The Great Post Thread

timsk

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Here's a thread that's long overdue . . .

Every once in a while one reads a post that offers real trading insight. It shines brightly for a day - or even less and then it's gone - buried under a quagmire of mediocrity. Not any more! Copy and paste great posts to this thread or send me a PM with a link and I'll do it.

Here's what to do:
1. The post must be a self contained stand alone piece. If it only makes sense in the context of what was posted before or after it - it doesn't count.
2. Please quote the whole post verbatim without editing it in any way and credit whoever wrote it. Ideally, include a link to it in its original thread. (To do this, hover your cursor over the post number which can be found at the top right hand corner of every post. Click on it and then copy and past the URL.)
3. T2W trading related content only please - no external content and no lulz.

What constitutes a great post? You decide!
Tim.

PS. If this thread has legs, I'll include it in my housekeeping duties, which means that I'll edit or delete anything that's just general chat or obviously not a great post.
 
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To kick things off, here's great post by ffsear:

I think i became more disciplined and a better trader when i started to become a better loser.

I remember my old demo accounts, I didn't lose money but i didn't make money either. But i lead myself into this false sense of security that i was making mistakes that I wouldn't make when I went live. Yet i went live and started to lose money.

The problem? Not my method, not my risk managment, just TOO MANY MISTAKES!

I went back to demo trading, but this time I focused on my losing trades. I was determined to make sure that ever loss was a perfect trade. None of this looking back and saying "oh i shouldn't have take that trade because of XYZ, or I shouldn't of done that because I didn't check the news"

Every loss must be perfect. Where by if the situation was run again, you'd still take the trade every time. And if its a loss, so be it, on to the next one.

The result for me was less trades and a higher strike rate.

Be a perfect loser! The winners will take care of themselves


Link: Can you learn to be discplined with your trading - Discuss
 
This one really put global warming into perspective for me.
All credit to Pondlifedregsbutler


It gets worse....

The average human produces half a litre of fart gas per day.

Now you know.....but wish you didnee

Gas converted to litres
1 cc = 1 ml 1,000 cc = 1 litre 1 meter = 100 centimeters. 1 m^3 =100cm x100cm x100cm or 1,000,000cc. Divided by 1,000cc/ litre = 1,000 litre/m^3. So multiply m^3 x 1,000 to convert to litres.

or summick like that Shakone too drunk to look it up properly, cheers 4 linky.
 
Blackswan Wrote:

I read a few paragraphs on the (new) white Pele, Rooney the other day. What separates him from his peer group is his utterly fearless winners mentality, been like that since he could walk/talk/kick a ball/throw a punch. FA cup losers medal? He doesn't give a 5hit about it, or being voted man of the match in the final they lost...he'd play his game for nothing, just to be a winner, just to taste the glory...
D'ya know the day/s I made my big breakthroughs (mentally) with trading? Getting fooking 'stuck into it' and making it happen, casting aside all doubts over; me, my 'system' and the platform and bossing it...
Theres not half some right pussies on here, I'm off for a run...


Link http://www.trade2win.com/boards/general-trading-chat/87126-pressure-3.html#post1048760

I can't actually believe someone wrote that. It's hilarious.
 
Well, there's a couple of magnificent posts full of deep insight and meaning for you Tim. Dunno why you bother really.
 
Really was a game changer for me, helped my find the courage to investigate what i was already suspecting.
by stevespray 88
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Hi LM, Great thread – I am very much enjoying watching the subject develop.

I hope that I might be able to add a few points to the many that have already been made.

Early in the thread several references are made to Jesse Livermore and his trading techniques. Several questions are then raised by his comments. I’m fascinated by Livermore and have been so for many years.
My feeling is that Livermore’s comments were perhaps cloaking a greater understanding of the markets than most of us perceive. Our ‘perception’ of what goes on is limited by our self imposed rule structures which we may consciously or sub consciously apply to ourselves. My feeling is that Livermore attached absolutely no value to index or stock values other than to acknowledge that each stock or index had to trade at a particular price. Naturally in a bull market prices tended to trend higher whilst a bear market would lead to an overall decline in prices.
Livermore’s techniques were not based around moving averages or any other indicator – this is important to understand since it is this understanding which paves the way for us to understand things beyond our current perception. The basis of this thread is an attempt to develop a largely mechanical trading system of sorts. The trigger to trade being a move away from a predetermined level. I would question everyone who feels the need to use a ‘rule based’ trading system. Most people choose a rule based system because they are looking to absolve themselves of trading responsibility – sub consciously life has taught them to do this – I guess you could call it ‘human nature’ of sorts. Most people will not make money from these systems for many reasons.

