The reality of "over-trading"

Teycir · Jun 6, 2015

Not bad trades, less than optimal trades. If you take trades that are 51win/49loss, you'll loose $ over time due to commish and slippage. Being selective is very hard to do if trading very often for a swing trader.

chrisjs87 · Jun 6, 2015

globalarbtrader said:
Why should your edge on a 5 second trade be the same as on a one month trade?

Having an edge doesn't have anything to do with arbitrary time frame settings. The longer you hold, the more you're entering into the world of "buy and hold". If your strategy produces returns that are not in excess of a buy and hold, or reduce risk exposure, you are wasting your time trading.

b) The more you trade, the more low conviction trades you're doing. The same logic then applies. You're paying hands of blackjack when the count isn't in your favour.

What does personal conviction have to do with possessing a mathematical advantage?

chrisjs87 · Jun 6, 2015

Teycir said:
Not bad trades, less than optimal trades. If you take trades that are 51win/49loss, you'll loose $ over time due to commish and slippage. Being selective is very hard to do if trading very often for a swing trader.

So basically what you're saying is, make good trades, and avoid bad trades?

Teycir · Jun 6, 2015

No. If the setup do not check all the conditions then don't trade. To have all the conditions, you must be patient and trade less. Because good setups are not so frequent.

chrisjs87 · Jun 6, 2015

So if the set ups aren't good, then don't trade?

Buy1Sell2 · Jun 6, 2015

chrisjs87 said:
Having an edge doesn't have anything to do with arbitrary time frame settings.

There is no edge in trading other than capital and the prudent use thereof.

romik · Jun 6, 2015

Trading is like a box of chocolates... (cheese statement, sorry), but it's true though. Nobody knows when *exactly* the next big move is upon us, neither does anyone know where *exactly* to place stops not to be shaken out. It's all done in pursuit of a profit, get real folks, we are speculators and a speculator is all about greed, which has to be controlled of course, otherwise you would never see profit. Overtrading is not bad, as long as there is a valid reason in your view to take that next trade.

Teycir · Jun 7, 2015

chrisjs87 said:
So if the set ups aren't good, then don't trade?

Looks simple and obvious for noobs.

Teycir · Jun 7, 2015

chrisjs87 said:
No that doesn't make any sense. The term "overtrading" implies that a higher frequency of trading results in lower profits. The purported solution is to trade less("Smart"), trade higher time frames, etc. It's all a mind game to delay reality from sinking in.

Trading emotionally, or without any sort of basis for making your trades is also certainly bad form, but that doesn't necessarily have anything to do with trade frequency.

Nope, it implies negative expectancy trades. HFT algos are not overtrading and yet they make millions of trades per second.

i am nobody · Jun 7, 2015

Teycir said:
The market is 90% noise and 10% easy $ clear high odds and or high returns opportunities. Say you play mean reversion on ES as a swing trader: the easy trade is a very stretched RSI 14 nearing a strong resistance/support. This kinds of setups happen 2 to 4 times a month. If you try to force trades when the good conditions are not met, you are just gambling.

If 90% is noise you should start to develop a real trading system, because you apparently see a lot of noise that is not noise at all. You classify it as noise because you don't understand it.
If you trade ES based on a strechted RSI 14, you can hardly speak about a trading system. You should try to build a real system.

Teycir said:
HFT algos are not overtrading and yet they make millions of trades per second.

Virtu financial's result for the first quarter of 2015 are: net profits $87.9 million. That is on average $11 per second, which means that with a assumed average profit of $11 per trade, it is about 100,000 times less than even 1 miion trades per second. And you speak about millionS of trades. Even if you take the 5 biggest HFT firms together you will never reach the numbers you speak about.

Teycir said:
If you take trades that are 51win/49loss, you'll loose $ over time due to commish and slippage.

Very simple logic but, and because of that, you forgot a small part in your statement: profit per winning trade and loss per losing trade. If profit to loss is 2:1, your statemant is completely wrong.

I will not join this discussion any further because I notice that more and more discussions on ET have the same charateristics:

a lot of nonsense or at least uncomplete statements.
too many bashing.
too many discussion end in a fight to prove that the other person is an idiot.
the same subjects come back over and over again without any interesting result.
.......