Questioning common beliefs

[Mr. Charts]

A daytrader needs to trade every day, and should watch the screen all day long.



If you're not profitable every day, week or month, then your system is crap.

I can't imagine anyone believes either of those !

 

[Mr. Charts]

...and the third one you've just added is a widely believed fallacy on a par with you can't succeed in business unless you've been bankrupt twice.

 

[Shakone]

I can't imagine anyone believes either of those !

Some people will throw a system out the window after 3 or 4 losing trades in a row, never mind waiting until the end of the week or month. We need winners now!

Also if someone starts the day off with a couple of losers, I wonder what the chances are that if the third trade is winning they'll think about taking profits at the point that gets them back to positive for the day rather than trade their system as it should be.

 

[Shakone]

I put this one in with all the other "hindsight" material. It may have worked fine in hindsight and show me loads of charts where it does work, and I'll counter with loads of charts that don't.
That could of course be argued that what I was drawing wasn't actually true support. so what is true support?...something that only works well after its happened. previous resistance, is just a buying opportunity for me...it means nothing after that. would I place a stop based on that fallacy, never

I don't think there is true support except in hindsight, just areas where price turned and may do so again.

I think there is something to the idea that when losing, traders will want out at breakeven and something to the idea of traders entering at perceived support and resistance levels. Both ideas can be investigated for ways to trade upon. But as you point out, there are plenty of times when support definitely did not become resistance, and books state it like some sort of axiom, so there needs to be a bit more thought applied to these ideas of support and resistance. Not all highs and lows are created equally.

 

[Mr. Charts]

If a methodology works forward walking over a statistically significant number of trades in different market conditions (or different methodologies in different market conditions) then it can be used live. There is no need to blow accounts or even lose anything more than insignificant amounts of money provided that small value position sizes are used initially then scaled up with increased experience and results analysis.
Emotion and poor planning or even gambling = failure.
Discipline, discipline, discipline.

 

[Forexmospherian]

A daytrader needs to trade every day, and should watch the screen all day long.



If you're not profitable every day/week/month, then your system is crap.



All good traders blow an account or two.

Hi Shakone

Three more great belief's that needing questioning.

It all down to you as a trader - and the levels and standards you would like to live up to.

If you believe all the commercial world ( which i just don't ;-) ) then you should be happy trading only a few hours a day - using all the standard methods and then over time - you will progress and then achieve and acceptable 40 -70% annual increase on you $2 - 5 - 10 or even $20k capital account.

Its fine to have losing days and weeks and even the odd losing months - as really as long as over 12 months you have more winning months than losing and the numbers are OK - you should be delighted...... NOT

After all - if these top commercial guys can only make 50 - 70% per annum per year - what chance have you got against all these experienced pro's

Well - the real truth is missed totally out and diverted around - the commercial trading world is totally different to the retail world you will be trading in

You have leverage - you don't have the pressure of trading multi million dollar capital accounts - you are not being micro managed and under strict rules - you just have to follow not lead - you are you own boss - and in competitive fighting talk - you will win by the sword - or die by the sword.

Trouble is most traders just roll over and die by their own sword - they are just too lazy - undisciplined - read and learn rubbish - don't "think out of the box" and basically never really do enough homework.

They forget that the world they are entering is full of crooks and deceitful money mad super brains - who will skin you alive. That's not just the imitation guru's and tutors - or those nice brokers - its those traders who control the market and have the muscle to move it at a whim - ie when it suits them ;-)

Not many systems work day in - day out - and to use them - you have to be experienced and know how the market operates every day of the week.

You are just kidding yourself if you think there is a "Holy Grail" and you will never get 100% wins on 100's or thousands of trades over years.

BUT - you can control and discipline yourself so well that - you raise your own bar and improve to a level that the "sheeple" would all love to have

I don't want losing sessions - or days - never mind weeks or months - but my strategy is manufactured to make sure that is obtainable.