What I like about LM’s system are the comments regarding the trade going the right way from the start. This is the kind of ‘taking responsibility’ which makes a system potentially profitable. There is a massive reason for this which I will mention shortly.

Just getting back to Livermore and his techniques – These were, for the most part, based around what we would term as ‘tape reading’. As I said before, the level of an index or stock was not important, what Livermore saw as important was how the prices reacted to the activities of the larger market participants. He would examine how the market ‘absorbed’ buy and sell orders. His key tactic was to try and identify the key areas of what today we call ‘distribution’ and ‘accumulation’. Livermore would record findings in his various journals for later reference. The reason that Livermore was so successful was because he was able to uncover longer term trends right from their outset. The reason that most ‘mechanical’ trend following systems don’t make money is because they spot the trend late. Having ‘spotted’ a trend you join it and hope that the trend continues. Often this happens. The problem is however the exit from a trend. Again a mechanical system falls foul of apparent ‘lag’ – by the time the systems calls an end to the trend the price has retraced significantly and therefore a large percentage of the profit has been eroded. Likewise if we manually intervene, and close it ourselves, the trend will carry on much further and again the profit is missed out on!

Potentially profitable trading....

My own studies have uncovered what I feel are pretty important aspects of trading if one is to become and remain profitable. I feel that these ‘theories’ tie in very nicely with LM’s proposed trading system. This is because I feel that the sudden / rapid movements which LM is looking for are of a particular nature and caused by a particular set of events. People have questioned whether there will be too many false entries (“death by a thousand cuts”) – this is certainly going to be a problem and I would suggest that a volume study is going to be needed either as a set up or a conformation tool.

In my opinion it is important to understand that these types of breakaway techniques are only going to work when there is a significant level of ‘speculative money’ within a particular market. This is because speculative money tends to be ‘fast in – fast out’ in nature meaning that the speculative punter is easily persuaded to alter his market position and this is generally caused by the price movement itself. If the amount of speculative money in a market is low then the reactions to price movements will be very much more damped in nature – this leads to a marked increase in ‘false breakouts’ and the like and a more ‘random walk theory’ starts to prevail.
These theories are backed up by theories such as ‘reversion to the mean’. Someone mentioned earlier about the ‘true value’ of something – this is a very valid point since the true value of something can become vastly distorted by an increase in speculative money. Livermore talks in a number of his books about how certain commodity traders ‘cornered the market’ in certain things. In fact Livermore lost some large sums of money betting against these traders. Livermore commented that ‘no price is so high that it cannot double again in a month’ (or words to that effect). Likewise ‘no price is so low that it cannot half in a week’ (I hope no Northern Rock shareholders are reading this now!).
So, as speculative money enters the market the price can potentially move further and further away from its ‘true value’. In the markets price movements and bigger volumes in turn attract more speculative money which often creates small self perpetuation cycles. Mean reversion shows us that as volumes drop back off the market will return back towards its area of ‘true value’ – ie a fair value which is established by market participants who trade on much longer timeframes and are not persuaded to alter their positions by price movements in the shorter time frames.
As an example you can often spot this in the FTSE in the last 30 minutes of trading. Quite often the FTSE will move independently of its US counterparts (in that last 30 minutes) as the days speculative positions are unwound – this is a reversion towards true value.

So back to profitable trading....

In order to trade profitably on an intra-day basis one has to examine the habits of losing traders. This is, at times, much harder than it sounds. Most of my theories on this subject come about after studying my own unprofitable trading periods. In particular I had a period, about six years back, of intra-day trading on foreign exchange (USD/GBP to be exact) which was of particular annoyance to me since my trading was so consistently bad. By ‘consistently bad’ I mean that I was consistently able to ‘donate’ cash to the markets on a daily basis. As it was I was only trading with £1 per point whilst I ‘got the hang of it’ but it didn’t stop me losing, on average around £120 per week over the course of about 3 months. Statistically I was averaging just under two trades per day – say eight per week. This meant that with a spread of two pips my trading costs were only 16 pips per week which obviously meant that my net market losses were around 104 pips per week. This quite frankly amazed me and, once analysed, lead me to conclude that consistently profitable trading was very possible given that I could show (and indeed demonstrate live!!) that consistent losses could be achieved over and extended 3 month period. I continued studying my failings but to no avail. I could not place any logical reasoning behind this ‘consistency of losses’.
My ‘eureka moment’ came when I was relaxing whilst lying on a beach in Spain. My girlfriend at the time was most amused to see me scribbling away frantically with my demented ramblings. So what had I stumbled across??

