Education is the key

[SOCRATES]

Dear Trader28,

Yes, and you would do well to listen as all of this is the consequence of a lot of experience. We do not trade and talk at the same time. We talk among ourselves when we have finished trading, at least for my part anyway, I suppose other members are the same.

Trading does not mean you have to be glued to the screens 24 hours a day. Trading is the only profession that allows results to be achieved in minutes that takes others hours of road digging or sheep shearing or other.

But you are most welcome to join in if you can provide constructive and interesting comment.

And a good day to you, Sir.

 

[SOCRATES]

Success <g>
Yes, tuning fails due to the individual. Personally I think MOST individuals are incapable of what's needed... I've no idea why it should be so, but what I think of as logical processing of ideas seems alien to many - I think it's fair to say that I'm in the minority so it's me that's odd.... I am genuinely baffled when somebody can't see that they've made an illogical link between disparate items. ('Oh look, it's Tuesday, there'll be a flood in Mongolia then....<g>')

Back to the market then (admittedly not much of a journey - it's on the left hand screen). Watching hour after hour of intraday in RT isn't exactly entertaining, but I seem to be improving at a very gentle rate....

I agree.

 

[DaveJB]

...but not when the market is out to lunch, leaving the gofers running the place, usually.

 

[SOCRATES]

I can't help thinking we are making this discussion over complex.

If I can summarise how I feel in a few simple points.

* Not everyone is suitable to be a trader, in terms of temperament, skills or so on.
* For those that have the potential abilities, they need education and mentoring. There can be no question of that!
* Mastering their own emotions, understanding investor psychology and so on are a fundamental part of the educational agenda
* Follow up after training is vital, so that people don't forget what they have learnt and embed bad habits
* I disagree that paper trading is the way to do it. Yes to master the mechanics, but as emotions play a fundamental role in trading, one has to learn to trade with ones emotions, and control them. And trading with your own money is always going to make you think differently than a virtual trade ever could.
* The key its to start small, don't get greedy or cocky. There are no fast bucks, If you think of trading as a job, and expect to serve some sort of apprentership, you have the attitude to do well - if you are given the necessary, tools and support in proper edcuation programmes.

Ken

I agree completely with EVERYTHING you say above.

Two points:#

1. Follow up. You can take a horse to water, but you cannot force it to drink, despite your most patient, well intentioned, persistent, strictest, open hearted efforts.

2. Paper trading is crucial. This is because there are two main reasons.

Reason A. The aspirant has to experience exercising judgement, not gambling.
The aspirant has to verify if his judgement is correct, and to accept when
and if it is not correct, and now the excercise is to determine why this is so
and to learn not to repeat blunders.

Reason B. The aspirant has to give himself time to observe, without committing, all the
varieties of market conditions that are presented. This is very important as the
ability to recognise what is and what is not later will be crucial.

It is far more sensible to do this without real risk, rather than with very real risk, in addition to having to multitask in live trading, because the ability to multitask comes with time, and exposure, and experience.

Having said this, also, paper trading for the sake of it is meaningless. It is only meaningful when it is done for a purpose. The main purpose is to gain familiarity with the insturment being observed, its behaviour, its limits, its quirks, its rhytm, its parameters, its style, its capabilities, its traps, and ulimately its own individual identity.

This takes time, sometimes a lot of time, and a lot of patience that people do not have.

This is essential work for any trader, but it is not what the majority are willing or able to do.

 

[SOCRATES]

I dont listen to talkers, I watch the doers and act!

Well, I regret to inform you that you are not invited in here, sorry.

Kind Regards.

 

[SOCRATES]

...but not when the market is out to lunch, leaving the gofers running the place, usually.

Friday lunchtimes are the best example, because everyone is thinking of the weekend.
This is why I take Friday afternoons off, never trade on Friday afternoons.

Sometimes the first day after a major holiday is also a dead duck.

The day before Xmas Eve as well. There are many of these non trading days that can easily be pinpointed if you look carefully.

 

[DaveJB]

Yes - most lunchtimes are very obvious if you are watching the charts... 2c up, 1c back, 2c down, 1c back up..... I sometimes wonder if the desk minders are subject to decimation or something should 10c worth of trend develop!

 

[SOCRATES]

Yes - most lunchtimes are very obvious if you are watching the charts... 2c up, 1c back, 2c down, 1c back up..... I sometimes wonder if the desk minders are subject to decimation or something should 10c worth of trend develop!

No, it is that the fat cats are not around, they are round the corner at Wheeler's guzzling Oysters and the best of Vinos. That is why.

 

[ducati998]

SOC.

Please, can you explain to me more clearly how it is possible to capitalise on the markets errors and thus to contradict it ?

