Why Is The Obvious Not So Obvious?

Ricky Roma said:
No..it's not "just gambling"...if that's the way NS viewed it I'd be deeply dismayed ... the rabbit hole is deep.... the path is spiraling and dark....but the path CAN be known ;)
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Use the search tool to find all posts by "nysestocks" containing the word "gambling". Repeat the search for "The Expert" and the "The Oracle" if you like.

Eg.
If you really want to make money, then accept the fact that trading is gambling, and if you can accomplish that one simple goal, then you will stop reading all the rubbish that sends you up the wrong path!
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It's quite liberating when the full realization of this sinks in.
 
nysestocks said:
Why Is The Obvious Not So Obvious?

I have read thru some of the recent and distant posts in this section, and have come to the conclusion that; the obvious is not so obvious to many!

There appears to be a lot of textbook information being thrown around, especially in relation to position sizing and risk management.

What every trader has to realise, is that all the risk management and position sizing techniques in the world are of no use what so ever, unless the trader is aware of the obvious pre-requisite to trading any market.

It will be very interesting to see what answers the many traders come up with for the obvious, those with little and lots of experience alike!
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My two cents. . . I talk about psychology a lot and think that it's the most key part of trading. But risk is key too. When it comes to risk, I have seen many traders starting out with a plan of shooting for a 1/1 risk/reward ratio, or worse.

It is a basic concept to have better odds when you plan your trades. Even if you don't fully succeed with a 1/3 gain in your trades, as least start with an intention to be 1/3 risk/reward.

Be clear that what means as far as where you get into the trade and where you get out. If all your trades are 1/3 and you win half of them, in theory you will make money.

This is really basic, but is often overlooked or misunderstood. Or, there is an idea that 1/1 trades are okay. Unless you have a really high win-ratio, I think a 1/1 expectation sets you up for failure.
 
Wide Tailz said:
I'll go ahead state the obvious, since this thread is very old, and devolved into a guru contest.

OP left many clues. 95% lose at short term trading, 5% win. Money flows from the many to the few. When one trader loses, another wins. Therefore the 5% manipulate the 95% (much like in society) toward falling into their innate traps of human nature. The 5% take the other side of the mistakes the 95% keep making. This is as much as I will say.

On the flip side, since trading is ultimately a social contest, the study of sociology can be adapted to see it from two perspectives: functionalist and conflict perspective (for real, this is what they indoctrinate you into when you take the classes).

OP was trolling everyone with hints to see it from the conflict perspective, and here is the functionalist perspective: the market pays you to keep it alive. If "monkeys" had the kind of money the 5% do, they would destroy the market by destabilizing the price, sending it off in huge trends, cornering commodities and creating mayhem for the hedgers who actually need the market for good business practices. The 5% do the opposite. They correct the mistakes the 95% keep making, over and over and over........
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When I first started trading it was "obvious" to me that the ultimate buyer of my positions would be losers. I struggled morally with this for many years. And even now after learning some positive expectancy setups, I still think my subconscious mind prevents me from holding winners because I do not want to do business with anyone unless it is beneficial to all parties.

"Take a little out of the middle"......

The crowd is right during the trend and wrong at both ends.

The best party to go to is one where everyone is having a good time.

And "the Obvious" that nysestocks was showing on his charts was horizontal support and resistance. This is the mechanical side of it.

The spiritual side of it is you need to know who is going to buy your position at the end and why. All business owners know this and so should you, the speculator.

I've sucked at trading for 10 years because I refuse to make my counterparties losers.

However the hedgers are the third and hidden element to the moral equation that makes it all right. Winning traders smooth out the spikes in the market so real businesses and producers can monetize their future products and cash flow.

All the chart pattens in the world just distracted me from this obvious reality.
 
Wide Tailz said:
I've sucked at trading for 10 years because I refuse to make my counterparties losers.
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I think a lot of people look at the market with the "for every winner there has to be a loser" mentality. While this, in essence, is true of course, I don't it's a healthy mindset to carry into this ultimate game of human psychology.

This industry spends billions of dollars to lure us into their world of red and green flashing lights. Free charting facilities and commission rebates instead of free sandwiches and suite upgrades. Would anyone feel sorry for the house if they walked in and dumped 100 bucks on red 18 and the ball just happened to land there?

To picture every winning trader as taking money off another small trader is wrong. If I am not the counter party to that trader's position, them somebody else will be. The only way for that trader to AVOID future losses is to learn the game....like the age old story about teaching someone to fish. Hard truth.

The "charts" are cleverly designed to inflict maximum pain on any participant. Imagine if 90% of short term participants actually won instead of lost....would we even have markets to trade? Where would the new money come from?

SEE where the stoplosses are sitting and either counter-trade them (prepare for many small losses v spectacular R:R), or as you say, wait until the party is in full swing and everyone is having a good time. I think we all know now 3/4/5 hits on support or resistance doesn't make it stronger..it's just trying to etch a line in your brain.
 
Ricky Roma said:
What if....The Obvious only really sussed out what was obvious with regard to the niche market of NYSE Stocks?

What if... no other data other than price and time are needed to trade ANY market ? No volume, no indicators bla bla bla.

What if... the future targets of price on ANY market are known in advance? (OK, price will have to take the Scenic Tourist route to knock as many off course as possible or it would be too OBVIOUS - but it MUST respect certain boundaries).

What if... all price charts LOOK the same because they WORK the same? And the algorithm that controls them ALL is just designed to take advantage of human psychology..fear and greed?

What if....all fancy charting programs, 24 hr financial news channels with "Breaking News", TV Stock Gurus, NFP data that flip/flops you out of your trade while seeming to react in a "random" way to the data released..were all just introduced to feed the insatiable appetite of the human mind and convince it to come to the table and put down it's chips?

What if... all those years ago, the powers that be decided that they will control the markets...and they didn't for one minute think about committing their billions to some randomly priced casino roulette game? (OK, they have an edge with the 2 green numbers...but NOT the kind of EDGE these guys were thinking about)

What if .... there's a chart pattern, that HAS to happen, at all those target turning points, that they just can't hide (regardless of all the fancy coloured indicators they've got you to paint all over and obscure your chart)?


Just some Random thoughts Obviously.......or are they? :)))))
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i love it !
 
The obvious pre-requisite to making GOOD money trading is spelled out in this post by "The Expert":

https://www.elitetrader.com/et/thre...-trader-study-ta.197367/page-127#post-2893420

If you were hoping for something more specific than this, forget it. No-one who has found one of the "very few ways" is ever going to reveal details. I know I wouldn't!

However, personally, I'm eternally grateful that they have saved me from wasting years on the "usual tripe". :)

Time to engage my half a brain... :D
 
baron193 said:
no better risk management than getting your entry right.....
or am i wrong?
: )
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Years have passed since the 1st day, I'd perused this forum, so as a courtesy cuz I don't frequent this forum anymore for a long while, I reply why risk mgmt is trumping everything. It's very logical & common sense.
1) No one can have correct entry at all time. There will be a bad entry some where down the line.
2) To safeguard against own demise due to errors & mistakes which will 100% will happen, risk mgmt is a must.
3) With correct risk & reward mgmt, one can make money at an absolute uncertain level of 50%. Above 50% or below 50%, it's a defined certainty.
4) hence, works on risk mgmt first, whatever to improve next will only make the cake sweeter.
5) Yes, as an anecdote, positive expectancy of 66% to 87% is very achievable in regular basis so good risk mgmt is a must to handle the other parts. Or else.

PS: It sounds simple but it isn't because by definition, if you know your risk & reward, you already know your entry & exit under that particular condition.
 
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