Stages of a Trader

[dbphoenix]

As a beginner I kept a journal here for a couple years and posted many, many charts of my trades back when I traded stocks using stochastics on a 3-min chart. When I traded my simple plan based on that I did very well. But when I got overconfident and careless with my risk management, I really screwed things up.

But that's all hindsight, so it's useless. Of course, this post is also hindsight, even before I hit "enter". And indicators are by definition hindsight.

What the hindsighters are really complaining about is that no one can tell them the future. They don't get the "conditions" thing, much less probability (or odds or whatever the hell one wants to call it). And, for the most part, they don't care. But some do. So until spring gets here, it's worth doing.

 

[feng456]

But that's all hindsight, so it's useless. Of course, this post is also hindsight, even before I hit "enter". And indicators are by definition hindsight.

What the hindsighters are really complaining about is that no one can tell them the future. They don't get the "conditions" thing, much less probability (or odds or whatever the hell one wants to call it). And, for the most part, they don't care. But some do. So until spring gets here, it's worth doing.

I can only speak for myself but what I was saying is it's very easy knowing the outcome to go back and look for confirmations of that outcome than to be given a bunch of information and find out what the outcome is going to be.

Or you know you can keep the circlejerk and generalize about other groups of people and how they are all inferior.

 

[kut2k2]

What the hindsighters are really complaining about is that no one can tell them the future. They don't get the "conditions" thing, much less probability (or odds or whatever the hell one wants to call it).

"Why would we look to the past in order to prepare for the future? Because there is no where else to look." -- James Burke

 

[dbphoenix]

I can only speak for myself but what I was saying is it's very easy knowing the outcome to go back and look for confirmations of that outcome than to be given a bunch of information and find out what the outcome is going to be.

Key words here being "to be given". You could also study a phenomenon for the purpose of determining those conditions which preceded it. This is how backtesting begins. Then find those same conditions in other circumstances and trace them forward to see if they result in the same phenomenon. If they do, then you look for another set of the same circumstances and see what the outcome was. This is forwardtesting. If the outcome was not what was expected, then you go back and start over, puzzling out what went wrong. Eventually you'll know the odds of a particular set of circumstances or conditions leading to the desired result.

On the other hand, if you prefer to be given all this, then your future is very likely to be no different than your past.

 

[dbphoenix]

"Why would we look to the past in order to prepare for the future? Because there is no where else to look." -- James Burke

Good one.

 

[SIUYA]

Feng - a couple of questions for you.....

You say your system is profitable - it is just that it while it has large variations in the PL, (>100% to small loss or BE some years) - remind yourself that this is not a bad result.
Ask your self -
can this be scaled up safely?
What is the problem with the results? (apart from your first "Now when do I get rich?" question)

...............
You say "

 

[SIUYA]

Feng - a couple of questions for you.....

You say your system is profitable - it is just that it while it has large variations in the PL, (>100% to small loss or BE some years) - remind yourself that this is not a bad result.
Ask your self -
can this be scaled up safely?
What is the problem with the results? (apart from your first "Now when do I get rich?" question)

...............
You say "“It's not anti trend. It just doesn't work well in big trending days.”
Have you thought of allocating a proportion of capital to a trend following method (say 20%)?
Have you analysed any methods of avoiding just a few of the bigger losses you might have?
Have you even tried to 'guess' the market context/conditions/probabilities of what a day might do to see if your system can be improved? (tested this, and seen if the results improve)
Why did you choose this method of wanting to trade?

...............
You say “All I know is historically my system wins approx x% of time in all conditions and loses y% of time in all conditions. That's all I know.” – have you at least tried to make judgements on market possibilities, conditions and seen if you are any good at what if scenarios?

While I am a 'PA' (blah) trader, what I see in the markets is not necessarily what others might see....but that is not a problem.
You might be terrible at it, but have you tried this - as opposed to saying everyone merely does it in hindsight?
You might be 50:50, and that might be enough to miss the trending days that kill you - eg; Market down 4 days in a row at the end of a bull market, after having a big down month.....odds are any up days are likely to be strong.....is it worth having my mean reversion/non trend system on 'ALL' the time?

just a few questions worth visiting.....

 

[feng456]

Thanks.

I've tried looking at ways to predict whether or not it's going to be a big trending day ahead of time with no success. I've tried changing parameters to make it more profitable and the drawdowns smaller, again no success. While I believe I have been in this field long enough to start seeing patterns in charts ahead of time, I worry that the discretionary side of things would fuck up my discipline and mess with my systematic trading. History has taught me repeatedly that when I didn't follow my system, when I thought I knew better, I paid a heavy price.

However, I will take your suggestion and record on paper what would happen if I were to add a little discretionary into it. i've noticed that there are days, like yesterday, where within the first few minutes, I could tell it was probably going to be a big move a certain way. It won't prevent the full loss but might decrease it. So I will look into that and see what happens.

 

[SIUYA]

I worry that the discretionary side of things would fuck up my discipline and mess with my systematic trading.
......................
However, I will take your suggestion and record on paper what would happen if I were to add a little discretionary into it..

You make a good point that it 'may' stuff up your discipline.

Without knowing too much about how your system works....
The suggestion is not to alter your system and execution with a lot of discretion.
The suggestion is to use a little discretion about when you turn it on, and the context of looking for those 'value' areas for when it performs best.
Dont do anything more than that.....

IMHO Most 'PA' traders do little more than wait for the right time to execute the pattern that occurs 50 times a day but in areas of chop or its already moving and they can then either chase or wait it out.

This 'discretion' of context/conditions requires first having a belief in how markets move, what moves them and then where a system is best applied. I assume you have this in mind when you developed your own system.
eg; today NFP - for me I trade FX at present - not much to do but wait, and then put on some trades after the dust settled.

If your system needs to be turned on all the time, then maybe its another story, and there are other issues.
best of luck.

 

[feng456]

You make a good point that it 'may' stuff up your discipline.

Without knowing too much about how your system works....
The suggestion is not to alter your system and execution with a lot of discretion.
The suggestion is to use a little discretion about when you turn it on, and the context of looking for those 'value' areas for when it performs best.
Dont do anything more than that.....

IMHO Most 'PA' traders do little more than wait for the right time to execute the pattern that occurs 50 times a day but in areas of chop or its already moving and they can then either chase or wait it out.

This 'discretion' of context/conditions requires first having a belief in how markets move, what moves them and then where a system is best applied. I assume you have this in mind when you developed your own system.
eg; today NFP - for me I trade FX at present - not much to do but wait, and then put on some trades after the dust settled.

If your system needs to be turned on all the time, then maybe its another story, and there are other issues.
best of luck.

Well when I developed the system I looked at what preexisting conditions were most favourable for system execution. These are my filters. This is why I don't trade/execute everyday. What i mean is there have been times where I saw/predicted certain moves that would've saved me money. However, what I don't know is if I'm right enough times to make it profitable for me to do so.