Nothing works consistently

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Old Jul 24, 2008, 1:10pm   #31
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Hehe

Thought I'd make some unpaid advertising for Super Size Me while I'm at it, and point out the inevitable correlation between certain eating habbits and certain changes to ones physique, ahem.

;-);-);-)

Bon appetit nevertheless
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Old Jul 25, 2008, 9:08pm   #32
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I've been trading for approximately six months now. What am having a hard time grasping is what worked yesterday doesn't work the following day.

For instance on one day I was scalping NASDAQ stock anddoing well well, and then using the same method the next day or a week later and I have devastating results. When trying to trade breakouts and momentum trades, majority of the breakout turn out to be false. Sometimes prices bounce off the EMA, sometimes they go straight through.

My point is nothing seems to work on a consistent basis. Anyone have any thoughts on this?

The key thing to understand here is that the market goes through various phases, during which price movement is different from the previous phase. This alters the parameters of the indicators that you are using(if any), or the structure around which price volatilty can move.

You have to first be able to identify the different phases the market i going through, then you have to define a seperate strategy for each phase.

If you keep using the same method , you will experience the kind of results that you just reported. Part of your trading plan should cover this aspect before you attempt to follow indicators or price action.
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Old Jul 26, 2008, 9:17am   #33
 
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Originally Posted by Market Wizard View Post
The key thing to understand here is that the market goes through various phases, during which price movement is different from the previous phase. This alters the parameters of the indicators that you are using(if any), or the structure around which price volatilty can move.

You have to first be able to identify the different phases the market i going through, then you have to define a seperate strategy for each phase.

If you keep using the same method , you will experience the kind of results that you just reported. Part of your trading plan should cover this aspect before you attempt to follow indicators or price action.
Interesting stuff Market Wizard, but how do you identify the phase the market is going through?
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Old Jul 26, 2008, 5:58pm   #34
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Interesting stuff Market Wizard, but how do you identify the phase the market is going through?
Great chart, NT. A classic view, a classic pattern, best seen formed in conjunction with the DOM.

Paul.
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Old Jul 26, 2008, 8:44pm   #35
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NT has shown some classic trading action, it happens all the time,.....why?
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Old Jul 26, 2008, 10:22pm   #36
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Nothing works consistantly?

What's the definition of consistantly, and from what perspective?

I suppose it's all just conversation.
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Old Jul 27, 2008, 8:51am   #37
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Interesting stuff Market Wizard, but how do you identify the phase the market is going through?
A very good question NT, but its one i cannot go into discussion here, i dont have the time and only frequent here occasionaly whilst the markets are slow.

The difficulty in doing this is trying to get people to breakout of their own mindset about the markets. If people have a simple system that works, many will not want to explore further because it may put the existing understanding (and profits) at risk. That can be lot of hard work down the drain for most, and if you are used to taking small points from the market, letting it go is not easy, as something for your efforts is better than nothing.

Secondly most traders view the market from the perspective of finding a system that generates profits ,without trying to develop an understanding of how the markets them actually work and are structured. This i can understand because it is a very complex subject with little information, real fact and practical issues and more on personal ideas and opinions.

How does one identify the opinions from real fact when there is no benchmark for comaparison? You cant, it just has to be folowed and tested, this is very time consuming and costly with no guaranteed results , thus posing a huge risk.

But at the very basic level you have to know what phases of the market exist : up trend, sideways, pullback, retracement, reversal action etc. There are several, I know that everyone knows they exist, but the key is understanding how they develop so one can begin to identify the signs and then begin to utilse this information in their trading plan.

One thing to remember though is that even if you do not develop a complete understanding, you should look to develop a little of the above, this alone will alter your success ratio because it allows you to correct your trading parameters with known reasons , beyond this things can only get better.
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Old Jul 27, 2008, 10:18am   #38
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and you'll need another arm.... i can only hold two books.....

im off to amazon, appears my library is incomplete...again.....
Taleb's book was too deep for me. In the beginning the reader understands that Black Swans are around every corner. What he does not explain to me is how to figure out when they are going to take place and in what form.

Quite often we can tell that a bubble is forming and we know that it will have to end at some point. The important word here, though, is when.. When is never known.

Traders will never know when "when" is going to be the next to happen and, in trading, that is of extreme importance.

Statistics play an essential part of trading but we can only go so far with them. The Black Swan is,also, a new component of anyone's population count. When it enters, the whole plan is thrown into confusion.

Many were short on the day that the Twin Towers massacre occurred and, equally, many were long. It is ridiculous to suggest that that could have been forecasted, but I believe that we had a premonition that, somewhere in the world, a similar incident would occur. No one knew, though, the "when" or "where" and, so, we all had to work on the charts as we saw them.

I'd save your money with Taleb's book. It does not tell us anything that we did not know already. Unfortunately, I did mention it a few months ago. Now, I wish I had not.

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Old Jul 27, 2008, 10:21am   #39
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Click the image to open in full size.

LOL !

I've met a lot of traders in my time, people I contacted to learn what they do and how they do it while I was trying to figure out how to make a living at this.

If there was ever one correlation it was between perceived simplicity of markets and wealth.

The dingier the abode was the more rubbish was spouted on markets being oh so complex and rocket sciency.

Not a single one of the rich guys I visited ever claimed that there was anything even remotely hard to grasp about markets, or that there were big secrets between you and success, their view was strictly markets go up, down, or sideways, and what happens next is strictly not predictable, but prediction is also entirely irrelevant to trading profits.

The truly wealthy were most definitely all in the KISS camp.

Ttrading is dead simple, which is not to say that it's easy, but thats about yourself and not about markets.

Click the image to open in full size.

That guy is a REAL market wizard running a hedge fund and with a fortune commensurate with his ability to print money.

Jesse Livermore, who came from a farm and started with zero yet earned himself a fortune that would have made him a Billionaire in todays money credits his success with pretty much the same what the other rich guys I met credited their success with:

“It was never my thinking that made me money but my sitting tight.”

Don't waste a lot of time searching for some holy grail...

It doesn't exist.

Markets are nothing than the sum of what their participants are doing, and the the one thing they are not doing is dancing to the tune of the Great Invisible Conductor.

That's just what the people driving the Nissan Micras like to believe to find an explanation for their lack of success as per the famous complexity experiment that Harvard did where two groups of students had to come up with explanations to simple problems. The first group got the correct evaluation from the professors, ie if they had come up with the correct explanation they received a "correct", if not they got a "wrong", while the second group got random evaluations, so that even if they were right they might have received a "wrong" and vice versa.

The first groups solutions were all admirably simple, while the second groups explanations became increasingly complex as they tried desperately to force the inexplicable facts to fit the theory.

The same goes for trading.

As William of Ockham very rightly observed in what came to be known as Occams Razor, "All other things being equal, the simplest solution is the best."

All other things in trading are very equal, and you'll make more money than you can ever spend by being right no more than 30% of the time provided your winners average out at 3 times the size of your losers.

Bill Lipshutz who was featured in the "New Market Wizards" was for his 8 years at the then Salomon Brothers their biggest and most profitable FX trader, earning, on average, US$ 250 K / day for his employer, before he started his own hedge fund, and the way he did that was by going for excellent risk / reward levels where he was right no more than 20 -30 % of the time, but by vigorously cutting his losses short while letting his gains run.

But then his focus was on profits, not some wild goose chase to unearth secrets that don't exist in the first place.
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Old Jul 27, 2008, 10:38am   #40
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I can't see a zigzag or a TC in there!
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