Socrates, I'm surprised, while you may very well never use valuation as a methodology, you should at least be aware of it. From your public profile you list yourself as a "VETERAN TRADER, and a "long term investor". Now, as I said, you may not use a value approach, but in essence to contradict the market is all I ever do.

The market, via price provides a valuation. This valuation is so patently incorrect, due to the over-reaction of the emotional, the technical, and just plain ill-informed, that I have a trade guaranteed to pay me.

Tight stop losses do not destroy novices. Novices destroy themselves when they derelict responsibility over placing tight stops and adhering to them.

This I disagree with, for the reasons previously outlined.
Stops in general contribute directly to the net losses suffered by a trader per annum.
It would be correctly argued that, in point of fact, stops prevent even larger losses.
Nevertheless the fact is, .....stops create losses.

Therefore, by definition, the closer, or tighter the stoploss to your entry price, the higher the more frequently that it will be triggered......unless, your entry is close to the exact turning point, in which case it will not be triggered. If your stops are based on a support point, lets say floor pivots, and take the NQ Futures as an example, how often does it run through the pivot, only to reverse at some arbitrary point? How often can you get a fill at that precise point even if you are aware and waiting? Not that often, or a partial fill will be the best you get. In stocks, this is exacerbated to a degree by market makers blatently manipulating

Therefore, knowing this, an entry would have to allow for ...1....the break of a support level, and ...2...a poor fill, or a good fill higher, but running a looser stop.... A tight stop just for almost anyone just increases your losses.

Add to that an average trader ability, discipline and emotional issues, and you have a recipe for disaster.

The real mess develops when they disregard everything they are told and start to trade multiple contracts in in derivatives they do not understand, when conditions are not right,

The mess won't last long, they'll be swept away in short order.


trader28

Traders trade.... you people sure talk a lot

dont listen to talkers, I watch the doers and act!

Regrets are for the sorry

Not all market participants need to watch the market intra-day, therefore have time to participate in forums such as this. Obviously such a basic concept has slipped past your cognitive faculties.

You watch the herd, and by definition have joined the herd, and are subject to all the paranoia of the herd. Congratulations on surrendering all individual thought.

Regrets, hopefully you will never have any, however, the probabilities of that occurring seem infinitely small.

cheers d998

 

[DaveJB]

No, it is that the fat cats are not around, they are round the corner at Wheeler's guzzling Oysters and the best of Vinos. That is why.

I'll take your word for it that these are the places they like to pass that brief period (approx 3hrs and counting) - I'm okay on the fat cats, their absence is why I suggested there were desk minders on for this period... Fat Cat heads for lunch, glances over shoulder, murmurs "do anything, touch anything, get more creative than answering the phone to take a message and you'll be cat food" to the minder, and heads for the door.

 

[SOCRATES]

Absolutely, and if it is not Wheeler's, it is the Gym, or Peter Jones, or the Tailor, or the Dentist, or the Oculist, or Shipton and Heneage and the juniors, and their sandwiches, are left to "hold the fort", and "don't do anything, and don't press any buttons".

Such is the culture that permeates institutional life, that even after many years, even when they have, according to their own frame of reference, "gone up the ladder", and one day, if they decide to leave and trade their own accounts, they cannot, like goldfishes taken out of the familiar goldfish bowl.

Having said that, institutional life can be very rewarding and interesting, but does not prepare the denizens for the cold reality of facing screens on their own paddling their own canoes.

I remember a Danish Insitutional trader that I retrained many years ago. He was addicted to the news, and if there was none he would make a point of gossiping with his old friends.

I stopped him from being influenced by all the gossip and made him succesful. However, within a short while he had resorted to his old habits, and began to slide.

Despite all warnings, he exchanged what worked for what did not work, as the force of ingrained habit was too great for him to overcome.

I finally was obligated to give up futile attempts to guide him any further.

He is now an Estate Agent.

 

[trader28]

It has been my experience that traders who talk, traders who try to set themselves up as an authority, traders who give themselves pretentious nicknames are merely massaging their ego's and their opinions can be deemed worse than useless as they focus on everything but what really counts, the psychological aspect of trading! The truth is most systems, methods and tech analysis work just fine.... more knowledge is an excuse, a subconscious projection, a repression of what is required...... no more guru's!

 

[kevin546]

trader28

I can understand your reluctance concerning your experience towards those that talk and those that do. However perception can sometimes be a dangerous thing, 1st perceptions are not always what they first appeared to be. I suppose what I am trying to say is you have a different point of view based on your experiences. But IMHO that does not mean that everyone who offers some advise maybe a charlatan or speaking from a lack of trading experience. Those that are content to make up there own minds and disseminate the information as they see fit is up to there personal choice.

