Thinking in Probabilities..
- Thread starter ilcaa
- Start date
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Ilcaa;
And looking @ about a '' million or billion'' charts of differing time frames helps.
Market Makers Edge by Joshua Lukeman helps.
;especially his longer charts.
Van Tharp, Trade Your Way to Financial Freedom.
Despite having advanced degrees in statistics, it was this book -- when it first came out nearly 7 years ago -- that brought such essential concepts as expectancy, R (risk-reward ratio), position sizing, and others, as they apply to trading, into sharp focus for me personally.
There are other excellent materials and courses on his website (International Institute for Trading Mastery), many of which I've gone through over the years and recommend. You'll have no trouble finding the URL.
Despite having advanced degrees in statistics, it was this book -- when it first came out nearly 7 years ago -- that brought such essential concepts as expectancy, R (risk-reward ratio), position sizing, and others, as they apply to trading, into sharp focus for me personally.
There are other excellent materials and courses on his website (International Institute for Trading Mastery), many of which I've gone through over the years and recommend. You'll have no trouble finding the URL.
Play poker or blackjack to train yourself to avoid results-oriented thinking on the most basic level.
If you double down on your 11 vs a dealer's 5 and lose, will you refrain from doing so again the next time around (given no extreme negative count)? Or worse, feel so indignant that you triple your next bet to get the loss back? If you're dealt 7 2 offsuit and fold, and the flop comes 7 7 2, will that make you think twice about playing those cards next time they come by? etc.
The market is no plain deck of cards and is much more difficult to place into that frame of consideration, but if you apply the same kind of thinking at least to your own interaction with the markets, you will have a much healthier attitude towards trading overall -- no room for fear or regret.
If you double down on your 11 vs a dealer's 5 and lose, will you refrain from doing so again the next time around (given no extreme negative count)? Or worse, feel so indignant that you triple your next bet to get the loss back? If you're dealt 7 2 offsuit and fold, and the flop comes 7 7 2, will that make you think twice about playing those cards next time they come by? etc.
The market is no plain deck of cards and is much more difficult to place into that frame of consideration, but if you apply the same kind of thinking at least to your own interaction with the markets, you will have a much healthier attitude towards trading overall -- no room for fear or regret.
Check out Nassim Taleb's site at: http://www.fooledbyrandomness.com/
You won't get a trading manual but you will get real insight into the obstacles to 'thinking in probabilities' - accurately. His 'Fooled by Randomness' was a seminal work for me. In spite of his impressive academic and professional record he chose to spend two years - mid-career as a local on the CME and has far more respect for the average 'Brooklyn Floor Trader' than all the industry quants put together
You won't get a trading manual but you will get real insight into the obstacles to 'thinking in probabilities' - accurately. His 'Fooled by Randomness' was a seminal work for me. In spite of his impressive academic and professional record he chose to spend two years - mid-career as a local on the CME and has far more respect for the average 'Brooklyn Floor Trader' than all the industry quants put together
Real Thinking?
Blaise Pascal about the Roulette.
He invented the thing!