Something wrong...

This is a discussion on Something wrong... within the General Trading Chat forums, part of the Reception category; Originally Posted by hoodoo man That is a crutch used by people who wish to delude themselves that they are ...

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Old Jun 4, 2011, 11:34am   #22
 
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Joined Nov 2006
Re: Something wrong...

Quote:
Originally Posted by hoodoo man View Post
That is a crutch used by people who wish to delude themselves that they are not gambling. Ask any real gambler - horses, casinos, sports, etc - the smart ones will tell you that if a 'system' doesn't work on level staking, it doesn't work. All of this attention to "money management", risk:reward numbers pulled out of the air - all of it is simply self delusion.

A professional posture will include appropriate position sizing. This means not being overleveraged. In a professional arena, such as a futures exchange, the margins are set at more sensible levels than for example spread betting companies. There are also position limits and liquidity considerations for larger players.

For an amateur, position sizing should be in place to reduce the risk of ruin. Without this, any other efforts are irrelevant as the trader will eventually blow up. However, without a robust strategy in place to take net points from the chosen markets each day, position sizing will not make a trader successful.

All of this is obvious, however the masses persist in attempts to control their gambling and limit losses. It is a crutch to avoid responsibility for haphazard, hit-or-miss trading or more accurately guesswork. Provided the gambler has rationalised affording to lose, he can continue.

The people who indulge in circular discussions with made up risk:reward numbers most likely don't understand the true probabilities of what they are trading. Without this knowledge in place, the numbers are all fantasy.

These terms are marketed to the class of wanabee "traders" - who wish to distinguish themselves from the mere gamblers. Therefore there must be mathematical systems, sophisticated financial terms, and other such props. The nature of the activity is the same - uninformed gambling - but a respectable veneer is added to attract the professional and managerial classes.

kimo'sabby makes a very good point about use of language. Consider the spread betting companies who brand themselves as "spread trading" companies. Consider the nature of the marketing.

Didn't say it wasn't gambling.

Merely pointing out if you place your bet and hope or put it down to luck, that's pure gambling.

Like a business if you manage your trade - which also has inherent risk / rewards then the odds / probabilities of success means one has more chance of coming out a winner rather than a loser. Most business startups also fail due to poor financial control and planning.

You suggesting all the risk management and limit controls on traders are delusional setups?

You then talk about position sizing - well what is that if it isn't money/risk management?

So the sub-prime crises was just about everyone who lost billions and millions were simply unlucky because they over sized positions - didn't see or calculate inherent risk in the instruments against their capital exposure.

Tell me were they professionals or ameteur operators in their approriate position sizing to exposure they faced?

I'm happy to reflect and ponder these issues from an academic point of view - but you are contradicting your self from one paragraph to the next one.


I think you're still pissed at losing bet with your friend and still upset with me. Poor boy - ahhhh - there there there...
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Old Jun 4, 2011, 11:52am   #23
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Re: Something wrong...

kimo'sabby started this thread Some good points being made. I think it's an important part of the process (psychologically) for a person to know where they stand.

Trading/speculating must start with the understanding that there is no absolute, no magical equations or ratios.

If someone wants to try their hand at trading, they must understand that they are gambling, not only are they gambling but everybody else is too within the speculative arena.

This helps to put a perspective on the difference between successful and unsuccessful right from the off, and also dispels any illusions. (i would hope)
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Old Jun 4, 2011, 12:19pm   #24
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Re: Something wrong...

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Originally Posted by Atilla View Post
If you're feeling lucky you are gambling imho.


It's the risk / reward management that makes the difference.

risk < reward
Apologies Atilla, i was attempting humour then which missed the mark.

On a serious note, being a full time trader myself and having met a professional gambler last christmas, i realised there was very little difference in our approach or psychology. The only major distinction was he was talkling about horses, and I was talking about markets. Food for thought.
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Old Jun 4, 2011, 12:23pm   #25
Joined Nov 2001
Re: Something wrong...

Quote:
Originally Posted by JRP2891 View Post
No way, 50/50 each trade, it's going to go one way or the other. Just got to get on a hot streak and pile on the size when you feel lucky.
Some folk are luckier that others but, that said, why is that the case? They say that you make your luck as you go along so, maybe, with experience, you learn to be in the right place at thge right time.
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Old Jun 4, 2011, 12:34pm   #26
Joined Dec 2008
Re: Something wrong...

You're right, experience does teach you to be in the right place at the right time, and when you're rewarded for that, 90% of people will call you "lucky". To me that's just playing my edge over and over.
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Old Jun 4, 2011, 12:56pm   #27
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Re: Something wrong...

kimo'sabby started this thread My edge is made up of different components. I understand that the market is not a puzzle, don't try and work out every twist and turn. I also understand the repetitive nature of the market, born out of liquidity being liquidated (if ya like) and it's impact on price (volumatic). So i guess my edge is two-fold.

Charts are like horseracing form.
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Old Jun 4, 2011, 2:17pm   #28
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Re: Something wrong...

If you want to be pedantic, then crossing the road is a gamble. Since a lot of us are very proficient at it, we know we are not gambling. I am of the view that the difference between trading and gambling is risk control and profit performance. If you are consistently profitable, then you are doing trading rather than gambling.

Last edited by BeginnerJoe; Jun 4, 2011 at 2:24pm.
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