Question regarding Brooks' book

[padutrader]

I started seeing it only after the trade was placed, but now I can see it before the trade and it’s making me hesitant and so once again I need to find a statistical edge. I need a hint in the right direction because otherwise it’s a coin flip and the commissions will eat me alive over time.

very true
most of the time it is a coin flip.....probability is 50%

while in a coin flip you have only two options, in trading there are lot more..

you can only bet heads or tails in a coin flip.

so if you bet heads and it comes up tails you know you were wrong: in trading you really do not know when you are wrong.


the problem with brooks is that it is all subjectivity.....no rules.

he talks about context which is quite hard to determine and is not the same for all time frames:the market continuously gives reversal signals most of which are weak.......and end up being classified as corrections after the fact.......

 

[Ego]

If you are referring to his Bar by Bar book, you are unfortunately making this hard on yourself. His price action video course is the source to learn his PA concepts.

Only one video in, but it’s much easier to follow. Thanks for this suggestion, I will spend a lot of time on this!

 

[Ego]

very true
most of the time it is a coin flip.....probability is 50%

while in a coin flip you have only two options, in trading there are lot more..

you can only bet heads or tails in a coin flip.

so if you bet heads and it comes up tails you know you were wrong: in trading you really do not know when you are wrong.


the problem with brooks is that it is all subjectivity.....no rules.

he talks about context which is quite hard to determine and is not the same for all time frames.

Agreed, much room for error. It’s all probabilities but so is mechanical trading. And mechanical edges are subjective to recently bias and so I’m thinking it’s not possible to achieve pure objective trading. Nature of the game, nature of life itself.

Though I wish it weren’t so, risk is unavoidable. Even if a person doesn’t want to trade, what are they to do with their money? There is no safe play anymore. There really never was one, but that fact has only become more apparent in the last 20 years or so.

We’re all traders, one way or another. Best get better at it or succumb to a thousand cuts from taxation/inflation/central bank shenanigans. Sitting on the sidelines is only a temporary move, and I’ve been sitting there for too long.

 

[padutrader]

Even if a person doesn’t want to trade, what are they to do with their money?

buy good companies with good reputed managements, there are not many. My father's investment in a Indian bank multiplied by 100000 times in 30 years. my father had money he could tie up for 30 years.......i do not and there in lies the rub.
some of us have to trade

 

[Ego]

buy good companies with good reputed managements, there are not many. My father's investment in a Indian bank multiplied by 100000 times in 30 years. my father had money he could tie up for 30 years.......i do not and there in lies the rub.
some of us have to trade

Your father took a risk. A 100 year trend is a sure thing until it is not. History has shown that there are periods of massive capital destruction, but they tend to skip a generation or two because their severity must have time to escape the collective memory in order for their supportive behavior to once again take place.

There is no safe bet. It’s all a gamble of one sort or another. I think we’re seeing that level of complacency now, where a 30% pullback means nothing and people think it’s going to the moon forever. So buy and hold just does not work for me, because times change and you have to time it right to do well.

 

[padutrader]

risk is unavoidable.

i believe knowledge reduces risk....but it may be case of diminishing results.....and more knowledge may lead to over thinking and 'paralysis by analysis'. this term i found in my golfing days

'where there is much light, there is deep shadow'- Goethe

 

[padutrader]

Your father took a risk.

he took a huge risk
the company could have gone bust.
just like Buffet took risk when he held 7-10 companies for 50 years

 

[Ego]

And Buffet is a hero for it, just like your father. If they had been wrong, they would not be held as examples to follow.

So moral of the story is perhaps:
1. Take your best educated guess (few or many guesses, that’s another choice)
2. Win or lose, at least you chose.
3. Don’t fret over what could have been. You didn’t have all the information.
4. Be happy regardless.

 

[padutrader]

I end up seeing both sides of the trade.

i used to get confused too.

because the market does keep giving reversal signals and i would take all of them.

i realized that most of these fail

because though there was a reversal signal and the market did reverse .........the strength of that reversal move was weak and so experienced and smart traders just sold into it.

trading like most other things is experience

 

[padutrader]

And Buffet is a hero for it, just like your father.

they chose solid companies.....and incidentally that was the only share my father ever bought.

so it was amazing...