Nothing works consistently

This is a discussion on Nothing works consistently within the General Trading Chat forums, part of the Reception category; seeing as this thread has gone this way...slightly off topic... was talking with a long term successful trader today, we ...

Reply
 
LinkBack Thread Tools Search this Thread
Old Jul 23, 2008, 10:27pm   #25
Joined Jun 2008
seeing as this thread has gone this way...slightly off topic... was talking with a long term successful trader today, we were talking about time and effort. We both think that the time and effort we have put in to knowing when not to do the thing that looks like the right thing to do is the key to keeping what we get lucky and make all the other times!!!!
davedavethetrader is offline   Reply With Quote
Old Jul 23, 2008, 10:28pm   #26
Joined Jun 2008
for time and effort read money! lol
davedavethetrader is offline   Reply With Quote
Old Jul 24, 2008, 8:00am   #27
 
new_trader's Avatar
Joined Jan 2006
Quote:
Originally Posted by Paul71 View Post
PS. Just because you can't do something....doesn't mean it can't be done.
"It always seems impossible until its done."
-Nelson Mandela
__________________
"It always pays a man to be right at the right time." - Jesse Livermore | Less Marx, More Mises

CLICK - My Trading Journal
new_trader is offline   Reply With Quote
Old Jul 24, 2008, 11:56am   #28
BSD
 
BSD's Avatar
Joined Feb 2006
Quote:
Originally Posted by davedavethetrader View Post
consistency is winning month after winning month. not winning trade after winning trade.
That in a nutshell is what trading is all about, at least for those that trade for a living.

Certain woulda-coulda-shoulda-artists living a make-believe parallel life of pretense on boards to help them forget their real existence which consists to a large degree of asking customers if they want fries with their order will inevitably voice vociferous opposition to said simplicity, albeit with the small but pretty relevant blemish that they will never be able to back up their bragging.

;-)

But back to real life.

As I've said here many times, Mark Douglas is spot on in his analysis that anything can and will happen at any time in the markets (think, all it takes is one massive order that can be anything, a hedge, a position being covered, somebody entering the market with a view diametrically opposed to yours, but that will all have the same effect of throwing all of your clever analysis overboard and triggering your stop loss).

The very simple reason why markets cannot be predicted consistently is based on the fact that markets are made up of a conglomeration of huge numbers of participants all following totally different objectives...

You have hedgers, you have speculators.

You have fundamental traders, you have technical traders.

You have scalpers, daytraders, swing traders, position traders.

You have participants that see the same price levels, yet for some price is too high, for others it's too low.

Etc etc.

Every participant in markets has a different perceptive, different objectives, and different risk parameters.

That is why the notion of predictable markets that follow some inner system is nonsense.

The market is composed not of an inner logic or system that would be seperate from it's constituting participants, no, a market is nothing but the sum of it's constituting participants, each of whom has his own agenda, doing his own thing.

Thats why a quest for consistency is largely nothing than an irrelevant brain fart.

Not only is such a search for a holy grail a total waste of time, far worse, systems that are right more often than they are wrong are decidedly less net profitable than their lower hit rate brethren:

Brett Steenbarger:

"...As a rule, maximizing batting average/minimizing drawdown comes at the cost of lowering overall system profitability...."


"William Eckhardt:

The Win/Loss Ratio
“One common adage on this subject that is completely wrongheaded is: You can’t go broke taking profits. That’s precisely how many traders do go broke. While amateurs go broke by taking large losses, professionals go broke by taking small profits. The problem in a nutshell is that human nature does not operate to maximize gain but rather to maximize the chance of a gain. The desire to maximize the number of winning trades (or minimize the number of losing trades) works against the trader. The success rate of trades is the least important performance statistic and may even be inversely related to performance. …

What really matters is the long-run distributions of outcomes from your trading techniques, systems, and procedures. But, psychologically, what seems of paramount importance is whether the positions that you have right now are going to work. Current positions seem to be crucial beyond any statistical justification. It’s quite tempting to bend your rules to make your current trades work, assuming that the favorability of your long-term statistics will take care of future profitability. Two of the cardinal sins of trading - giving losses too much rope and taking profits prematurely - are both attempts to make current positions more likely to succeed, to the severe detriment of long-term performance.”

Market Wizards

If you want a high hit rate system you can very easily achieve that through having stop losses that are larger than your take profits, that is all there is behind high hit rate strategies.

They do no more than provide psychological comfort at the cost of lowering your net profitability, and making it much harder and eventually impossible to keep compounding due to eventual liquidity issues.

The following is probably the single most important insight on the way to wealth and fortune through trading:

Kenneth Grant, in "Trading Risk: Enhanced Profitability through Risk Control", depicts his experience as risk manager for some of the best and most successful hedge funds, amongst others Paul Tudor Jones funds and Steve Cohens SAC Capital, that:

ACROSS ALL MARKET CONDITIONS, TRADING STYLES, TIME FRAMES AND TRADERS, ONE RULE HOLDS TRUE:

10% OF ALL TRADES INEVITABLY ACCOUNT FOR 90% OF PROFITS !


Truly grasp that and you're on your way.

Have problems with that path that simply needs to be taken on the way towards your objective of net profitability and it's next to guaranteed that you'll end up as one of tradings 95% net losers, and you'll need to keep on asking customers what they want with their order.

Click the image to open in full size.
__________________
Markus
Doing without doing

Last edited by BSD; Jul 24, 2008 at 12:18pm. Reason: Changed pic of two fat girls stuffing themsleves with fries, really was a bit to unsettling must admit ;-)
BSD is offline   Reply With Quote
Old Jul 24, 2008, 12:02pm   #29
 
Vrothdar's Avatar
Joined Jun 2008
Was that image really necessary?! I'm about to have my lunch! Urgh!

Otherwise, good post.
Vrothdar is offline   Reply With Quote
Thanks! The following members like this post: BSD
Old Jul 24, 2008, 12:10pm   #30
BSD
 
BSD's Avatar
Joined Feb 2006
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
__________________
Markus
Doing without doing
BSD is offline   Reply With Quote
Thanks! The following members like this post: davedavethetrader
Old Jul 25, 2008, 8:08pm   #31
Joined Jan 2003
Quote:
Originally Posted by mehow View Post
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.
__________________
"I do not believe that the same God who has endowed us with
sense, reason, and intellect has intended us to forgo their use." -- Galileo Galilei
Market Wizard is offline   Reply With Quote
Thanks! The following members like this post: Trader333
Old Jul 26, 2008, 8:17am   #32
 
new_trader's Avatar
Joined Jan 2006
Quote:
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?
Attached Thumbnails
es001.gif  
__________________
"It always pays a man to be right at the right time." - Jesse Livermore | Less Marx, More Mises

CLICK - My Trading Journal
new_trader is offline   Reply With Quote
Reply

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Similar Threads
Thread Thread Starter Forum Replies Last Post
Anyone making money consistently and never blocked out by bookmakers? ladbrokes Fixed Odds & Binary Betting 18 Oct 20, 2011 3:47am
How many traders win consistently comino Home Trader 66 Feb 28, 2009 2:31pm
Please show me a sub H1 forex strategy that'll consistently make me 100+ pips a week JTrader Forex 45 May 24, 2008 7:56pm
Proof of consistently profitable day trading in the Foreign Exchange market!! TrenchantFX Forex 42 Jan 15, 2008 11:11am
Which markets trend more often/consistently hellokimchi First Steps 19 Aug 11, 2007 2:12pm

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)