If you are trading off the daily or weekly or even monthly charts - you are bound to have longer losing periods - but - if you cannot be around every hr or every day etc - you accept it - especially if you are happy with your 20 -50% per year - after all even the banks promising you just a few percent for doing nothing is not really not that safe or good alternative.

With regards to losing accounts - yet again up to you - you don't have to lose 2 or 3 accounts to be good.

However to be really good and to keep raising your own bar - you should be testing yourself more - with live money

I am a big motor racing fan - and have raced myself. You are not on the limit if you don't go off or crash whilst you are trying to get to your own limit. Schumacher and Senna were known to even hold their breath whilst on a qualifying lap - to be totally in their focus zone - so - you need to test yourself more .... - eg

Every year I might lose 2 to 4 $100 capital accounts on massive 500+ to 1 leverage purely to see if I can get an improvement over 5000% return in a week.

No way would I do silly things on a proper capital account - but even if I trade at say half a percent stake on a proper account over say $25k - its still a risk over $100 if I lose ;-)

I don't like massive pressure with large money on a live account - but on small accounts you can take the risk and really pile it on - just seeing how good you are and how you adapt at the real "cutting edge" - ie make or break - and no its not just gambling - I am taking calculated high probability trades and therefore should win over 70% of the time.

Every retail trader is different - we all have our own likes and dislikes etc etc- all you can say to yourself is

Am I really trying - or am I expecting great results with hardly any work ??

Hope you all can at least see my point of view ;-)

Regards

F

 

[Shakone]

F, I think in trading one should aim for perfection, every trade correct, every day profitable. But there's a big difference between what you aim for and what you get.

If you're new to trading it's worth having a look at some of the best hedgefunds and their monthly historical performances over the years. You'll often see a winning year with 3, 4, 5 or more months that are losing.

The very best in the business for the past decade or so had 17 monthly losses in 148 months. I don't want to argue about what's possible, because I believe amazing performance is possible, but equally don't be downhearted if the week hasn't turned out well, and don't lose your composure the next week or start taking reckless trades to catchup. Much better to accept that losing days and weeks are part of this business. Accept it and work to improve.

 

[Shakone]

If stop is at breakeven then it's a risk-free trade

It's not a free trade, you're risking the current gain that you've made. This sort of thinking goes right along there with thinking it's not a loss until it's closed, or you're gambling with the house's money. Well maybe for your stats on wins and losses you haven't counted it as a win or a loss yet, but if you are showing a negative unrealised P&L you most definitely have lost that money at that point in time, because you can't withdraw it, you can't use it as margin, it's gone - not yours anymore. Whether you later get it back or not doesn't change that it is not your money at the time.

Fibs are everywhere in nature and so they apply to the markets

It's not just about whether they 'work' or not in the markets, it's not unreasonable that you can build a system around trading on a % pullback. But all this crap about it being in nature needs to be questioned. Be suspicious of anyone who says that it is, because they obviously haven't checked properly. And if they're this sloppy with their research and statements, then they're sloppy with other things too. Nature has too much variation to conform to precise %'s like this.

Also if you're going to delve into fibs, why not test them? There's another member here who says, 'if you draw enough lines...one of them is likely to work'. Well he's right imo, and not just for fibs, but other methods that strew a bunch of lines across your chart.

 

[wackypete2]

If stop is at breakeven then it's a risk-free trade

It's not a free trade, you're risking the current gain that you've made. This sort of thinking goes right along there with thinking it's not a loss until it's closed, or you're gambling with the house's money. Well maybe for your stats on wins and losses you haven't counted it as a win or a loss yet, but if you are showing a negative unrealised P&L you most definitely have lost that money at that point in time, because you can't withdraw it, you can't use it as margin, it's gone - not yours anymore. Whether you later get it back or not doesn't change that it is not your money at the time.

Fibs are everywhere in nature and so they apply to the markets

It's not just about whether they 'work' or not in the markets, it's not unreasonable that you can build a system around trading on a % pullback. But all this crap about it being in nature needs to be questioned. Be suspicious of anyone who says that it is, because they obviously haven't checked properly. And if they're this sloppy with their research and statements, then they're sloppy with other things too. Nature has too much variation to conform to precise %'s like this.

