Why Is The Obvious Not So Obvious?

[Wide Tailz]

Yes I did know and I also know it has nothing to do with hard right edge. Same with the above boxing analogy.

Do you think you sound successful by denigrating (muppet) others and talking without saying much of value?

Not at all, sir. I use the M-word for the ones who are ready to see themselves as they are, and need to hear the truth. It describes people who are easily manipulated by others.

You may have found your own answer to providing a service the market will consistently pay for, and it may not be the "obvious" I am referring to here, and I salute you if so. For me, the analogies presented are right over the target for what I found to work best.

Risk management is a psychological state of mind, not a stop loss.

 

[Vindago]

Risk management comes from understanding how price moves, same as good entry versus bad entry. This is the easy part that comes with some experience and observation, than comes the hard part: killing the muppet that exist in all of us

 

[Ed48]

Risk management can make a profitable system unprofitable, but it can never make an unprofitable system profitable.

I wouldn't have expected that but then again my friend is anecdotal evidence of the latter.

So, the "only" purpose of risk management and position sizing is to smooth out the equity curve and avoid catastrophic losses, massive drawdowns, blow-ups?

 

[SunTrader]

I would say risk mis-management can make a profitable system unprofitable but then who in their right mind would use it that way.

But can it always make an unprofitable system profitable? Of course not. Though in many cases if properly done it can.

Blanket statement words such as always, never (cough, cough), will, should are the signs of someone who doesn't know what they are talking about with reference to trading and what it is all about - probabilities.

 

[SunTrader]

Not at all, sir. I use the M-word for the ..........

Risk management is a psychological state of mind, not a stop loss.

Stop losses, hard ones, I consider trade management. Don't know what you mean by psy state of mind?

Risk is of an event happening - or not.

 

[Ed48]

But can it always make an unprofitable system profitable? Of course not. Though in many cases if properly done it can.

I guess the question is, how profitable? I would have thought it very unlikely that risk management could turn a poor system into a stellar performer.

Which is why I reckon the "obvious" is: if you want to achieve an exceptionally good P&L, you better start with an exceptionally good system.

 

[SunTrader]

I guess the question is, how profitable? I would have thought it very unlikely that risk management could turn a poor system into a stellar performer.

Which is why I reckon the "obvious" is: if you want to achieve an exceptionally good P&L, you better start with an exceptionally good system.

There is an in between scenario ya know.

A whole lot in between poor and stellar.

 

[Ed48]

There is an in between scenario ya know.

A whole lot in between poor and stellar.

Yes but I'm guessing the majority are down at the poor end.

 

[JohnnyBGoode]

It took me 15 YEARS to learn what's 'obvious'. When I did, I near threw up. On that day, I realized the true depth of OP's statement: "It is a cruel and callous world" (page 11).

Below, I provide you (the reader) with information and ask you self-reflective questions. I strongly encourage you to think them through.

I want you to image how Jesse Livermore, Warren Buffet, Jim Cramer, John Lebed, Marty Schwartz and Ross Cameron (Google them if you do not know their names) would behave after buying a stock. What are their follow-up actions? Do they sit on their hands and hold their breath? Do they keep their eyes glued to the chart? Do they pray to the market gods?.. NO! .. What do they do?

OP uses an acronym near page 33: C.O.N.T.R.O.L. You need to be in control - but in control of what? Are the above mentioned traders in control? And if they are, what do they control?

If a trader (or investor) buys a stock at $20, wouldn't it be wonderful if there was an obvious action they could take to 'encourage' the stock to rise? And if there was such an action, what do you think it would be?.. Do our famous traders have this ability? Do you?

Lastly, what does the market (or a trader) need for a stock price to rise? Well.. it's obvious - demand! Where does that demand come from? Is it possible to generate?

OP highlights an important characteristic of game play (and cons) on page 9: You only get smarter by playing a smarter opponent. Just remember dear trader: Trading is a zero sum game. I only win if you lose.

It is most definitely "a cruel and callous world".

 

[Vindago]

It took me 15 YEARS to learn what's 'obvious'. When I did, I near threw up. On that day, I realized the true depth of OP's statement: "It is a cruel and callous world" (page 11).

Below, I provide you (the reader) with information and ask you self-reflective questions. I strongly encourage you to think them through.

I want you to image how Jesse Livermore, Warren Buffet, Jim Cramer, John Lebed, Marty Schwartz and Ross Cameron (Google them if you do not know their names) would behave after buying a stock. What are their follow-up actions? Do they sit on their hands and hold their breath? Do they keep their eyes glued to the chart? Do they pray to the market gods?.. NO! .. What do they do?

OP uses an acronym near page 33: C.O.N.T.R.O.L. You need to be in control - but in control of what? Are the above mentioned traders in control? And if they are, what do they control?

If a trader (or investor) buys a stock at $20, wouldn't it be wonderful if there was an obvious action they could take to 'encourage' the stock to rise? And if there was such an action, what do you think it would be?.. Do our famous traders have this ability? Do you?

Lastly, what does the market (or a trader) need for a stock price to rise? Well.. it's obvious - demand! Where does that demand come from? Is it possible to generate?

OP highlights an important characteristic of game play (and cons) on page 9: You only get smarter by playing a smarter opponent. Just remember dear trader: Trading is a zero sum game. I only win if you lose.

It is most definitely "a cruel and callous world".

Very interesting post, I will give my 2cents:

It took me 15 YEARS to learn what's 'obvious'. When I did, I near threw up. On that day, I realized the true depth of OP's statement: "It is a cruel and callous world" (page 11).

Below, I provide you (the reader) with information and ask you self-reflective questions. I strongly encourage you to think them through.

I want you to image how Jesse Livermore, Warren Buffet, Jim Cramer, John Lebed, Marty Schwartz and Ross Cameron (Google them if you do not know their names) would behave after buying a stock. What are their follow-up actions? Do they sit on their hands and hold their breath? Do they keep their eyes glued to the chart? Do they pray to the market gods?.. NO! .. What do they do? They'll make sure their action become profitable, how? well they have the capital to make (almost) sure of it

OP uses an acronym near page 33: C.O.N.T.R.O.L. You need to be in control - but in control of what? Are the above mentioned traders in control? And if they are, what do they control? Well, it is obvious, they control their trade and (to a certain extent) the instrument on which it is done

If a trader (or investor) buys a stock at $20, wouldn't it be wonderful if there was an obvious action they could take to 'encourage' the stock to rise? And if there was such an action, what do you think it would be?.. Do our famous traders have this ability? Do you? Well, if I had the capital to impact the price of an instrument I would do what I need to get the price moving in the direction I want to until I need it to do something else. Obviously no retail trader has the least chance to do any of this.

Lastly, what does the market (or a trader) need for a stock price to rise? Well.. it's obvious - demand! Where does that demand come from? Is it possible to generate? Well since price going up will attract trader into Long trades I would make the price start going up, than once the herd is hooked I will just need to keep the herd going until I reach a price range that is good for me to sell what I bought at a lower price, you know BLASH

OP highlights an important characteristic of game play (and cons) on page 9: You only get smarter by playing a smarter opponent. Just remember dear trader: Trading is a zero sum game. I only win if you lose.