With correct position sizing,account size is relative---- It's not Garner thinking, its the results of a statisical valid test. you can't argue with it.
TA - Objective or Psychological Skill?
- Thread starter cornix
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With correct position sizing,account size is relative---- It's not Garner thinking, its the results of a statisical valid test. you can't argue with it.
I absolutely hate when you reply to folks as if that particular person said something for fact to support some belief you have. Simply, I did not claim an edge of 40% nor were you and I having such a discussion. Thus, please reply to the person that said such.
With that said, I'll remind you of the question that continues being avoided by you.
others the way you do in an effort to continue a debate you're having with someone as if that person is
-----------------
1) You yourself use TA.
2) You yourself argue/debate against others that use TA. The difference is that you use TA for different reasons and then minimize the importance of those reasons.
3) Traders you say that have profitable proven trading records (e.g. Timothy Sykes via price moving averages, breakouts, chart patterns) are on record themselves in saying they use TA while using their TA with other important elements of their trading plan like fundamentals.
4) I am not here to debate with you about arguments involving 40% win/loss rations.
With that said and getting back to my prior message post. The point I'm making is that random entries will not beat a proven verifiable profitable trader. If you think I'm wrong, you're essentially saying that random entries will outperform Timothy Sykes...correct ???
If so, why would random entries outperform Timothy Sykes performance.
That's my thesis here, a proven verifiable profitable trader that uses TA as one of his/her trading tools even if that TA is less important than his/her other trading tools in the trading plan...
That profitable trader will continue to outperform random entries.
P.S. There's a chart somewhere (I'm trying to find) where someone posted random entries versus the Dow (real performance) the past 50 years...most of the years the Dow out perform random entries.
I disagree. His picking a method of random entries 'worked' because of a 5 ATR stop loss. A tighter stop would significantly increase the ratio of losing trades.
Once you reduce the account size down to 100K or 50K, using a 5 ATR stop on the instruments he mentioned would increase your risk factor per trade to a level where a run of losses would cripple your account, if not wipe it out.
This is what he traded.
Portfolio: The portfolio consisted of a balanced assortment of over 25 futures, 3 bonds, 3 currencies, 3 energy, 4 grain, 3 interest rates, 3 metals, 2 softs and 3 stock indices.
5 ATR simply will not work for these instruments with a small account.
Now of course some would argue that one could use the system with penny stocks. I don't even look at those so I can't tell you how viable that would be, but if you ask a day trader to drop futures and trade penny stocks just so they could have wide stops and random entries, I'm pretty sure one and all would say you are nuts.
"Volume usage compared to price usage in TA are separate and UNEQUAL. When making an assumption about price moving from level A to level B we all look at prior price action and not the amount of volume that was involved."
Now hog breaths comment concerning PnL and volume is certainly true.
Reminds me of an old joke.
Broker: "Got some good news and some bad news".
Client: "What's the bad news?"
Broker: "Your account has been wiped out"
Client" "What's the good news?"
Broker: "It was on low volume"
Agreed, and we see a LOT of these sorts of generalizations. WAY too many presume that because they can't/don't do something it automatically means NO ONE can/does that something.
Now hog breaths comment concerning PnL and volume is certainly true.
Reminds me of an old joke.
Broker: "Got some good news and some bad news".
Client: "What's the bad news?"
Broker: "Your account has been wiped out"
Client" "What's the good news?"
Broker: "It was on low volume"
That raised a chuckle. Thanks.
Quote from justrading:
It is a pretty powerful statement.
Unfortunately, a newbie would not get the importance of it. Reading your post would help put things into context much better than just the statement.
In our culture being "wrong" associates with negativity. That's why it is so hard for most to accept the reality of an odds game.
ET has plenty of excellent examples of how people pay too much attention to single calls/trades and absolutely not enough attention to their risk profile and long-term equity curve.
Such false pride/ego is a disaster. I strongly recommend reading Vic Sperandeo who also wrote some extremely wise words on the matter from trader's point of view (and he also spent significant time studying psychology to understand and express those principles correctly).
"Overall, day trading has always been very easy for me, because I have a personality trait that
lends itself to this particular business, and that is the ability to take losses and never let it bother
me.
Most people hate to be wrong. No one I ever knew relished saying, "You know, I'm dead
wrong in this." Ego is the killer here; ego in the psychological sense, rather than in the
philosophical meaning, is the opposite of self esteem. Ego (or false pride) says (subconsciously)
"I can never be wrong, or make a mistake, because I am great. If I do make an error in judgment, I
will not be respected." But human beings are not gods, and traders are not omniscient; they must
be wrong sometimes. To be unwilling to accept this would be illogical.
To be a day trader you need self-esteem, the healthy sense that you are competent and worthy.
If you don't feel confident with your own judgment, you can't execute your trades properly. In
order to trade, you must be able to take losses, thousands of them, and yet come back and trade
again with confidence. Just remember: Don't let ego (false pride) take the place of self-esteem."
From Trader Vic II. He also has amazing chapter fully dedicated to psychology of trading.
Surf, ask your PhD wife if a bet with 40% chance of winning and 1:2 risk:reward contains an edge. That would make things clear.
Don't know about you, but I LOVE to take as many trades as I can which have chance of winning of 40% with risk:reward of at least 1:2. It's equal to having a cash-making machine in your hands.
While I am pretty sure there are many traders having better win rate than 41% I demonstrated so far (which by the way includes break-even trades too, where a loss was less than 1 tick, just commission) the most important point in regard to this matter is:
only persons with self-esteem and confidence problems really care about their win rate and not about their bottom line. They don't trade to generate alpha, they trade to satisfy their ego... and it's a purpose somewhat opposite to what's needed to trade well. Results of such "ego-motivated" trading are corresponding.
If I was offered to choose a method which has 80% winning rate of 1:1 risk:reward vs. a method which has 20% winning rate of 1:15 risk:reward I would not even think a second about it.
What would Surf choose?