What it all comes down to is ‘Stops’! Of course everyone will tell you that keeping good stops is the key to profitable trading but it simply isn’t as straight forward as that and I can now (attempt to) demonstrate why.

I would ask these following questions;

What is a stop and where is it generally placed?

What has happened once a stop has been tripped?

I will attempt to answer my own questions in an attempt to demonstrate my theory. Firstly, stops are generally placed at price extremes in terms of current market action. That is to say that when a stop gets activated the price will have moved to a point of local extremity (at the split second it is triggered) – if the price wasn’t at an extremity then the stop would not be triggered.
Secondly, once a stop has been triggered you are exchanging ‘piece of mind’ (that you loss cannot get any bigger) for a price which is very likely away from ‘true value’ (which is consistently to your detriment). I therefore consider that stops consistently triggered (due to price movements) will always represent bad value from a trading perspective because each and every time a stop is triggered you will be trading at a point in time where the price is least favourable to you in terms of deviation from true value.

Likewise when we think about wining trades – how often do we let winning trades reverse on us before closing? This is the second part of the theory. With stops we set ourselves up to trade at unfavourable price extremes and then compound the issue by only closing winning trades once the price has regressed a good way back towards true value. So, as you can see, we are trading in a manner which is a reverse of what is required.

In my opinion to trade successfully intra-day we must adopt a policy which takes advantage of the theory. This simply means closing bad trades on a regression whilst only ever taking profits on prices of local extremity. By trading this way we will only ever be exchanging ‘value’ at points which are beneficial to ourselves.


End of part one!


Steve.
 
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And a follow on
By stevespray 102
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An excellent post Steve that captures a number of key fundamentals to price action and speculative psychology very succinctly. Nice work.

Before anybody considers now placing their targets where their stops are and their stops where their targets are, they need to be able to have a reasonable shot at establishing the mean and extremity you refer to. The longer TFs which effectively drive this process have their own idea of future value as I’m sure you’re aware.

One of the most intelligent and informed posts for a while (apart from my own of course….)

Unfortunately it simply isn’t as simple as swapping your targets and stops around. It’s actually quite difficult to try and explain the point that I’m trying to get across. Can you see that with a stop the moment that it is triggered you are out of the market? Ask yourself what function a stop like that is actually performing? When we understand that a stop is performing a ‘service’ for us we can then move on to understand that this ‘service’ comes at a cost. It is this ‘cost’ that makes us consistently lose money. In simple terms, if we react to price is such a manner as to make us close our trade then we will more than likely be losing money.

Let me try the following as a semi practical demonstration....

Let us imagine we are trading GBP/USD. We will ignore trading costs to start with but will consider that a round trip cost is 2 pips.
Let us also assume that we are looking to scalp around 17 – 20 pips from a trade.
So, we see that GBP/USD has rallied to a round number at 1.9700. At this point we sell short at 1.9700. A trader prone to loss would now place a stop close by as he considers this ‘good practice’. Lets imagine that our generally losing trader places a 20 pip stop order to get him out of his short at 1.9720. At the same time he feels that his target for profit would be around 1.9680. He may or may not place a limit order to buy to close at this level. His feeling is that his ‘edge over the market’ is the fact that the market will normally reach points of resistance and support at round numbers and therefore by consistently making this kind of trade at these points in time he will, over the longer run, make money. At the moment this all sounds perfectly logical. (I will in due course try to prove otherwise.)
Imagine now that the market spikes higher still and reaches the stop at 1.9720. In an instant the trade is ‘stopped out’ and our friend is ‘flat’. Then what happens? Well obviously the market can still run higher or perhaps turn back lower. The chances are however that the market will run back lower and at some point will return to a level below the stop level set by our losing trader.
Try imagining now what would have happened if the trade would have gone into profit. Let’s suggest that over the course of 20 minutes the market fell those 20 pips. What would our trader do? The most likely thing is that he would have thought “Oh, this looks like it’s going lower” and held onto the position. Then, before you know it, the 20 point winner has diminished backwards into a 12 point winner... whoops... now it’s only an 8 point winner.... oh bugger lets close it for 8 while there’s still some profit left!

Do you see how both methods of ‘trade management’ are detrimental to profits? This is why our friend is a ‘generally losing trader’.

Psychologically our trader cannot win in the longer term because he is not capable of taking control of the trade management aspect of his trading. Instead he uses a ‘fixed stop loss’ because that ‘comforts’ him and causes him to believe that by doing this his potential losses from each trade are ‘under control’. Whilst this may be true to an extent our trader has failed to realise that, by allowing stops to get hit time and time again, he is consistently paying a premium to trade out of his positions at points of price extreme.

