is optimized... Not much room for improvement."
LOL. The funniest thing I've heard for a while...! This is a proverbial oxymoron. Have you read what it says in Market Wizards? Don't play with optimization, unless you've seriously been in the business for 10+ years with lots of experience. I tell you what : I've tried and developed hundreds, literally hundreds of trading systems. I -STILL- hardly use any optimized parameters! As soon as you go into optimization, you're walking with a double-bladed sword, buddy. Easy to trip.

Let me keep it simple, so even you get it; The more you optimize, that is, curve-fit to past data, the less likely the system is do to do the same in the future. The better it looks in the past, the worse it tends to be in the future. No matter how long your backtest period, whenever you optimized past data, you're encountering trouble. Not to mention you're doing what everyone does. To assume that the market has behaviour memory, particularly in a way that can be reflected by optimization, is dangerous thinking, to say the least. If I were you I wouldn't even touch my trading system again until I developed a better one, with higher returns, and as few optimized parameters as possible.

Use optimization with extreme care. You advocating it here is potentially detrimental / deadly to any ET who read your post.

Here's an example which shows how it is hard to choose the optimal parameters:
Simple system, EMA crossover with profit target, on 15-min bars.
EMA 14/45 with 3.5% target: net profit 867 pts
EMA 14/65 with 4.5% target: net profit 255 pts

LOL! You use Moving Averages???

Man, you're still in lamer-land, majorly. MA's are probably the most lagging indicators out there (really! any worse out there? no!), to use MA crossover systems is probably the most worn-out and tread-to-death approach ever. Don't even consider it man.
Great way to die slow, period. You're better off dying hard than slow. Why not roll dice instead?

Quote from DT-waw
I disagree. Using discretionary entry & exit and/or position size mgmt one can "beat" his own system. Most traders can't beat systems, but some are able to do that.
Curve fitting on historical data is simple. It is much harder to fit to the forthcoming curve.

Well, my systems even beat your systems more than 3-fold in terms of returns without having to interrupt discretionarily! If you think that with your clearly exposed limited knowledge you can "beat your own system", that is simply because your system (MA-crossover?) is so lame that it can only be beaten, no matter what you try.

If you've got a really good system, there's no need to "beat it". Otherwise - Might as well trade discretionary!

Take these two things (discretionary skills and optimization issues) into an account and we may say that it is almost impossible to beat optimized system's performance over the long period of time.

The other way 'round buddy. Beating optimized systems is what everybody out there is set out to do. You're competing with all the dumb guys, wannabe traders, highschool chartists, fund managers, trading system vendors etc etc.

While the superior system developers, and even more so discretionary traders take the other end. That is, the phenomenal gain end.

Whatever you do in life - If anybody else, not to mention everybody else is doing the same - forget it. There's no money to be made in the obvious. I wrote a lot about this and other life wisdoms in my recent thread, on which you (incidentally) wrote "this kid is a schizonphrenic". Well, if so, then you're an idiot. Pardon me. And I'd rather be 'schizo' than an idiot. Maybe you should read that thread again - Never know, you might learn something and start evolving to civilized behaviour.

Good Luck Brother,
~The Scientist