Why Johnny cant trade..........

Originally posted by OldTrader
Johnny can't trade because Johnny mistakenly thinks he/she can scalp 1-2 points on a trade successfully.

There might be someone who can do it....but most can't.

1-2 points is random noise in today's SP market. Further, it's hard to set a loss that would be even smaller than your gain...thus forcing you to be right more times than you're wrong. That's tough when you're dealing with random noise. Now add the commissions in...and voila...Johnny loses therefore Johnny can't trade.

In actuality, Johnny never gave himself a chance. He tried to game the stock market like it was another one of those video machines he grew up playing. He mistakenly thought he didn't need to KNOW anything about stocks, how the market functions, etc. He figured the market was something that required constant motion...pushing buttons, watching one minute charts leap up and down, etc etc. Lost in all of this were the time honored routes to big money....using your intelligence, your reasoning, waiting patiently for your opportunities, playing those opportunities for what they are worth....NOT for 1-2 points.

Johnny can't trade because Johnny is still trying to find the holy grail. He actually is looking for some type of system that he can automatically come in each day and grind out a small fortune.

Successful trading is all about thought, reasoning, intelligence, patience....all the things that Johnny has never given a thought too.

OldTrader
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Dearest Brother OldTrader,

Some Johnnys make a comfortable living taking their 1-2 points on futures or their 10 cents on stocks... these Johnnys know when to stay in cash and when the odds are in their favor, thereby securing at least a 70% success rate in their scalping... Johnny can make a successful living scalping if he is disciplined, understands probabilities, expectancy and other risk considerations... smart Johnnys smile contentedly at others who feel that 1minute charts are noise, since smart Johnnys somehow manage to make a profitable living from trading this very noise... smart Johnnys will readily concede that there is not much thought involved in scalping, with the trades being somewhat automatic as a result of conditioned reflexes through a lot of experience... these Johnnys appreciate that there are many ways to make money in the market, including holding a trade for a long time to extract its "full potential"... but smart Johnnys understand statistics and have calculated that the long-run aggregate statistical expectancy for scalping can be equivalent to longer-term intraday strategies... so it all boils down to aligning psychological traits with trading style... if a Johnny hates a high losing frequency, he will gravitate towards scalping... if a Johnny hates to book profits and then see a position run to the moon without him, he will gravitate towards holding stuff for longer... and it's when Johnny fails to accurately align his psychological traits with a given strategy that he is setting himself up for failure...

With fraternal greetings,
Candletrader
 
Originally posted by candletrader


if a Johnny hates a high losing frequency, he will gravitate towards scalping... if a Johnny hates to book profits and then see a position run to the moon without him, he will gravitate towards holding stuff for longer... and it's when Johnny fails to accurately align his psychological traits with a given strategy that he is setting himself up for failure...
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Though many Johnnies, apparently, find it next to impossible to make up their minds between one and the other. Or they switch back and forth, back and forth. They get caught unexpectedly by a trend day, during which they incorporated their scalping strategy, so they switch to their trending strategy the following day, which, of course, will be chop. Then they give up and go back to paper trading, at which everything works out just fine. But when they go back to real trades, nothing works. Because the market has changed, and they're using the wrong tactic again.

Always a day late. Always reactive. Always following, though usually following the wrong crowd down the wrong road.

As for whether or not something can or can't be done, those who claim that something can't be done are saying only that they themselves can't do it (daytraders can't make money). They assume that what applies to them applies to everybody. Wrong.

--Db
 
A Johnny who keeps on switching styles has got real problems with identifying his psychological traits... a dose of Mark Douglas is recommended...
 
Originally posted by candletrader
A Johnny who keeps on switching styles has got real problems with identifying his psychological traits... a dose of Mark Douglas is recommended...
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Agree on Douglas. Justin Mamis' The Nature of Risk is also good.

--Db
 
Originally posted by 2Good2Care


Candle, read the thread header & oldtrder's post again. This isn't about those who can trde (the minority) it' about why the average guy fails when he attempt to trade actively. The average guy will fail when attempting to trade one minute charts. It's obvious you refer to yorself in your post, well congrats but this thread isn't about you. It's about mr average "johnny" trader. And the everage johnny can't trade one minute charts or anything else for that matter (see GG)
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Oldtrader was making the case for longer trades versus scalping... I was suggesting that scalping is just as viable as longer trades... in a nutshell, a big reason why Johnny fails is his failure to align psychological traits with trading style... this was my conclusion and my contribution to this thread, a point which is most definitely not off topic... go back and read what I said carefully...
 
Originally posted by candletrader


Oldtrader was making the case for longer trades versus scalping... I was suggesting that scalping is just as viable as longer trades... in a nutshell, a big reason why Johnny fails is his failure to align psychological traits with trading style... this was my conclusion and my contribution to this thread, a point which is most definitely not off topic... go back and read what I said carefully...
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I'll have to go with candletrader on this one. Scalping in and of itself is no more difficult than any other trading tactic, anymore than longterm hold is a sure road to profits. Success depends on doing what one is best at. If that happens to be scalping, so be it.

One man's noise is another man's pattern. Bumper sticker advice is of no help if it doesn't address the central issue, which candletrader is attempting to do.

--Db
 
Originally posted by 2Good2Care



But to maintain meaning to this thread and to follow it's line of inquiry, "johnny" WILL have more difficulty trading shorter time frames because "johnnies" psyche is NOT capable or prepared ...hence the thread header ..."why can't johnny trade"
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You're making an unjustified jump here. You're assuming that "Johnny will have more difficulty trading shorter timeframes because his psyche is not capable or prepared". But if he is not in "alignment", the timeframe is irrelevant. He will have just as much difficulty trading a longer timeframe.

Therefore, again, his problem is a lack of compatibility, not a choice of timeframe per se.

If the thrust of the thread is that Johnny can't trade because he's chosen a "bad" timeframe, that's one thing. But if the thrust is that he can't trade because he chose a shorter timeframe rather than a longer one, that's a debatable point.

--Db
 
Originally posted by 2Good2Care


No, it is not debatable, it is a FACT. Shorter time frames ARE without a doubt inherently much more difficult to master and deal with psychologically.

As inandlong aptly put it ...with daytrading short time frames "every sphincter in your body is puckered" (i paraphrase here)
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Its your fact... it aint 'a' categorical fact.... moreover, it is debatable, since that is what we are doing here :) ... indeed your blanket comment above simply reinforces my argument about the alignment of personality traits with trading style... evidently you would be more comfortable holding for longer periods of time than scalping, so I would advise you against the latter... thank you for reinforcing my case without even realising you were doing so...
 
Originally posted by 2Good2Care


No, it is not debatable, it is a FACT. Shorter time frames ARE without a doubt inherently much more difficult to master and deal with psychologically.
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Only to those who find them to be so. Those who are aligned with the demands of shorter timeframes will find them to be much easier to trade than longer timeframes, which have their own set of demands and expectations.

--Db
 
Originally posted by dbphoenix


Only to those who find them to be so. Those who are aligned with the demands of shorter timeframes will find them to be much easier to trade than longer timeframes, which have their own set of demands and expectations.

--Db
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Precisely... couldnt have said it better myself!
 
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