Of course the correct way to manage this type of trade is to use a mental stop which does not trigger an automatic exit from the market. Suppose in our example we set the following loose rules.

1 Mental stop of 20 pips.

2 Hard stop of 40 pips.

What we could do in terms of trade management is this. If our trade goes into loss then we will monitor it closely. If our mental stop is triggered we will move into ‘damage limitation mode’. This means that we have now accepted that our trade is a poor one and we are looking to get out. What we are waiting for is a better price than is currently available. It is possible that the market will move either way. If our mental stop of 20 pips gets hit and then the market retraces 12 pips then we can get out for a loss of 8 – see how remaining in the trade beyond our mental stop has saved us money? In most cases it will! Suppose, instead of retracing 12, the market moves on another 10 so our loss is now 30 – this can and does happen – it is still more than possible that the market will retrace 10 – 15 pips in the short term which still means a loss of less than 20 pips.
I hope that you can see that by taking responsibility for the trade management the losses can be far better controlled. This is because your exit from a trade is likely to be nearer to ‘true value’ than if you have a fixed stop set which is guaranteed to exit you from a trade at a price extreme.
Likewise by placing a limit close at a price extreme you are fair more likely to take advantage of poor losing traders when your trade closes at a point well away from ‘true value’


I hope this explains a bit more.

Steve.
 
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In the interests of saving space, id like to present these two masterpieces in one post. I hope im not thought less of by nominating some of my own work. :D All who seek shall find
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Anyone who thinks it's better to use a limit order instead of a stop can't be a real trader.

Providing hes not taking the p**s its goto be deadbroke! And of course the twanger above!

I mean..Wudda
:LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL:
:LOL::LOL::sneaky::sneaky::sneaky::LOL::LOL::sneaky::LOL::LOL::LOL::sneaky::LOL::sneaky::LOL::LOL::LOL::LOL::sneaky::LOL::sneaky::sneaky::sneaky::sneaky::sneaky::LOL:
:LOL::sneaky::LOL::LOL::LOL::sneaky::LOL::sneaky::LOL::LOL::LOL::sneaky::LOL::sneaky::sneaky::LOL::LOL::LOL::sneaky::LOL::LOL::LOL::sneaky::LOL::LOL::LOL:
:LOL::sneaky::LOL::LOL::LOL::LOL::LOL::sneaky::LOL::LOL::LOL::sneaky::LOL::sneaky::LOL::sneaky::LOL::LOL::sneaky::LOL::LOL::LOL::sneaky::LOL::LOL::LOL:
:LOL::sneaky::LOL::LOL::LOL::LOL::LOL::sneaky::LOL::LOL::LOL::sneaky::LOL::sneaky::LOL::LOL::sneaky::LOL::sneaky::LOL::LOL::LOL::sneaky::LOL::LOL::LOL:
:LOL::sneaky::LOL::LOL::LOL::sneaky::LOL::sneaky::LOL::LOL::LOL::sneaky::LOL::sneaky::LOL::LOL::LOL::sneaky::sneaky::LOL::LOL::LOL::sneaky::LOL::LOL::LOL:
:LOL::LOL::sneaky::sneaky::sneaky::LOL::LOL::LOL::sneaky::sneaky::sneaky::LOL::LOL::sneaky::LOL::LOL::LOL::LOL::sneaky::LOL::LOL::LOL::sneaky::LOL::LOL::LOL:
:LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL:!
 
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Here's a thread that's long overdue . . .

Every once in a while one reads a post that offers real trading insight. It shines brightly for a day - or even less and then it's gone - buried under a quagmire of mediocrity. Not any more! Copy and paste great posts to this thread or send me a PM with a link and I'll do it.

Here's what to do:
1. The post must be a self contained stand alone piece. If it only makes sense in the context of what was posted before or after it - it doesn't count.
2. Please quote the whole post verbatim without editing it in any way and credit whoever wrote it. Ideally, include a link to it in its original thread. (To do this, hover your cursor over the post number which can be found at the top right hand corner of every post. Click on it and then copy and past the URL.)
3. T2W trading related content only please - no external content and no lulz.

What constitutes a great post? You decide!
Tim.

PS. If this thread has legs, I'll include it in my housekeeping duties, which means that I'll edit or delete anything that's just general chat or obviously not a great post.

....hope springs eternal
 
Possibly the greatest post ever.


The Great Post Thread

Here's a thread that's long overdue . . .

Every once in a while one reads a post that offers real trading insight. It shines brightly for a day - or even less and then it's gone - buried under a quagmire of mediocrity. Not any more! Copy and paste great posts to this thread or send me a PM with a link and I'll do it.

