Why Is The Obvious Not So Obvious?

Quote from nysestocks:

You see Rabbitone, people are not to be blamed for what they do and do not know!

Think about it - they can only deduce from the information that is available to them.

Applying logic to this situation, it is apparent that for one to make rapid progress one needs to be able to differentiate between what is "normal", and what is "abnormal".

Which one would you pick - the normal or the abnormal?
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Which one would I pick, The normal or the abnormal? You pose an excellent question. I will answer with a story. The story tells of a lesson I learned the hard way some 22 years back as a database administrator (DBA). The story goes like this.

I was in charge of all of the databases for a large steel mill. The databases ran the mill because it was in charge of clocking every worker in or out at every gate. A freak process crashed the databases and it shut down for 16 hours at tremendous cost (because workers had to be clocked in manually).

The week after the crash I was hauled into a meeting with the companies head DBA. He asked the question “Why didn’t you test for such a problem.” My answer was “It was too freak an occurrence to test for.” For using that answer I was reprimanded.

Later in private because we were good friends he relented some and told me “I understand how you feel an accident happened to me about 9 years ago like yours. I got my medicine just like you got yours and I deserved it…” That’s when I learned what I’m going to tell you….” And then he said “…it’s the unexpected or abnormal that rules business and our lives. It’s what we are judged on. Forget about testing what can happen and worry about how you will handle the abnormal problems. That going to define you for the rest of your life…”

So I will always pick abnormal. Because if you try and understand what is abnormal you can then define what is normal.

That is how I trade. I have spent countless hours in testing systems (5800 tests over 10 years) and trade management (6 procedures) weeding out the abnormal to defined what is normal in trading a daily automated system. I had no choice because there is no definition in any book or paper that describes in detail how to trade swings or positions in automation.

This is the reason traders fail today. They read a trading book and believe they can use it as a business model. I have yet to see any written business models for any type of trading that will work in any live environment. Most trading today is large sets of rules of thumb which are really no a business plan.

Many traders who succeed today don’t even understand why they have succeeded. Some are hanging by a thread. What most of them do is piece their business procedures together by trial and error. All it takes is one abnormality and they are broke.

So I agree with you 100% NyseStocks people are not to be blamed for what they do not know. We are fed like mushrooms. But that does not stop us from trading. That is why I have no sympathy for those who risk their money trading using business methods they do not attempt to review on their own.

This industry in my opinion is in its infancy. For most types of retail trading we have yet to methods or process that allows us to define and build trading as a business. Every other profession has reams on this subject. But all we get is bits and pieces of flotsam and jetsam to try to define ourselves as trading business entities. Here is a simple example. Try to find a good definition or any definition of trade management from any one?

And now I have a question for you, if you please. Name one book or author that as suitably defined, using business not trading terminology, what a trading business model should consist of?
 
Wow, there is a lot of pseudo trader-religion BS going on in this thread. People find it useful to get all philosophical about trading, and that's fine -- but don't bring the fucking pyramids into it.

Trading is work. There is no secret to hard work. Success has nothing to do with Ancient Egyptians, the Illuminati, the Plunge Protection Team, or the latest gimmick trading "system".

Remember, there are a lot of old market makers out there, but not very many old speculators.

1) FIND AN EDGE 2) Exploit it before it goes away (it will go away) 3) Look for another.

It is a boring game and has nothing to do with spirituality or pyramids. It will fluctuate.
 
Quote from Rabbitone:

Here is a simple example. Try to find a good definition or any definition of trade management from any one?

And now I have a question for you, if you please. Name one book or author that as suitably defined, using business not trading terminology, what a trading business model should consist of?
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Very interesting story Rabbitone!

In relation to trade management, it will vary depending on timeframe used.

There is a trader on another site that uses what I think is a sort of automated momentum system, and the logic behind this is very acceptable.

When the prices stop moving you automatically adjust positions to lock in profits - when they start moving again you adjust positions depending on the direction and magnitude of the move.

I am not sure how it works in fast markets, but at certain times it may be spot on?

So, the question!

"Name one book or author that as suitably defined, using business not trading terminology, what a trading business model should consist of?"

