trading and luck

[tenbobtrader]

"The less one works, the more time he has for thinking."

thinking without reading is dangerous ...... read that some place

Andy

 

[Black Swan]

. Usually, people who say 'its just luck' are people who lose in life, but my dad made £100k. That's one things that concerned me.

My experience is completely different, folk that tend to say they're lucky are generally successful at whatever they do, but always recognise (and have the humility to admit) that 'luck' plays a part.

The phrase the harder I practice the luckier I get is one of life's 'truisms' in my book...

 

[Black Swan]

Hi morgan_edge -

TA works, but not all TA works all the time. Prices in a free market tend to progress in one direction for sustained periods (trends). Trends tend to sustain themselves as new participants speculate that they can enter and profitably exit the trend before it ends. Participants in later trends see where earlier trends started and finished and feel obliged to regard these as guides to safe entry and exit levels (support and resistance) and price tendency changes tend to recur at these levels. The sort of TA that relies on trends, support and resistance will always work. The adage used to be 'Buy low, sell high': more helpfully it should read 'Follow a trend after it has started, leave it before it ends'.

Cool yep the "trend is your friend etc"...

 

[montmorencyt2w]

Morgan_Edge,

You might like to look at a book called "Technical Analysis and the Active Trader" by Gary Norden.

I should warn you that, despite the title, he's very critical of TA, at least the way it is normally practised. His "thing" is "Behavioural Finance". It's only a couple of hundred pages, so worth a quick look at least. Even if you end up disagreeing with him (and I think he tends to overstate his case in some ways) he will make you stop and ask questions.

Also it was written around 2004-2005, and so to some extent may be behind the times, but then again, maybe not.

 

[arabianights]

for behavioural finance get ahold of choices values and frames by tversky et al...

 

[firewalker99]

for behavioural finance get ahold of choices values and frames by tversky et al...

Don't forget Kahneman.
And Ariely is also worth reading.

Also a nice experiment of how people behave with regards to money under certain circumstances can be found here:
Trading for tequila

 

[montmorencyt2w]

Now where have I seen that before? Only just spotted the bit of Dutch though. hmm...they speak a version of Dutch in parts of België don't they ....

geplaatst - Wiktionary
plaatsen - Wiktionary
door - Wiktionary

 

[amnonco]

Quote:
Originally Posted by tomorton
Hi morgan_edge -

TA works, but not all TA works all the time. Prices in a free market tend to progress in one direction for sustained periods (trends). Trends tend to sustain themselves as new participants speculate that they can enter and profitably exit the trend before it ends. Participants in later trends see where earlier trends started and finished and feel obliged to regard these as guides to safe entry and exit levels (support and resistance) and price tendency changes tend to recur at these levels. The sort of TA that relies on trends, support and resistance will always work. The adage used to be 'Buy low, sell high': more helpfully it should read 'Follow a trend after it has started, leave it before it ends'.

Cool yep the "trend is your friend etc"...
...

uhhhhhhh no.

it should read - Follow a trend after it has started, leave it After it ends.

trend followers will (traditionaly) won't set price targets, rather they'd wait and let the trend unfold.
trying to leave the trend before it ends, implies you know where a trend will end...

 

[tomorton]

uhhhhhhh no.

it should read - Follow a trend after it has started, leave it After it ends.

trend followers will (traditionaly) won't set price targets, rather they'd wait and let the trend unfold.
trying to leave the trend before it ends, implies you know where a trend will end...

Not really. I mean the only way to enter a trend is when it has already made itself clear - nobody can say a price is about to enter a trend.

As for leaving, I can#'t predict the ends of trends, and I'm not aware of any technique that will reliably do this (I suppose Fibonacci might be used in some circumstances, I never attempt it). But it just isn't that easy to say in real-time that a trend has ended and the tendency will always be to hold on too long for confirmation. My advice is set a target, get out when it is hit and don't look back.

 

[amnonco]

Not really. I mean the only way to enter a trend is when it has already made itself clear - nobody can say a price is about to enter a trend.