I think as a discussion a different point of view is good providing it can be expanded on and examined to see if it has merit. Therefore I would prefer to see your comments expanded in the context of the discussion rather than the short quips that offer little interest.

If you wish to discuss more active trading issues I can understand and appreciate that but this is a general topic and I think what you want is something such as strategies. No one here has yet come out and offered there services for offer but has posted in there own time. There are a number of traders apparently registered with this site who do post and are highly active successful traders. Will you bemoan all of these because of you current thinking. You may run the risk of making comments that are unfair and incorrect.

If the content of this discussion does not sit well with you then I suggest offer something as an alternative of find a suitable thread that meets your requirements.

 

[trader28]

trader28

I suggest offer something as an alternative of find a suitable thread that meets your requirements.

I did offer a suggestion, the only one that counts, even though it be unpopular

inner knowledge is the only successful method anyone needs, a monkey with a bar chart and an macd could make money, only one thing seperates successful traders from losers.... and it isn't more knowledge.... unless that knowledge concerns the self.... if you are reading to enhance your method you are already numbered among the losers, if you are listening to traders like Socrates you are already numbered among the losers

Know thyself

 

[kevin546]

I think it should be know thyself in the context of what you are trying to do in the market and therefore you need to know the market in order that you can identify when you can achieve your intent and how you need to respond during these times.

 

[trader28]

I think it should be know thyself in the context of what you are trying to do in the market and therefore you need to know the market in order that you can identify when you can achieve your intent and how you need to respond during these times.

90% lose..... because its hard? because they dont knbow the markets well enough? because tech analysis doesn't work?

Some good questions there, better than the answers

 

[kevin546]

It depends what you mean by tech analysis, would reading the price be considered technical. Price is everything around the market intent.

 

[trader28]

It depends what you mean by tech analysis, would reading the price be considered technical. Price is everything around the market intent.

Missing the point, it's not price action vs indicators.... it's psychology vs this insane never ending search for more knowledge, more knowledge wont do it, never has done it, never will do it..... psychology and scant knowledge of markets/analysis will wipe the floor with the perennial searcher who knows it all but needs to know more.

You see he is searching for a reason........ he just doesn't realise he is the reason.

 

[kevin546]

I accept if a persons psychology is tainted to that degree that the trading will fail.

Knowing yourself and applying yourself to the market in the manner that works for the individual must involve an element of knowledge and experience in order to develop or establish you have the right psychology to trade.

Therefore how in your opinion should someone begin to prepare for trading, assess there development or not as the case maybe in order to show they are or are not suited.

 

[DaveJB]

Trader28,
for what it's worth, if you look at the material some of the posters here have produced, and look back at what they've said across this board (often over several years) you'll find that the people you appear to be decrying push quite hard for the adoption of a 'price and volume' approach... ie they're NOT suggesting lots of extra knowledge, they're suggesting rather strongly that you need nothing more complex than:
1) A bar or candle chart, most would include a volume bar display
2) A lot of time looking at (1), with some help from others to help identify the important lessons visible, but the essential point is that the individual spend a long long time becoming very familiar with the basic price chart.

I'm not a fan of training myself - I think those who survive the entry to trading could probably benefit from spending time with a more advanced trader who could pass on a few extra ideas which anyone who survives the apprenticeship could possibly make use of. I doubt training raw beginners is a good idea, simply because I think the failure rate will be excessive.

As for Socrates - I've argued with him, he's invariably a gentleman about it, he's a strong advocate of spending time with your head in a chart and has yet to suggest anyone might like to sign up with him... he's a Price&Volume type as well - given the vast array of 'trainers' offering to teach MA crossovers at $2500 a day there are worthier targets for your scorn. Soc is keen on traders being psychologically prepared/armoured, I think that comes from within naturally rather than being taught... we disagree somewhat on that. (I'll concede that if it exists in the pupil then a good mentor/trainer might help extract it and speed development thereby). Your position and Soc's aren't actually that far apart, I think you've misunderstood where he's coming from.

Chatting - yes, I have a live datafeed running as I type, I have alerts set up so if a stock I might trade hits a significant price then it goes 'ding' and I'm looking at the chart. I KNOW in advance what I'm waiting to see, so I can trade it - if it does not occur then I do not want to trade it. Sitting and staring at a screen, watching intraday bars bounce up and down is no way to spend a day - it is a misuse of your resources (your intelligence, your attention) to stare endlessly at a screen while nothing happens... much better to be fresh as daisy when you need to react. I'm a small trader - I come from EoD trading and have been teaching myself to adapt to intraday, so I'm far from expert, initially I wanted to trade every swing of every stock, it seemed the thing to do... I count 'sit back, wait for what you need to see' as one of the most valuable lessons I've learned, and cementing that into my brain has taken a good while!