Here's what to do:
1. The post must be a self contained stand alone piece. If it only makes sense in the context of what was posted before or after it - it doesn't count.
2. Please quote the whole post verbatim without editing it in any way and credit whoever wrote it. Ideally, include a link to it in its original thread. (To do this, hover your cursor over the post number which can be found at the top right hand corner of every post. Click on it and then copy and past the URL.)
3. T2W trading related content only please - no external content and no lulz.

What constitutes a great post? You decide!
Tim.

PS. If this thread has legs, I'll include it in my housekeeping duties, which means that I'll edit or delete anything that's just general chat or obviously not a great post.
 
I like this a lot :)
(btw, instead of the handbagging/moaning, why not spend the effort in finding a post you like, little bit of lulz here and there wont hurt none)
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post 8
Your edge is your Method.

An edge in trading is a method of picking an entry and/or exit from the markets that is better (ie more profitable) than randomly entering or exiting the market.

Some edges can be mathematically proven to be profitable others can be demonstated by rigourous
backtesting, some are just intuitive (chart reading/tape reading/level II etc).

Elder splits trading into three categories Mind, Money (Management) & Method.

You have all three sorted if you want to succeed in the markets. Although your mind probably has to
be sorted first as you wont be able to define your Money management rules or to even correctly
discover a proper Method if your Mind hasnt been tuned properly.

Trading with the trend is an obvious edge, a novice trader tends to trade counter trend, this
effectively gives them a negative edge (worse than random performance).
 
Dont get me wrong, while I think this poster slots nicely into 'I am always right therefore you must be wrong!' arrogant tw@t box. He does imo make some great points.
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post 5
there are no 'basics of trading'. it is all very advanced.

it is also beyond the classroom.

you can study markets if you wish, but it will only take you so far and most certainly will not guarantee any success.

this is why so many fail. all effort is placed in academia and learning market history/past action. most likely because this is the norm in life.

this is why so many fail. they spend all their time reading books like edwards & magee, pring, trade2win threads & the rest. all of it is dog eggs and kebab meat quite frankly if you do not know what needs to be done and when. yet this is not discussed because no one knows what to discuss.

the answers are not so much in market evaluation, but self evaluation - in peratio proportions, not fibonacci i may add!

anyone for a game of endless circles? it really is a very amusing game to watch i promise!

when new rules are introduced to the game, the bringer is scorned for spoiling the nature of the game.
 
Posted that a while back but its not mine :

I believe that there is no secret edge and there is no static set of rules which will make u money always . I found these posts useful it is in FF from Porkpie :

" Most noobs are taught to trade what they think or see which by default puts you on the same side as the herd. If 95% are losing, what are the chances that a new approach using a variation of the same old defunct concepts using the same old indicators is going to put you on the winning side of the curve?

Making a living in the markets requires that you identify and react to the behaviour of others, not analyzing patterns and using indicators to time trades.

The market makes sure that nobody has a static edge by repeating the same exact strategy. Otherwise, it would get massively exploited with huge capital. If there was such a loophole that developed, it would be quickly closed. If participants instantaneously catch onto it then the price returns to complete efficiency. This action is not created by any individual or specific group, it is the auction itself and all the participants acting in the entirety that create the movement. "

" The bars, indicators, patterns, systems, structure, and action are all driven by what the other party is doing. The other party is the cause and everything else is the effect.

This is why some of the best "setups" you see still often fail to produce winning trades. We use tools and visuals to have context in what we decide to do relevant to direction and timing but the outcome after the entry is made is driven by the other party.

There are no "winning" entries. There are no winning trades that are decided in advance as many would like to believe. It is a game of who has the will to hang in there and who will push the other out. It is a game of poker and a game of chicken. I best compare it to a tennis match in which one player will wear the other down to the point that an unforced error is made.

Many of us are correct in direction and premise on our winning trades but still end up donating to the market. This is the a result of the trader on the other side having the ability to wear us down and force an error. "

"The market cannot be defeated with a static set of rules because it is dynamic. The players have to constently change up the action in order to keep the price fair. Those that play poker will agree that you can not win repeatedly at poker by making the same bets on the same types of hands. Same goes for trading. Either you are going to get pushed out or your opponent is. Successful trading is about engagement with the other traders. You get a random hand each time. Whoever plays the hand the best wins. The player with the best hand is not always going to be the winner.