As for leaving, I can#'t predict the ends of trends, and I'm not aware of any technique that will reliably do this (I suppose Fibonacci might be used in some circumstances, I never attempt it). But it just isn't that easy to say in real-time that a trend has ended and the tendency will always be to hold on too long for confirmation. My advice is set a target, get out when it is hit and don't look back.

have to disagree...
if you can tell when a trend made it self clear for entry, you can tell when a trend in other direction made itself clear aswell...
setting price targets is essentially capping your profit potential.

take a look at the donchian channel system for example (father of trend following btw),
you can see that you're buying highs and selling lows...not buying highs and selling highers...

 

[Splitlink]

uhhhhhhh no.

it should read - Follow a trend after it has started, leave it After it ends.

trend followers will (traditionaly) won't set price targets, rather they'd wait and let the trend unfold.
trying to leave the trend before it ends, implies you know where a trend will end...

Quite often, with time, the implication is correct. That's not beig bigheaded. It's just a gut feeling that is more common with intraday trading. Morning and afternoon trends, for example.

 

[amnonco]

Quite often, with time, the implication is correct. That's not beig bigheaded. It's just a gut feeling that is more common with intraday trading. Morning and afternoon trends, for example.

if it works for you, cool.
I'm more of a mechanical type of guy...so there has to be a clear cut criteria for me. I have no gut feelings,
I have no gut
nor feelings

 

[tomorton]

have to disagree...
if you can tell when a trend made it self clear for entry, you can tell when a trend in other direction made itself clear aswell...
setting price targets is essentially capping your profit potential.

take a look at the donchian channel system for example (father of trend following btw),
you can see that you're buying highs and selling lows...not buying highs and selling highers...

Hi amnonco - Getting into and following an established trend is a low-risk strategy, because the trend is already established and will tend to continue. But to put the actual point of entry into an uptrend on a local high takes away some of that protection, so I don’t follow the Turtle or Donchian or similar systems that demand long entry on a new high, I would await a pullback as per Rivalland or Gann et al.

On exiting the position however, I love to exit a long on a high. When entering the position, you’re putting money at risk to find out if you are right. When you think an uptrend is ending, and the evidence for this can only be that prices are already falling, you are no longer putting money at risk to find out if you are right, you are actually paying it out to be told you are wrong. This seems notionally and financially wrong to me.

I like to set a price target (this will almost certainly not be a trend reversal point, I can’t do that) where I will get out and then move on to another market or await another opportunity in which I find a strong and well-established trend. I don’t like to be holding long at a price where I would not be opening a new long or expanding my existing long: if I wouldn’t be going long here, why would anyone else? And if nobody else is going long, the price is already falling. Having set a price target, I would even be happy to take 80% of it and get out.

 

[Splitlink]

Mechanics and blood and snot trading don't mix, I agree, in the same way that robots and humans don't, either. I've tried the mechanical side, too. Now, it's discretionary.

Good trading

 

[white4burgundy]

trade indeed

Indeed... in trading you use your head..in luck, you use the lines in your palm.
but for sure, what is important is to learn the trade, than learn the trick of the trade.

 

[Splitlink]

Indeed... in trading you use your head..in luck, you use the lines in your palm.
but for sure, what is important is to learn the trade, than learn the trick of the trade.

Don't get me wrong. You don't trade on luck, you trade with your head, as you say, but there is an element of luck in everything--good or bad-- and it is extremely important.

It doesn't matter if some on here don't believe it. There is nothing anyone can do about it, it's a factor that will help or hinder the bottom line, sooner or later.

 

[white4burgundy]

opportunity

i do not really disagree with you... it's just that, when opportunity and preparation come together, we call it luck. a trader has a good preparation, and then opportunity comes and his preparation matches, then there goes the luck. the trader becomes lucky .enough.

 

[Splitlink]

I think we agree. It's there and influences our bottom line in one form or another.

Good trading and Good Luck!

 

[AmateurTradersOnline]

The Harder you work the Luckier you get!

 

[Splitlink]

The Harder you work the Luckier you get!

I think I came in here.