Why Is The Obvious Not So Obvious?

MrScalper said:
You are barking up the wrong tree..whether you believe it or not is up to you!

You can make money trading by just tossing a coin to go long or short..providing..you have strict money management rules and "stick to it". If you do not believe me..then try it out..only way..forget about what anyone says..go and prove it to yourself!!!!

Now..once you prove it to yourself..or disprove it..come back and we will analyze your tosses and risk taken..all will be revealed in relation to how well you carried out the tasks.

In case you want to try it..as most will not..that I am certain of..here are the rules.

1. Divide your capital into at least 10 pieces..I would divide it into at least 50 for swing trades..into 100 for daytrades..but that is me..the choice is yours..but as the key is proper risk management then you must have a meaningful sample of trades to analyze.

2. Decide what you want to use for stop loss amount and profit target amount..or if you will use the charts to take your loss or profit based on your chart reading skills..remember..once you start you will be always in the market..either long or short..so..after your first entry..when your get stopped out..or win..you will toss the coin again and re-enter immediately..heads for long..tails for short.

3. Do it for as long as the money lasts..or until you have made an adequate number of trades for sampling..then the results can be looked at.

Note:as the key is both dividing your capital (the correct portions based on what style you pick..as in position..swing or daytrading)..and you stop loss and take profit criteria..spend some time on these..you do not have to worry one little bit about direction..as that is covered by the coin toss.

I will be very surprised if one person actually does it..but I am often wrong :)
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Here is what I did in Feb 2017: Look at 10 year SPY, from Feb 2007 to Feb 2017, every day recorded open, high, low and close. Bought 100 shares in three different scenarios: bought on open every day and sold on close at the end of everyday; bought on open on the first of every month and sold on close at the end of every month; same for once a year and compared to buy and hold. Here is the outcome:

upload_2017-8-2_19-53-4.png


These were without commissions. If you factored in commissions and bid/ask spread, trading 1/day would result in a loss, the others were all profitable. This is almost the same as throwing darts (randomly buy and sell) but because of the upward bias of SPY over the 10 years, all trades were profitable without commissions. I started day trading way back but did the same test back in 2003, after that never day traded again.
 
ironchef said:
Here is what I did in Feb 2017: Look at 10 year SPY, from Feb 2007 to Feb 2017, every day recorded open, high, low and close. Bought 100 shares in three different scenarios: bought on open every day and sold on close at the end of everyday; bought on open on the first of every month and sold on close at the end of every month; same for once a year and compared to buy and hold. Here is the outcome:

View attachment 176315

These were without commissions. If you factored in commissions and bid/ask spread, trading 1/day would result in a loss, the others were all profitable. This is almost the same as throwing darts (randomly buy and sell) but because of the upward bias of SPY over the 10 years, all trades were profitable without commissions. I started day trading way back but did the same test back in 2003, after that never day traded again.
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The point is.. picking the right direction..or prediction..really has very little to do with consistent profits..they come from your ability to adapt to ever changing situations..and one way to get good at adapting..is to get good at chart reading!

I would say that daytrading is ok once you have your plan well thought out..if you are prone to not being able to take a loss..like Mr eug described in his honest post..then you will be parted from your money very quickly.
 
MrScalper said:
The point is.. picking the right direction..or prediction..really has very little to do with consistent profits..they come from your ability to adapt to ever changing situations..and one way to get good at adapting..is to get good at chart reading!
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It is easier for you to say than for me to do.:vomit:

But thanks anyway.
 
ironchef said:
It is easier for you to say than for me to do.:vomit:

But thanks anyway.
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Well..it is far from easy for me actually..in fact..as mentioned..some times I just walk away..might be for months on end..as I know what will happen if I don't!

It is far more important to have a clear head and no high notions.. direction is really irrelevant..it is your silly ways of thinking that cost you the big money..and that I know from experience.

I explained to someone in detail..what I thought was the best way to daytrade..even showed them some live trades..do you think they could do it..no way..and the same goes for most who try..it takes a lot of losing and winning trades before it finally sinks in..why do you think I walk away at times :)
 
Ed48 said:
On the other hand, according to the OP...

https://www.elitetrader.com/et/threads/why-is-the-obvious-not-so-obvious.151802/page-29#post-2355717

"Trade entry is the most important thing ever, but this should be "obvious" to even a child, as if you get it wrong from the start, the odds are stacked way against you"
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Based on my own trading outcome, I actually agree with you and this statement.

The thing I am trying to figure out is how to select a good entry. Watching TA and charts did not seem to help. As an example, one chart I have been watching is TEVA. I couldn't find any warning from watching the charts or from all the TA that the stock would drop 25% in one day?

Maybe someone can do a post-hoc analysis and point it out to me.

Thanks.
 
ironchef said:
Based on my own trading outcome, I actually agree with you and this statement.

The thing I am trying to figure out is how to select a good entry. Watching TA and charts did not seem to help. As an example, one chart I have been watching is TEVA. I couldn't find any warning from watching the charts or from all the TA that the stock would drop 25% in one day?

Maybe someone can do a post-hoc analysis and point it out to me.

Thanks.
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TA can't, and it's not meant to, tell you if a stock is going to drop xx% the next day.
The stock was obviously in a downtrend. The first indication of a continuation of the downtrend came with the end of the 6/01 to 7/03 corrective move. Now, explaining the point of entry that you are looking for to short in this case would open up a can of worms by having to explain the basics of price movement .
I don't know what type of TA you were using to determine an entry point. You might care to explain this, as if it was some way out on the limb offshoot of TA, that may be what's causing your difficulty .
 
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