Judging by all the systems/methods and discussions on FF, very few traders think about the person on the other side of their trade (ok we know its the broker but their prices come from the interbank of competing traders). This is the single most important factor in trading imo and will often decide the outcome of your success. Next time you stick an indicator on your chart, think about what you are doing and why. "
 
In the spirit of helping out a fellow tarder, heres another great post from 1lotwonder. Although strangely, i cant find it in 1lots history (click to check), im sure its genuine. Cant think how he came to be into possession of it tho, personal collection perhaps. Maybe its blue tacked to the bedroom wall along with selected socrates quotes, next the batman posters! ahhh, im just being silly!:cheesy:
Have taken the liberty of removing the bold, I mean we are all free thinking people here right, so id like to offer the 'whole picture' for you to draw youre own conclusions.
(apologies for the link, its all i got)
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Post 277
Originally Posted by 1lotwonder;
beliefs we hold are to me the obvious reason for both losses and arguments - which could be stating the obvious - but there we are

some folks simply refuse to believe the truth. they prefer to walk the easy path and believe everything they hear and read and refuse to stop and think for themselves. although because they may be (trying to) think - they believe they are thinking for themselves.

these are the same people who let their losses run out of control as they refuse to believe they are wrong. the truth would hurt them too much - so in a sense, losing becomes less painful because to alter their beliefs would cause even more pain in the long run.

their beliefs in a quick buck and easy money (especially if its tax free!) lure them to trading like bees to honey.

when a novel and original idea comes to light, these folks will disagree and start an argument as it goes against the grain of what they have 'learnt' in the material pumped out by the media/brokerage reports on the web etc. again, to keep an open mind and the trouble to investigate an idea would be too much pain for them. it is easier to bore everyone to death with their repeated claims and statements they ripped out of that glossy book. this then infuriates us (especially me!) even more - but then i realise i need the ignorant to make my livelihood possible.

in other words, for these folks ignorance is bliss.

however, although must would agree that trading style is individual, most arguments seem to centre around the losers false claims of success (real winners dont talk about it - they just do it) or understanding of 'facts' rather than ways to actually make money. in fact - how to make money probably has never been discussed - because most here simply dont know. im not talking about someones latest magic cross over system here. those that do know are not going to share it with the ignorant and stupid are they! so a big argument erupts with both sides often knowing little about what they are talking about.

i now let it wash over me and i really see this site as a place of amusement when times are quiet rather than a place where serious discussion takes place.
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Ooops, slipped trip and landed on the print scr button :p
Post 197
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Post by TheBramble:

The winning system you take from demo to live, is unlikely to be the system you end up trading successfully – if you end up trading successfully at all.

While there is a great deal of difference between trading demo funds and real funds and while there are ways to mitigate the problems you will encounter en route, you will likely find after your first set of failed trades that you’ll lose faith with your ‘winning system’ and try all number of on-the-fly fixes, new systems, signals and indicators to make up for and take your mind off your failures and prove, if only to yourself, you’re a ‘good trader’.

The thing is, the probabilities are that you’re not a good trader and that you’re far more likely to join the large percentage that fail, one or more times, before giving up for good.

If you’re lucky, you’ll find your level, hit your stride, find your metre – whatever metaphor you want to use – and it’ll click into place. You’ll no longer dread the start of a new trading day – you’ll look forward to it. You’ll no longer feel relaxed and calm only when NOT in a trade and stressed and anxious when you are. You’ll find you’re no longer looking for excuses NOT to place that trade (make a cup of tea, make a phone call, walk the dog, go for a run) – you’ll know exactly when and if to place it. You’ll no longer start to tense when your position moves against you – you’ll smile and feel good that that means you’ve just established a lower risk level, or if you’re already in profit, a higher profit level that you’ll come out at if it gets hit again. Far more of your trades will go into positive territory right off the bat and those that don’t will move against you far more quickly and let you know you were wrong without you having to hang on every up tick and down tick for – cheering one and despairing at the other – for an eternity. You’ll no longer stick to your target (an ethereal thing at best) and give back all your profits as it retreats, having reached within a few ticks of the completely arbitrary goal, you’ll let the price action let you know when it’s time to take your profits (or your losses). Each trade setup, entry, management and exit will be in perfect harmony with your system and your own personal psychological needs in relation to trading a system. You’ll be trading the perfect timeframe and the perfect system for your personality and your needs. Until you find a methodology that suits you perfectly you’re just spinning your wheels and likely bleeding capital. If you don’t feel good trading – stop. Right now. ‘Cos it ain’t going to work otherwise.

How do you find this perfectly suited system? There are as many ways as there are bods trying to find a way. Pretty unhelpful.

What’s the point of this post? I’ve just waded through an entire weekends’ worth of the normal “I want a system”, “I’ve got a system and it’ll work for you” and “How do I make Money” posts. All chasing and offering the wrong things. And they’re the wrong things because none of them know YOU or address YOUR needs.