33344954.JPG


"If Mrs. Boyd granted her children unusual freedoms within her house, she was more than diligent in imparting rules for outside the house. She inculcated her children with a protective mechanism they remembered all their lives. Over and over again she said if people knew too much about the Boyd family they would use the knowledge in a critical manner. Never tell people what you don't want repeated, she preached. People will seek out your weaknesses and faults, so tell them only of your strong points. No family matters must ever be mentioned beyond the front door. This resulted in the Boyd children being extraordinarily reticent about all but the most inconsequential of family matters, even when they reached old age."
 
Quote from Fib Gridsman:

Wow, there is a lot of pseudo trader-religion BS going on in this thread. People find it useful to get all philosophical about trading, and that's fine -- but don't bring the fucking pyramids into it.

Trading is work. There is no secret to hard work. Success has nothing to do with Ancient Egyptians, the Illuminati, the Plunge Protection Team, or the latest gimmick trading "system".
More...

All together on 3……

1…… 2……. 3……. UUmmmmmmm…. UUmmmmmmm your getting sleepy your eyelids are getting heavy…. You see the price….. it’s calling you from the great pumpkin patch – wait oh damn I meant pyramid……

Buuuuuy me…Buuuuuy me - NOWWWWWW


Sorry Fib Gridsman I couldn’t resist – I’m just a dumb ole Redneck after all:)





NYSESTOCKS

I wonder if whales leave tracks – You ever wonder if whales leave tracks Sir

The Ocean is a mighty Big place

Redneck
 
Quote from Fib Gridsman:

Wow, there is a lot of pseudo trader-religion BS going on in this thread. People find it useful to get all philosophical about trading, and that's fine -- but don't bring the fucking pyramids into it.

Trading is work. There is no secret to hard work. Success has nothing to do with Ancient Egyptians, the Illuminati, the Plunge Protection Team, or the latest gimmick trading "system".

Remember, there are a lot of old market makers out there, but not very many old speculators.

1) FIND AN EDGE 2) Exploit it before it goes away (it will go away) 3) Look for another.

It is a boring game and has nothing to do with spirituality or pyramids. It will fluctuate.
More...

History is not a religion!

It is only by knowing about, and understanding great men, that one can ever hope to come anyway near such people.

Ignorance is of no use to anyone!

If you think History is rubbish then you will only see rubbish in History!

If you think History is educational, then you will learn a lot from Historical figures!

"There is a difference between knowing the path, and walking the path"
 
Quote from Redneck trader:

NYSESTOCKS

I wonder if whales leave tracks – You ever wonder if whales leave tracks Sir

Redneck
More...

Let me think about this one a bit!

A whale is a big mammal!

A whale makes one big splash when it is enjoying itself!

A whale can be clearly heard if the frequency is right!

A whale can be easily seen when it surfaces for air!

So RT, does a whale leave tracks, well, not the type of tracks that one would normally associate with the word, but yes, as the largest mammal in the sea, a whale definitely makes an impression whenever it surfaces, but for some with the right equipment, the cameras can be ready and waiting to get that perfect photo when it blows out its top hole :D
 
OODA

“There is nothing so practical as a good theory,” psychologist Kurt Lewin pointed out, and there are,
indeed, many practical implications of Boyd’s work, to cultivate decision making [within short periods
of market activity]. Traders must train like fighter pilots. They must learn to think and react rapidly in
the face of market maneuvers. The market adversary is attempting to enter their mind-time-space;
only superior information and processing of that information can produce consistent, positive results"
 
Quote from nysestocks:

Very interesting story Rabbitone!

In relation to trade management, it will vary depending on timeframe used.

There is a trader on another site that uses what I think is a sort of automated momentum system, and the logic behind this is very acceptable.

When the prices stop moving you automatically adjust positions to lock in profits - when they start moving again you adjust positions depending on the direction and magnitude of the move.

I am not sure how it works in fast markets, but at certain times it may be spot on?

So, the question!

"Name one book or author that as suitably defined, using business not trading terminology, what a trading business model should consist of?"