Also if you're going to delve into fibs, why not test them? There's another member here who says, 'if you draw enough lines...one of them is likely to work'. Well he's right imo, and not just for fibs, but other methods that strew a bunch of lines across your chart.

The difference is if you draw the same lines that many other people are looking at such as fibs, S/R, and trend lines, rather than just random lines, then you can expect the action to heat up at those points as everyone starts initiating or closing trades. The lines won't tell you where price is definitely going but these areas will not be quiet zones!

Peter

 

[Shakone]

The difference is if you draw the same lines that many other people are looking at such as fibs, S/R, and trend lines, rather than just random lines, then you can expect the action to heat up at those points as everyone starts initiating or closing trades. The lines won't tell you where price is definitely going but these areas will not be quiet zones!

Peter

I have all retracements deleted on my Fib retracement tool except for the 50% wacky. Check out the 9th July low to the Aug 20 high on EURUSD. Check out the 9th July low to the Oct 25th high :clap:

All you need is the 50%.

 

[sonofcablemonster]

If stop is at breakeven then it's a risk-free trade

It's not a free trade, you're risking the current gain that you've made. This sort of thinking goes right along there with thinking it's not a loss until it's closed, or you're gambling with the house's money. Well maybe for your stats on wins and losses you haven't counted it as a win or a loss yet, but if you are showing a negative unrealised P&L you most definitely have lost that money at that point in time, because you can't withdraw it, you can't use it as margin, it's gone - not yours anymore. Whether you later get it back or not doesn't change that it is not your money at the time.

amen to that brother. it gets my goat when people say this.

shalom

 

[sonofcablemonster]

I have all retracements deleted on my Fib retracement tool except for the 50% wacky. Check out the 9th July low to the Aug 20 high on EURUSD. Check out the 9th July low to the Oct 25th high :clap:

ah the old fibs n pivots debate rages on. I certainly use fibs on a daily/weekly/monthly time frame as so many other participants use them. I no longer user them for trade entries though only for trade management and to assist in projections prior to taking a trade. The fact is that there will be a scrap at these levels as so many people use them and thus they become self fulfilling. Just like the 200 DMA, there will be a scrap there always whether that can be used profitably by the trader is a matter of understanding the context of the market and experience.

 

[Shakone]

ah the old fibs n pivots debate rages on. I certainly use fibs on a daily/weekly/monthly time frame as so many other participants use them. I no longer user them for trade entries though only for trade management and to assist in projections prior to taking a trade. The fact is that there will be a scrap at these levels as so many people use them and thus they become self fulfilling. Just like the 200 DMA, there will be a scrap there always whether that can be used profitably by the trader is a matter of understanding the context of the market and experience.

You're inspiring this thread SonOfCablemonster

If so many people use them it will become self-fulfilling

Aren't the majority destined to lose? If many people use them, shouldn't it become a loser and not self-fulfilling? More like anti-fulfilling. Maybe. Just questioning it, I don't want to start a riot.

 

[malaguti]

[/U]

Fibs are everywhere in nature and so they apply to the markets
'if you draw enough lines...one of them is likely to work'. Well he's right imo, and not just for fibs, but other methods that strew a bunch of lines across your chart.

I hope that was me who said that...as far as i'm concerned you can draw a fib retracement and yes one of them might provide support, but you won't know until afterwards and marvel at how it "bounced off that fib level"..sorry, but thats crap. It can and does often bounce off 38.2% and then gives up and goes down to 50%..you can't trade off those levels and all they represent is more noise in my opinion. They are not a part of my analysis whatsoever.

 

[wackypete2]

You're inspiring me SonOfCablemonster

If so many people use them it will become self-fulfilling

Aren't the majority destined to lose? If many people use them, shouldn't it become a loser and not self-fulfilling? More like anti-fulfilling. Maybe. Just questioning it, I don't want to start a riot.

