Why waste your time?

[volpri]

Probability waxes and wanes with the ebb & flow of market mood.
Yesterday's probability wont be today's.

Attention all noobs and veteran traders...Make haste and hear this. Nothing is more the truth about the markets than this statement.

 

[d08]

You probably know that Goldman Sachs only has 1-3 losing days each year these few years. Of course they are in a different game level.

GS has so few losing days because they are ridiculously diversified. That's not in any way reachable for a single trader. That's sort of like comparing a single truck driver delivering food to some global freight company.

Lets put it in this way, if you have a system that gives you signals that are 95% probability to be winner, then if you enter 10 to 20 trades in a day with the same risk limit, you are surely to have a profitable day. For a single trade, there is only probability, that is correct.

There's nothing to give you 95% winners over the long-term, not in directional trading anyway. Also, the win rate is one completely useless metric to base anything on. When you stop looking at it, you will know you're on the right track.

When you confidence becomes permanent as what Nodoji said as surely as sun rise and sun set, is when you wake up every day and you are sure you are going to make some profits from the market no matter it turns out, or almost everyday, at least every week.

I'm possibly the only loser here to doesn't reach these goals but I care more about monthly and annual returns. And for me, it's rather the size of losing weeks that matters, not how many winners I have. You have have better results while actually having more fluctuation in your curve, it sounds counter-intuitive but it's true.

 

[Visaria]

Seriously? You are comparing a single proprietary strategy to a multi-strategy, multi-asset-class, multiple geography market maker?

When i was a market maker, I think i only had 1 losing day in a month on average.

PS. What is this infatuation with high win rates here?

Human (and indeed animal) psychology. People (and animals) don't like to lose. Risk aversion.

 

[Visaria]

I'm possibly the only loser here to doesn't reach these goals but I care more about monthly and annual returns. And for me, it's rather the size of losing weeks that matters, not how many winners I have. You have have better results while actually having more fluctuation in your curve, it sounds counter-intuitive but it's true.

Great comment. Smooth equity curves FEEL good though*. For those who can't handle a volatile equity curve, just trade a smaller account.

*actually it's more the other way around...volatile equity curves feel bad!

 

[themickey]

If you are a long term EOD trader and you make a point of buying the dips, a high win rate becomes extremely satisfying and reasuring.
As pointed out some while back, if you were holding 11 positions (I currently hold 23) and one position dropped instantly 25% in a minute, you only needed to make 2.5% over its holding period on your other 10 positions and you are one happy little chappy or chappette.

 

[d08]

If you are a long term EOD trader and you make a point of buying the dips, a high win rate becomes extremely satisfying and reasuring.
As pointed out some while back, if you were holding 11 positions (I currently hold 23) and one position dropped instantly 25% in a minute, you only needed to make 2.5% over its holding period on your other 10 positions and you are one happy little chappy or chappette.

Dip buyers are fantastic when you have a "normal" slightly uptrending market and correlation among listings is relatively low (like in 2012-2017). When everything is being dumped and almost perfectly correlated (like in 2008), you can have 11/11 losers easily at maximum losses. On top of that, it can happen for long periods accumulating huge losses.
Saying this as I did dip-buying for many years before and after 2008 with very poor results overall.
I'm not some guru and maybe you're much more proficient at it but dip buying individual stocks is not something I would ever do again nor recommend.

 

[Visaria]

Dip buying index futures has worked well. As it should in a bull market!

 

[themickey]

Buying dips should be the only way to trade, it has the best risk/reward ratio.
Buying into established trends can become too late.
Thats why MA's fail, in too late, out too late.

 

[Hooti]

If 5% of traders are successful, meaning they report trading as the majority of their income, why would you even bother?

Of course I trade for profit, but what kept me working at it over years was the challenge. The challenge of doing something really difficult just because it was.
Also, I started trading after a serious brain injury. Don't know why my family let me start trading... but my neuropsychologist gave me a full day eval – and I started trading shortly after that. A year later the neuropsychologist gave me another day's eval and said she’d never seen anyone improve that much over a years time. “This kind of improvement doesn't happen -- Don’t stop whatever you are doing!” [Trading real money made me pay attention, and that is the bigger part of what heals your brain.]

So “why even bother?”

There may be as many reasons as traders.

Buying dips should be the only way to trade, it has the best risk/reward ratio.

Buying pullbacks, I am consistently profitable. As to the first post in this thread, I am trading a relatively small account and watch how long it takes to double (then I re-set it to the original amount). This is a measurable outcome that gives me some sense, some way to keep track, of how I'm doing mentally and emotionally. I like to track that.

 

[d08]

Buying dips should be the only way to trade, it has the best risk/reward ratio.
Buying into established trends can become too late.
Thats why MA's fail, in too late, out too late.

With individual stocks, how do you protect against a market meltdown - say 2008 or 2011 scenario? Nothing will bounce and all your positions will show losses. Sector meltdown is easy enough to handle as your other holdings will compensate.
I have a somewhat complex dip-buyer for indexes but that's quite different from buying individual stocks at weakness. Then again we are at a market top, most didn't experience or don't remember 08.
MAs are not the only measure of trends...