33344954.JPG


"If Mrs. Boyd granted her children unusual freedoms within her house, she was more than diligent in imparting rules for outside the house. She inculcated her children with a protective mechanism they remembered all their lives. Over and over again she said if people knew too much about the Boyd family they would use the knowledge in a critical manner. Never tell people what you don't want repeated, she preached. People will seek out your weaknesses and faults, so tell them only of your strong points. No family matters must ever be mentioned beyond the front door. This resulted in the Boyd children being extraordinarily reticent about all but the most inconsequential of family matters, even when they reached old age."
More...
Traders on many of these forums continue to use smoke and mirrors to talk about how they manage their trading as a business (I am not singling out any one). This happens because many traders do not think or write in business terms and that is why their trading businesses fail. For example I can use the terms inventory management, accounts receivables, accounts payable and cash flow management and get a better response from traders than using risk management and position sizing.

Examine the following question that might be asked of a trader. “When you did your business (trading) planning why didn’t you have controls in your inventory management (risk control) to prevent inventory (trading losses) from choking the businesses cash flow (account losses)?”

When I ask new traders to respond to this question the answer in trading jargon comes back as “I don’t know. The losses kind built up. Next thing I knew the money was gone…” But if were sitting down with these same traders (many who have advanced college degrees) and asked them to use business terminology – the tables turn and I would hear….”When I put my business (trading) plan in place I failed to have adequate controls to manage my cash flows (draw downs). It was my fault as a business manager. From my preliminary business study (testing the strategy) I had plenty of warning that a cash crunch could jeopardize my business. What I should have done is run extensive field tests (paper traded) of my strategy on several candidates (stocks) to see how if it confirmed my suspicions that the cash flows (draw downs) were going to be impaired. Another factor I noted during testing that also contributed to poor cash flow was an inadequate level of funding in the business (account) to begin with. When I examined my business records (log) this was apparent.”

What I refer to as trading religion are pieces of trading terminology I am forced to use in forums like trade management because we have no unified way to discuss trading as business that resonates with most traders. The business term “cash flow” has more impact on trader’s ears than using nebulous terms like “risk management”. Many traders on these forums have become “gun fighters” using “bullets” from popular authors to try to force their form of business mangement on other traders.

Trade management is not about controlling the strategies internal algorithms. It is the process the trader uses to control the trade from design through production in your trading business. Trade management is not time frame, trading style or experience dependent. It is the guts of the trading business. It is how a trader designs the set up or strategy to produce results. It is how the traders built a business case in testing. It is how the trader manages the trades risk in live trading. It is how the trader designs performance and metric business reviews of a trade to manage the expectancy of the trade so adequate cash flow is produced. It is how the trader plans out how to handle the abnormalities or deviations from the strategy design in live trading so the accounts cash stays reasonably in tact.

What I look for from the trade management forum is solid and practical methods to control my trades in business terminology and give beginning traders sound advice on managing their businesses. Until we can discuss trading using a common business language we will still have 95% of traders fail.
 
Quote from Rabbitone:



Trade management is not about controlling the strategies internal algorithms. It is the process the trader uses to control the trade from design through production in your trading business. Trade management is not time frame, trading style or experience dependent. It is the guts of the trading business. It is how a trader designs the set up or strategy to produce results. It is how the traders built a business case in testing. It is how the trader manages the trades risk in live trading. It is how the trader designs performance and metric business reviews of a trade to manage the expectancy of the trade so adequate cash flow is produced. It is how the trader plans out how to handle the abnormalities or deviations from the strategy design in live trading so the accounts cash stays reasonably in tact.

What I look for from the trade management forum is solid and practical methods to control my trades in business terminology and give beginning traders sound advice on managing their businesses. Until we can discuss trading using a common business language we will still have 95% of traders fail.
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AMEN!!!!!

Thankyou, Reverend Rabbitone

And now can we turn to our hyme book Page1....."Let it Be"

A great contribution to this thread,Rabbit.

As for the OP ...an intellectual snob who has not ever placed a trade on any stock or commodity exchange.

The "obvious that is not so obvious" is that every trade always starts with a negative liability....cost....commission/fees call it what you want...

Therefore, to put it in a simple context for the OP so that he may come down off his high horse, a trader/investor is always behind the 8 ball until the trader has achieved sufficient profit.

Deny this premis , OP and you need a hot poker up your arse to wake up......
 
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