What's the most counter-intuitive thing you learned in trading?

[pinetboltz]

A few come to mind, which were all pretty counter-intuitive to me at some point in time:

- Winning percentages are not as important as Profit/Loss ratio, in terms of how the long-run equity curve for the strategy will look like

- Although alpha is a lot cooler to talk about, beta can be a whole lot more profitable

- Most academic finance papers were not written by / are not intended for use by industry practitioners

 

[FreakofNature]

Above Intelligent people have a harder journey into "getting it".

 

[ET180]

Above Intelligent people have a harder journey into "getting it".

How would you know? ;-)

For me, the most counter-intuitive thing has been the power of trend. Losers keep going lower, winners keep going higher. Markets over-correct most of the time.

Traders realize that efficient market theory is bullshit. XBI for example. Look at how it is impacted by Trump's tweets. Trading around 57 earlier this year and now 72ish on no news. It's just a biotech ETF comprised of hundreds of companies. How could market misprice it so drastically in such a short amount of time. Earlier this year, one could profit from XBI by shorting it, then bribing someone in the press pool to ask Trump or his press secretary during a press conference what he thinks of drug prices. Surprised no fund tried that.

 

[FreakofNature]

How would you know? ;-)

For me, the most counter-intuitive thing has been the power of trend. Losers keep going lower, winners keep going higher. Markets over-correct most of the time.

Traders realize that efficient market theory is bullshit. XBI for example. Look at how it is impacted by Trump's tweets. Trading around 57 earlier this year and now 72ish on no news. It's just a biotech ETF comprised of hundreds of companies. How could market misprice it so drastically in such a short amount of time. Earlier this year, one could profit from XBI by shorting it, then bribing someone in the press pool to ask Trump or his press secretary during a press conference what he thinks of drug prices. Surprised no fund tried that.

The need to be right, is a killer for the clever ones.

 

[lawrence-lugar]

A few come to mind, which were all pretty counter-intuitive to me at some point in time:

As far as I'm concerned...Everything, to some extent or degree, is counter-intuitive;

Every new, and even experienced, trader...should always learn or be to: FREE YOUR MIND

There's alot of poison and random noise out there that will just lead you astray,
And I'm talking about Everyone collectively...not just the obvious garbage salesmen.

 

[Simples]

Buy low - sell high. Sounds simple, should be simple perhaps. However, if you do a www-search on "weakness", that is what you will find - and more and more of it. So it is with most markets too. Most of the cheapest stuff is just garbage headed straight for the bin.

 

[Morpheouso]

download a load of back data (i only trade Forex) for pretty much any entry point, calculate the probability of the price being higher by n pips or lower by n pips, IE a 1:1 ratio stop to target, choose virtually any entry point you like, you will find the chances of +n pips or -n pips are almost always 50% the market is random 99.9% of the time. There are edges to be found but I am frankly sceptical that the vast majority of retail traders are finding them.

 

[tommcginnis]

THE. MOST. "counter-intuitive" thing??

Hmmmmm. There are a few candidates. But the one that blows my mind, every single day.....

 

[speedo]

download a load of back data (i only trade Forex) for pretty much any entry point, calculate the probability of the price being higher by n pips or lower by n pips, IE a 1:1 ratio stop to target, choose virtually any entry point you like, you will find the chances of +n pips or -n pips are almost always 50% the market is random 99.9% of the time. There are edges to be found but I am frankly sceptical that the vast majority of retail traders are finding them.

Either you are full of it..ala Surf or you have yet to do the work necessary.

 

[Morpheouso]

On the

Either you are full of it..ala Surf or you have yet to do the work necessary.

Actually I have done the work required, I live exclusively from my trading income. My point is people see patterns where there are none, that is pretty much the definition of counter intuitive.