1) don't lose money
2) don't forget rule #1
3) don't forget rule #2
2) don't forget rule #1
3) don't forget rule #2
Three Laws in Trading
- Thread starter alex.samant
- Start date
It definitely takes years of experience to truly understand what Alex means.
And it seems that the majority of the traders don't get the simple fact that a STABLE stochastic process does NOT mean that it's a PREDICTABLE process. Does "Pattern A" work? Yes. Now you see pattern A on chart, will it work? You don't know. Simple as that.
Trading is purely a probabilities game and it does not matter whether you have found the holy grail or the perfect edge, the very nature of trading determined that money management, thus probability management, is the most important factor to success.
asiaprop, dozu: your opinions have been noted.
euclid: trading is not about predicting the future.
zenith: say bin-go!
dackster: i don't know "the grind" as it's probably a ultra-short term order flow distribution event. i am using higher timeframes to execute my trades. i am using the 10sma to define the shape of order flow after i get in on a 12 times lower management time. whenever it falls out of the shape supported by that, i'm out.
euclid: trading is not about predicting the future.
zenith: say bin-go!
dackster: i don't know "the grind" as it's probably a ultra-short term order flow distribution event. i am using higher timeframes to execute my trades. i am using the 10sma to define the shape of order flow after i get in on a 12 times lower management time. whenever it falls out of the shape supported by that, i'm out.
Nothing "is" something else. Logical positivists tried to explain this many years ago. So your statement is a red herring.
Trading involves taking positions in the market of varying durations, seconds, minutes, hours, days, weeks, months, etc. Profiting from a position depends on the future state of the market, whether that is the next second, minute, hour, etc.
The act of taking positions in the market with the aim of profiting is equivalent to making a commitment to a belief about the future state of the market.
Therefore, even if prediction is not involved directly, a trader indirectly commits to a prediction as soon as a trade a placed. This prediction has the form of a prior probability about the future state of the market. Of course, the trader can re-evaluate this probability, etc.
Whether predictions are possible is another story. Some people say that trading is not about predictions meaning that they are impossible. Even if this is true, a commitment to a prediction is always present.
I'm ready to accept this dogma if you provide an example that satisfies the scientific method constraints.
Specifically, since I do not discount that I may be missing something so important, pls provide an example of how money can be made in the market consistently without any predictive capacity. Consistently is the key word here.
by letting your winners run and cutting your loses short ( if one can do this consistently one doesn't care where price is headed ), Or by making a huge bet that hits ( which is how many of the so called gurus have done it ) or by random entry strategies or by letting the monkey throw the dart at the board....If you can predict where prices are going then show me your 100% hit ratio please...if not please explain why you can't predict 100% of the moves...or perhaps you can only predict some moves and not others, then you are back to not being able to predict. I can say for 10 years the lakers will win again and have a great chance of being right one year...what good will that do for my betting bankroll? back in 99-00 i saw a bunch of cuban kids in broadway make millions one making $400k in one trade and then quit once they lost 1/8 of their nut...certainly they made money in the market without being able to predict.
price going higher doesnt mean jack to where pirce will be going later at least not to how it pertains to your account...
That's right! And I would proceed:
1. Anything can happen.
2. You don't need to know what is going to happen next in order to make money.
3. There is a random distribution between wins and losses for any given set variables that define an adge.
4. An adge is nothing more than an indication of a higher probability of one thing happening over another.
5. Every moment in the market is unique.
Mark Douglas "Trading in the Zone"