There are an infinite number of combinations of usage of price and volume and time. Such a large set of instruments and markets they may as well be infinite. And the range between the most well informed, highly teched and savvy institutional investor and the most clueless, under-funded, inexperienced and ill-equipped mug punter is so large as to beggar belief. Where do you think you are you on the spectrum? Where do think you REALLY are on that spectrum?

A very small percentage of people make money in trading. The odds of you doing so are miniscule.

Those that are making money are using techniques of such simplicity it would amaze you. In fact, it probably wouldn’t, as you’ve already covered that in your first few months interest and education in trading – and then put it behind you as being too simple to be worth further consideration.

You’ve gone off to pursue the newest and latest fads and techniques and systems and indicators, without realising you already have all you need to make the bare bones of a system that will suit you perfectly. You’re entranced with the prospect of being a Darksider. It’s a fabrication. An attempt to create a sense of asceticism or elitism which does you no favours at all and offers you no advantage, but gives a good laugh to those that think you’re stupid enough to believe that that’s the only way to go. You’re convinced a splay of indicators, or Gann fans, or Elliott waves or Di Jango’s reversal trines will be the ‘solution’. They my or they may not be. You’re convinced that trading a pure VWAP engine with no charts or indicators at all is going to be the only way for you. You feel the raw random noise of the 1 minute chart is the only place to be or the Daily gives you the freedom to be largely relaxed in stops and targets. It makes no difference. There’s no difference in the way you make your money be it with bar charts devoid of any further information or if charts covered to the exclusion of all white space with indicators of all manner, hue and type, or a bare excel style numbers grid. Your profits are made whatever way you make them and no one way is better than any other.

But unless you’re totally in tune with the way you’re trading, you’ll feel uneasy when you’re in a trade and you’ll fear the trade moving against you and you’ll feel varying degrees of pain when it does. Your profits will be fewer and smaller than your losses and you wont have any confidence in what you’re doing and you’ll feel insecure, lacking, a loser and a failure. What to do? Stop. Simply stop. You’re not going to be consistently profitable trading if this is where you’re at.

Go back to basics. Look at the charts, with whatever indicators you want to be using and just LOOK. Simple stuff like lower lows, lower highs or higher lows, higher highs. If you can’t see them – they’re not there. If you can see them –what is that telling you? They’re giving you direction, entry, S&R and exit points. How much more could you ask for?


Link: Why You Are Failing - and What You Need to Do
 
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A recent one from Robster:

Actually, after having had a shower and putting on my mid-morning kimono I thought I would deconstruct the simple method I posted yesterday and how something this simple is underpinned by a solid understanding of the market:

1) Switch to an exchange traded product so you can see volume.
Volume is the context for a price movement. If you cannot see volume you are more likely to get the context of the situation wrong. When price reaches a high, has it stopped there because nobody wants to trade at that price or is it because somebody is heavily trading at that price using limit orders because they have determined that this is value for them? This is a big difference and shapes how you engage in the trade. Somebody hoovering up the market is a very different tell to nobody wanting to play.

2) Wait for a trend to emerge.
Initial directionality is important as it implies a continuous imbalance in the orderflow in a particular direction. It might be being caused by long term traders (a big trend day) or more often than not, short term traders playing follow the leader and unloading into those less gifted at trading. However in either case it is a force that would need >= and opposite force to stop if a price considered value is reached. This implies somebody with money would need to stop this move. If the market is chopping, nobody is playing.

3) When price gets sticky, confirmed by a volume spike, fade the move that got it there (short for a uptrend, long for a downtrend)
The volume spike is a tell. In this situation it is saying that somebody with quite sizeable cojones (like our squirrel) is hoovering up the market orders at this price. As price is not moving and volume is going up, the initial directional force has met an equal and opposite force. You probably want to be on the same side of the market as the money here.

4) Place stop just below the highest(short), lowest(long) point.
The money didn't want to trade higher or lower than this point - trade with them.

5) Exit mgmt: Trail on 15min or follow the mantra "What gets you in, gets you out"
Auction rotations on $ES_F are anywhere between 1.5-4 points typically for a 15 minute period. Stay behind the rotations so you don't get taken out. If all goes well you will see somebody else start hoovering up the market orders and you have a choice to bail or reverse.

6) Rinse and repeat. Any timeframe.
This phenomena occurs almost on all timeframes. However the higher the timeframes, the deeper the pockets you need to play and this is reflected in the size of participant you are dealing with in the market. This is why you should always look at charts from high to low - you see where the big boys are playing and you should generally be trading with them.


