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

[themickey]

If you have rules it can be backtested. Or do you get out without following rules???

Could only be backtested if it could be coded.
This couldnt be coded, like attempting to code a painting.

 

[BONECRUSHER]

CORRECT

GUARANTEES???? Are you messed up in the head????????

 

[Pekelo]

When you are shorting a company that eventually goes bankrupt (its value to zero), it almost doesn't matter if you started at $100, $10 or $5, they all make 100% return.

 

[SteveM]

Trader 1: has no edge/screentime whatsoever, randomly enters the market during the day, yet has rigid stop loss/profit targets and adheres to them religiously once they put on a trade.

Trader 2: has significant screentime/edge, and only enters the market when their edge tells them to, yet constantly lowers/removes stop loss orders from the market and constantly lowers/ignores profit targets once they have entered a trade.

Trader 1 will finish the week,month,year with more money than trader 2.

 

[Bob4knowledge]

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

You only need to know 1 thing to make money. Exiting is the only complicated part about trading.

 

[BONECRUSHER]

Trader 1: has no edge/screentime whatsoever, randomly enters the market during the day, yet has rigid stop loss/profit targets and adheres to them religiously once they put on a trade.

Trader 2: has significant screentime/edge, and only enters the market when their edge tells them to, yet constantly lowers/removes stop loss orders from the market and constantly lowers/ignores profit targets once they have entered a trade.

Trader 1 will finish the week,month,year with more money than trader 2.

I agree trader 2 is retarded because they apparently have a SIGNIFICANT EDGE in this scenario, yet they FUCK it up over and over! People really do that? The traders I've known who constantly throw discipline out the window never had an edge in the first place and definitely not a significant edge.

 

[Simples]

I agree trader 2 is retarded because they apparently have a SIGNIFICANT EDGE in this scenario, yet they FUCK it up over and over! People really do that? The traders I've known who constantly throw discipline out the window never had an edge in the first place and definitely not a significant edge.

There are countless ways to f up trading. It's either because of bad trading plan or flaws in execution. The latter needs to be addressed in the former. Typically the trading plan sucks in some way that creates too much loss. This is most clear in mechanical trading where the code is the plan, thus there's much less room for lack of discipline. It is a much longer path however, because of so many pitfalls and possibilities for flaws, but can at least be addressed in robust ways over time instead of getting that mother of all losses.

 

[viruscore1]

Be aware of analyst that recommend stocks or investments that they themselves do not own. Ask financial advisers to disclose their (short term) personal position and results.

 

[murray t turtle]

Can you still make enough to make it worthwhile if you "trade small and trade not often"?

Regards,

Yes , trade-invest smaller than GM, DAL, LEH + Bear Stearns.I like imported food but homegrown is better, so i could do without a lot of imported food, if i had to.100%/+ of foreclosures are caused by excess debt.Thanks for the question

 

[SoesWasBetter]

That 94% of ET posters have EDGE but never reveal it.