Anti-fulfilling? lol.
Yes, most people lose for many reasons. IMO, what you are looking for is the potential at these areas. Fibs or other lines are just a tool and a tool in the hands of someone who doesn't know how to use it or doesn't respect it can be dangerous.

By the way I don't like when people use the term risk free trade either even though I don't have a problem with the method of moving stop loss to even. It's just the terminology that hurts my ears.

Peter

 

[sonofcablemonster]

You're inspiring me SonOfCablemonster

If so many people use them it will become self-fulfilling

Aren't the majority destined to lose? If many people use them, shouldn't it become a loser and not self-fulfilling? More like anti-fulfilling. Maybe. Just questioning it, I don't want to start a riot.

It took me ages to work out that trading is not about finding levels that 'work'. All levels no matter what they are random or not will sometimes 'work' and other times not. It's the meta game that is important, the 'game within the game'. quick example - loads of different t/f traders jump on a breakout of a key level, price rapidly comes back through the key level. that is opportunity. So it's what happens at the level not the level itself capiche. A lot of people will step up at fibs/pivots and therefore you need to be aware of them and make decision at them.

 

[Forexmospherian]

if stop is at breakeven then it's a risk-free trade

Its all how you look at it,

Every time you trade - you take a risk .

If you can lock any profit ( profit) in - ie in positive pips - ie 5 pip or 20 pip in the black or lots more if possible - it is not longer a risk and your emotion or stress levels are reduced

So in theory - If I was in 5 trades and had profits locked in say 4 of them - my risk then is only with one trade - as i don't have to worry about the other 4 - as if they get stopped out - I still have a profit from each trade.

Its not the best way to maximise your account as if you are up say 280 pips on a nice trade and you lock say 200 pips in profit and then don't manage it - and allow yourself to lose 80 pips ie a 34+ % - it's hardly being efficient.

What is probably more important is not to let a winning trade go to a losing trade.

So many traders think I am up 50+ pips my stop is just now 20 pips below entry - after being say 70 pips from entry - I will give the trade room - and then find out they were up 53 pips in profit and 2 hrs later they are stopped out with 20 pips loss

Money Management is as key as your method of forecasting or predicting moves

You only trade to make money - too many traders forget that

However - you do not keep risking 1 or 2% of capital on 50- 70 pip stops and end up keep taking profits of only 20 - 40 pips - you will soon get caught out that way.

You have to have the balance - ie trades with RR's over 2 or 3 + as well as trades that are all just RR's between 0.2 and 1 - and not so many trades that lose ideally.

One other point though - don't restrict yourself to set targets etc with profits at say RR's of 2 or 3 . There will be trades that can make RR's of 6 and 10+ those are the cream on the cake - don't just dismiss them by saying I have won - that's good enough - its not really ;-)

 

[wackypete2]

What is probably more important is not to let a winning trade go to a losing trade.

So many traders think I am up 50+ pips my stop is just now 20 pips below entry - after being say 70 pips from entry - I will give the trade room - and then find out they were up 53 pips in profit and 2 hrs later they are stopped out with 20 pips loss

Peter

 

[sonofcablemonster]

"bounced off that fib level"..sorry, but thats crap.

picture this. You are long the NOB crack spread and it has broken all time new highs on the daily t/f. You are way in profit. Price starts to pull back on you. You draw in a fib of the last major move up on the daily t/f and you see price move back down towards the 1st 23.6 fib. You know a tonne of people will take profits around there and also a tonne of people may try and buy the pullback there. Can you use this information to your advantage? I can tell you I would be taking the majority of my profit off at that level. just saying.

 

[Shakone]

picture this. You are long the NOB crack spread and it has broken all time new highs on the daily t/f. You are way in profit. Price starts to pull back on you. You draw in a fib of the last major move up on the daily t/f and you see price move back down towards the 1st 23.6 fib. You know a tonne of people will take profits around there and also a tonne of people may try and buy the pullback there. Can you use this information to your advantage? I can tell you I would be taking the majority of my profit off at that level. just saying.

NOB crack spread What an image