The Learning Curve

[axeman]

Yes. All this philosophy makes it seem too mystic to me.

It's all very confusing because there are so many different
types of traders.

Some guys, just GAMBLE over and over and over until
they start getting a feel for it, and start recognizing patterns
subconciously until they are profitable. VERY expensive way
to learn.

Others crunch the numbers until they find an edge.
Its very objective, and if they can follow the rules they will
make money. Lots of psychology involved because they never
got the practice that the gambler did. So they can lose,
even with an edge because they can't follow their own rules.

But your absolutely right. In it's simplest form, it's 1 or 2.



peace

axeman

Quote from Corso482:

You guys talk about trading like it's an Eastern philosophy akin to finding your chi or something.

Correct me if I'm wrong, but doesn't profitable trading ultimately boil down to 1) either you do/don't have a positive expectancy strategy and 2) either you do/don't follow that strategy.

If someone isn't making money, isn't it 1 or 2? Where does all of this introspective philosophy come in the picture???

 

[prox]

Quote from Magna:

I disagree. Keeping your emotions in check won't make a difference if you don't have an edge in your trading methodology. Oh, it may let you drag it out a bit longer, the death of a thousand cuts, but the end result will be the same unless you have a positive expectancy strategy. And all the psychology in the world won't help you if you don't.

So, which comes first?

Finding a working edge that is proven over time, thus eliminating psychological issues because the trader believes in the system.

or

Solving your psychological issues and then your method will be tradeable as it was designed, thus turning into your edge.

 

[spreadem]

There Is No learning Curve....

You guys talk about trading like it's an Eastern philosophy akin to finding your chi or something.

"Remember there is no spoon."

 

[JT47319]

When you establish a position, the stock/e-mini can do one of three things. Go up, down, or sideways. And given that sideways will eventually oscillate into the other two states, really it can do two things.

Excluding commission and the house’s edge, you have a reasonable 50/50 chance of making money or losing money. But consider 95% of trader’s wash out in the first 6 months. They take their profits too soon and hang on to their losses.

How many went long today in the e-minis? You could have easily gotten a ten bagger, but those trader’s who fall off the learning curve don’t hang on to their winners. Or didn't figure to cover their shorts in the face of a rising trend.

Numbers, expectancy, edge, whatever. They give you confidence as to when to enter your position and to maintain it when everything inside you is screaming to get out with a single tick profit or curling up in the fetal position at the huge loss you just took.

Its about confidence, knowing when you’re right and when you’re wrong, to trust your indicators because you know they work and not second guess your entry and your exit. The technicals don’t lie, it’s the traders who fail.

 

[Jayford]

Very good post JT.

 

[harrytrader]

I prefer this answer to the one made previously by saying it is just psychology. This term is to fuzzy, to describe what is said below I would rather talk about knowledge: you don't get really confident by pure faith (psychology) you become confident because you have a rational reason to become confident. I would drop the term "whatever" nevertheless as for myself I won't be confident with pure imaginative numbers

Quote from JT47319:

Numbers, expectancy, edge, whatever. They give you confidence as to when to enter your position and to maintain it when everything inside you is screaming to get out with a single tick profit or curling up in the fetal position at the huge loss you just took.

 

[JT47319]

I know a trader who depends on the retrograde motion of the planets. I don't know how that works, but he has confidence in his system and his track record. Whatever works.

 

[harrytrader]

You're right let's say I talked for the majority of "normal" people not special cases

I will begin to study astrology, I will tell you if I know how they do that

Quote from JT47319:

I know a trader who depends on the retrograde motion of the planets. I don't know how that works, but he has confidence in his system and his track record. Whatever works.

 

[Bolts]

Interesting to hear the different sorts of problems people have. I've been trading/learning for a year now. It's been a tough year. After just treading water for several months, I made a lot of money daytrading in Oct/Nov 2002, which was very exciting, but then I watched my profits gradually evaporate by new year's. Ever since then I've spent most of my time paper trading, trying to find something that works fairly consistently. There were a few false starts where I traded because I thought I was on to something, but the profits always evaporated after a few days, and I'd go back to paper trading again. Pretty frustrating, but as it stands I'm only at a small loss, and I take some small encouragement from people who say "this is the most difficult market I've seen", although I suspect most of that sentiment is B.S.

But either way, I suppose I could have done a lot worse. However, I suspect the worst times for the markets may very well be over with for the long term, and hopefully things will get easy again like they were in Oct/Nov 2002.

I've been going back and trying some of my old methods again. Afterall if something works for 13 out of 14 days in a row, for example, it's hard to believe that it will never work again. But it could be a simple fluke, that's always foremost in my mind.