The "Aha" Moment!

[schweiz]

Unfortunately, most people will never be around long enough to have their own "aha" moment. They will either blow out their account or get frustrated and quit. But for a precious few, pressing onward will be a priceless transformation of thought and process.

I don't agree with that.

I had many AHA moments in my life (followed by UGH moments), I wiped out once my account, I got many times frustrated (and got motivated again), so I stayed. But the huge problem for which nobody has an answer (at least if you exclude hindsight) is: should I continue and work hard? Or should I stop as it will never work? Will I ever have success?
Working hard and long does not guarantee any success. You only can know in hindsight that it was good or bad to continue. For me it was good, but it looked a few times very ugly.
Essential, and more important then hard working, is finding an edge, and for that out of the box thinking is more efficient then hard working. Most people worked harder than many billionaires, but these billionaires had an original idea and did not have to work hard and long. They achieved in a few years (or sometimes even shorter) things that 99% of people can even never achieve, even if they would hard for a few centuries (Google, Facebook, Twitter,Whatsapp...).

But if you keep working and studying long enough, you will wake up one day and it will all make sense.

Is that why so many never make money? If it would only be a matter of not giving up most people would be rich. And if most would be rich, there would be no counterparts anymore to take the trades as everybody would make money. You need losers to have winners, you cannot have only losers or only winners.

I know several people who did what you post. One day it made sense to them: they understood they had to stop as they realized it would never work for them. They all lost several years and lots of money.

Another problem is also that most people (over 90%?) overestimate their own capacities, we all think we can do things that the majority cannot. But the probability that we will fail, is also 90%.
90% of drivers think they are in the top 10%. Mathematically that's impossible.

 

[qlai]

But the probability that we will fail, is also 90%.
90% of drivers think they are in the top 10%.

Yes I agree with all you said. I wanted to share this little tidbit. I was attending Rande Powell (trading psychologist) webinar and he was talking about Alphas vs Betas in trading. Someone asked which personality has more difficulty adjusting to trading. He said that Alphas often give up only because they have more alternatives outside of trading
(successful business/career) ... They simply have easier way to make money.

Essential, and more important then hard working, is finding an edge

I am very suspicious when a retail trader(myself included) claims that he/she found an edge. People in the industry have seen what real edge is ... it is quantifiable ... It is explainable ... It's replicatable. It's like - oh that's why it works! Most of the time it is something they cannot replicate on their own outside of the organization.
My point is ... Be very sceptical of what you think is your edge. Assume you have been more lucky than smart until you see enough evidence otherwise. At the least, you need to trade through multitude of market conditions.

 

[smallfil]

Sweet Bobby,
I disagree with this, politely. I do at times know what is going to happen tomorrow and the next hour and next 60 hours. There is an art to it and it takes time and energy to learn.

I don't know where you stand, but traders giving up on trying to understand directional moves and market prediction and settling with naked premium selling is dangerous. These traders struggling and giving up on predicting directional moves and rotating to the "holy grail" of premium selling is a dangerous recipe.

In actual experience, I have seen a very hard working new trader give up and rotate to premium selling. He got hit hard and it was an excellent lesson.

You can never stop learning in the field of stock trading. Even the smallest things can hurt you! Just recently, I was puzzled that I had a number of losing trades using the same setups. Okay, we know just because you had a setup, does not guarantee it will work every time. Now, having reviewed those trades using my trading journal, I figured out what was happening. Now, I made a slight adjustment and seems to have changed my approach to trading by leaps and bounds.
I have to continue to trade and see if it holds. Of course, I hope I am correct in my assessment as I see it improving my options trading by a huge amount. It would come under the category of secret sauce so, no way would I discuss what it is. Point is, if you are not getting the results you want, you probably, are doing something wrong! Go study and figure it out!

 

[iccenuol]

What does trade management and risk management both have in common? They are both factors that we can control. Where the market will go next is guesswork.

 

[schweiz]

Where the market will go next is guesswork.

No, it should not be just guesswork. That's why you should built a system. Guessing should be replaced by guessing with (highest possible) probability to be right in foresight. Try to find out the direction for the next few minutes, with high probablity to be right. That's "all" you need.
The better you succeed in that, the less you need all the "management things".

 

[qlai]

Guessing should be replaced by guessing with (highest possible) probability to be right in foresight.

Agreed ... As long as you understand that you are still guessing and ready to accept being wrong on this particular instance.

 

[schweiz]

Agreed ... As long as you understand that you are still guessing and ready to accept being wrong on this particular instance.

Was tested on +1,000 trades over a period of 2 years. The stats tell me with high probability what I can expect. Size of tested data was statistically relevant enough.

 

[qlai]

Was tested on +1,000 trades over a period of 2 years.

I am not arguing against your system in particular, but two years is not long time and most likely during same regime. Probability of coin flip is 50/50, but it doesn't mean you will get a head afer a tail. I agree with @iccenuol, the only thing we can control is our actions, the rest is up to chance even if you have statistical edge. The only exceptions are - there's a real reason behind the move (hard edge) or you are causing the move (created edge) or inside knowledge (inside edge). If you could rely on your statistical edge, you would make unlimited amount of money.

 

[schweiz]

I am not arguing against your system in particular, but two years is not long time and most likely during same regime. Probability of coin flip is 50/50, but it doesn't mean you will get a head afer a tail. I agree with @iccenuol, the only thing we can control is our actions, the rest is up to chance even if you have statistical edge. The only exceptions are - there's a real reason behind the move (hard edge) or you are causing the move (created edge) or inside knowledge (inside edge).

I daytrade since 1992 the s&p. First the big contracts and later the ES. Since the system was finally developped I did thousands of trades over almost 2 decades and I see what I see. So I don't care if it is long enough or not and if I control anything at all or not. My system tries to get as much money out of the market as possible. That's the edge; take as much as possible from what the market offers you.

If you could rely on your statistical edge, you would make unlimited amount of money.

Wrong, as you are always limited by what the market offers you. Size of the market is also a limitation, as well as the size you want to trade.

 

[qlai]

I did thousands of trades over almost 2 decades and I see what I see.

2 decades a bit more significant ... I am going to stand back