Method or Rule?
- Thread starter Kevin1616
- Start date
Good post by Leob.
I have mentioned this before elsewhere but so many times people label their issues as psychological or being an issue with discipline, but the real issue is that their method just sucks and/or they have flawed assumptions about how the markets really work. This took me YEARS to figure out. What it came down to was identifying what really mattered within the framework of how I wanted to trade the markets. Also, the "Zurich Axioms" is a must read. I have created a customized 3-page summary of that book with all of the additional insights I have gained over the years to make sure I have a proper mindset.
Why are you putting on the trades that you do? Ego? To prove that you're right? Boredom? Fear of missing out?
What has helped me is to think about it more as "it's irresponsible not to do _____" as far as taking trades / being in / out of the market given what I'm seeing and then just accept the consequences.
I have mentioned this before elsewhere but so many times people label their issues as psychological or being an issue with discipline, but the real issue is that their method just sucks and/or they have flawed assumptions about how the markets really work. This took me YEARS to figure out. What it came down to was identifying what really mattered within the framework of how I wanted to trade the markets. Also, the "Zurich Axioms" is a must read. I have created a customized 3-page summary of that book with all of the additional insights I have gained over the years to make sure I have a proper mindset.
Why are you putting on the trades that you do? Ego? To prove that you're right? Boredom? Fear of missing out?
What has helped me is to think about it more as "it's irresponsible not to do _____" as far as taking trades / being in / out of the market given what I'm seeing and then just accept the consequences.
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If you have a profit factor of 80% and make a hundred trades , then tell me it's all about discipline , and again have a break even strategy that loses with costs , make a hundred trades and then tell me it's all about discipline . You can play roulette with all the discipline in the world , you will lose , conversely the house has no control over it's "trading"( the bets and behaviour of it's punters) and yet given enough "trades " always wins .
If you look closely at the roulette table there is a betting limit with a maximum bet. It stops a big bankroll from using a martingale system. Basically limiting the houses losses. It's the same as discipline with a trader. Limit your losses.
The house can't go on tilt, a trader without discipline can. Why do you think so many traders blow up?
A martingale system on roulette is still a losing system in terms of probability. "So many traders" blow up because they don't have winning systems , probability is against them , though they may be stupid enough to believe it is a winning system and that they lose because of of some personality trait , it couldn't possibly be that their trading system doesn't work.
If you have unlimited funds a martingale system will eventually win back your original bet. That's why the house has a betting limit.
Unless you have the discipline to follow your system you'll never be sure if the problem is the system or the trader.
And you really believe this ? simple math will tell you the exact opposite , this is basic , not just a dumb statement , but a very dumb one ,infinite bets with a martingale system and a house take , leads to infinite losses .
Thought experiments:
Guy bets $100, loses.
Guy best $300, loses.
Guy bets $500, loses.
Guy bets $1000, wins. Up net $100 on the day. Goes home. Repeats tomorrow.
Now, let's extrapolate this into an infinite number of bets.
The guy will go from multiple periods of net losses, to one period of net profit; rinse repeat ... as the dollar bet amounts grow to infinity.
I don't understand the confusion with this.