Link to robster970's original post: Intraday Trading the Forex market to make consistent profit
 
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BBMAC

Whether the failure rate statistic above is as high as the oft quoted 95% for retail traders - there is no way of knowing. What is clear though is that the failure rate is very high. Below I list some of the reasons for this.

a. The sub culture that surrounds trading as I intimated above suggests that you can ' get rick quick ' and work ' just five minutes day ' etc. This is plainly false and very misleading. It causes many to follow these apparent shortcuts letting their hope / greed cloud their common sense. If it looks too good to true - it usually is !

b. When they commence live trading - they simply don't know what it is they need to know and are distracted by false noises such as detailed in point a. above. They have no idea that actually trading isn't about getting involved in as many opportunities as possible - but about disregarding as many risks as possible to leave only the highest probability trading opportunities. This requires patience and discipline. It was Aristotle that said ' Patience is bitter - but it's fruit is sweet. '

The 1st goal of a trader should always be capital preservation, (Ie you have to be able to 'stay in the game ' through sensible and proven risk management techniques.) Only then can you achieve the 2nd goal which is to grow that capital. The 3rd task is to learn from every trade you place.

c. They are generally under funded and as a result of this (and greed) are over leveraged. Whilst the leveraging of margin can magnify gains it can magnify losses also. All too often they take advantage of the ridiculous levels of leverage willingly offered by the brokers and the result in more cases than not is that sooner or later they blow out their accounts and lose their trading margin.

d. They have no idea what a Trading Edge is, how to acquire one or what they then need to know about it in order to ensure that it throws up no surprises that can lead to problems, and a loss of trading margin.

e. They don't understand the psychological barriers that can prevent them from achieving their trading aims even with a proven Trading Edge. In his book Reminiscences Of A Stock Operator about the legendary Wall Street Trader Jesse Livermore, Edwin Lefevre suggests that one of the prime reasons most never make it is because;

i. When the natural human instinct is to hope - in trading you have to fear

ii. When the natural human instinct is to fear - in trading you have to hope

I.e: Most times the necessary cognitive responses required in trading run counter to the instinctive human ones. Furthermore when entering a market you have to be right at the right time, not right at the wrong time - because this is the same as being wrong. For example in a bullish market you have to know what the highest probability set-ups are to buy to profit from the rising price. If you buy in the wrong place and price corrects to the downside, even though it may resume it's rise you have been stopped out for a loss. You were right - the market was bullish - but you were right at the wrong time !

My experience is that developing the necessary 'trading psychology' can prove harder than mastering the technical stuff. Getting a proven consistently profitable way to trade (ie a Trading Edge) that can be relied upon to produce a regular income is one thing, but as the excellent Mark Douglas (Trading in the Zone, The Disciplined Trader etc) points out - it is the destructive effects of the human emotions connected with any discretionary trading that can lead to the ' Profit Gap, ' ie the difference between having a proven trading edge and actually being able to make a reliable and consistent income from it yourself. Of course the first step is to actually acquire a proven consistently profitable trading edge, but even given this - some never close this 'profit gap.'

G/L


Link to original post here: http://www.trade2win.com/boards/fir...y-advice-newbies-just-quit-3.html#post1813264
 
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FXSCALPER2

One thing almost everyone misses when it comes to how agressive one should be is the question of time. It all depends on how long you intend to follow a particular approach and why you need to follow it at all. Your circumstances are going to be a determining factor.

If I had only 3k, I would not kid myself tryong to trade by the book. I will wait for what I consider to be very good oportunities and bet huge. My risk would be to lose the 3k but, if I am right my reward will change the way I trade. That is one way to look at risk reward.

Trust me, if you follow what everybody says, at best you will never get anywhere. If you have 100k to trade with and you want to make a living from it, the way to trade is to risk a small % and do it as any job. It will be routine and boring but you are not looking for excitment. It will be very stupid, however, to risk 1% of a 2k account. We have this idea that a 50:50 chance is very bad. If someone gave you a 50% chance of losing 2k and a 50% chance of winning 20k, you should take it even if it is a one off. Either you end up with 20k or nothing.

People who have enough money to live on and trade with don't fiddle with MM. People who do not have enough money try to find a way to make money by fiddling their MM. With a small capital, you are almost certain to lose if you tiptoe and be careful. There is no way I am going to sit here and try to make a living from 3k by being careful or fiddling with MM. Give yourself a break. If you do not have enough money to live on while you try to grow your capital, you are wasting your life. Either go for broke or do something else. Use the money and go on a nice holiday, although you are better of trying to make a small killing instead of get a sun tan. Stop living in a dream land.

You got small capital? Gamble it and try to make loads. You are going to lose any way.
 
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