Trading is an illusion

[Rhody Trader]

Take a black and white photo copy of a five pound note.

Cut it out so that it looks like a fiver.

Then show it to some unsuspecting person and ask them to describe what colour it is.

Most people will tell you its blue. They will still protest it's blue even after you tell them it's black.

It's not until you place the real fiver next to the photo copy that they realise it's black and white.

This is really spooky, I've had this done to me. It's almost as if the photo copy changes colour as you bring the real fiver close in next to it.

( best done with a crisp new note )

We see what we expect to see.

 

[laptop1]

Take a black and white photo copy of a five pound note.

Cut it out so that it looks like a fiver.

Then show it to some unsuspecting person and ask them to describe what colour it is.

Most people will tell you its blue. They will still protest it's blue even after you tell them it's black.

It's not until you place the real fiver next to the photo copy that they realise it's black and white.

This is really spooky, I've had this done to me. It's almost as if the photo copy changes colour as you bring the real fiver close in next to it.

( best done with a crisp new note )

dd

Where were we? Oh yeah, the illusion thing… Let’s start with the physical, material stuff, in this case the £5.00 pound note. Everything you see is not as it appears – or as it is interpreted by our little brains.

Our perceptions of ourselves, of those around us and the events and situations in our lives and the rest of the world are shaped primarily by our inputs and experiences to this point in our lives. Nucleus of the atom that gives atoms their solid appearance a bit like us.



Are we all dreaming.

 

[firewalker99]

Take a black and white photo copy of a five pound note.

Cut it out so that it looks like a fiver.

Then show it to some unsuspecting person and ask them to describe what colour it is.

Most people will tell you its blue. They will still protest it's blue even after you tell them it's black.

It's not until you place the real fiver next to the photo copy that they realise it's black and white.

This is really spooky, I've had this done to me. It's almost as if the photo copy changes colour as you bring the real fiver close in next to it.

( best done with a crisp new note )

dd

That's a nice one.
A similar one is the shadow illusion, number 18 on the following site.

Personally I love 13 but they're all pretty cool.

Most Amazing Optical Illusions

 

[dick_dastardly]

We see what we expect to see.

That's right but we can also see what we fear most aswell.

Now I realise that what I'm about to say will be a red rag to our resident US bashers here on T2W and it is not my intention to start off an argument but let me give you another example.

Take the shooting down of the Iranian airliner in 1988 by the USS Vincennes. Now, a few days before this incident a US Navy ship had been involved in some sort of hostile exchange and so stress levels among the Vincennes crew were up.

For various technical reasons which I wont go into here the Vincennes Radar software incorrectly tagged the Iranian airliner as a military jet fighter.

As the airliner flew towards the USS Vincennes the radar operator on board ( not knowing the tag status was incorrect ) reported that the aircraft was approaching AND DESCENDING, ( an approaching aircraft that is also descending is indicitive of an attack )

As a result of this report the ships captain decided to launch an anti aircraft misile which destroyed the airliner killing everyone on board.

In the investigation that followed it was determined by the US military that the airliner had not been descending at the time but in fact had been flying straight and level on its normal flight path.

It was also determined that the radar operator had not lied or exaggerated the information he had observed on the radar screen but had in fact reported what he genuinely believed he was seeing. He actually believed that the aircraft was descending even though the radar screen showed it was flying level.

It was concluded that the radar operator had seen his greatest fear unfold as if it was really happening even though it wasn't. Psychologists later went on to name this phenomenon Scenario Fulfilment.

Now the reason I use this example is I can't help but think that perhaps there may be parallels here with, on the one hand a stressed out radar operator who fears for his life and, on the other hand a stressed out trader sitting in front of his trading screen believing that the market is about to turn against his position.

Could it be that this Scenario Fulfilment is a psychological problem that some traders have to overcome in order to be successful.

just a thought

dd

 

[Rhody Trader]

That's right but we can also see what we fear most aswell.

You could say that's the same thing as seeing what you expect to see. In a high stress situation where you are worried about threats and looking for them, you tend to see them.

It happens in trading too. Bears will tend to focus more on negatives, while bulls will tend to focus on the positive. It isn't always that you don't see the other side of the equation, you just tend not to weight it at strongly.

 

[grantx]

Laptop,

“Everything you see is not as it appears”.

If I’m making judgements on misinterpretations, will the results - positive or negative - also be illusory?

How can we say something isn’t when, by your definition, we cannot determine what it is? Or perhaps, what it isn’t is what it is.

Markus,

The girl on the boat – is she one of your bitches?

Grant.

 

[Paul71]

Laptop,

“Everything you see is not as it appears”.

If I’m making judgements on misinterpretations, will the results - positive or negative - also be illusory?



Then the illusion becomes reality. That's why people move stops and average out, reality is too much to handle.

 

[BSD]

Markus,

The girl on the boat – is she one of your bitches?

Grant.

Fraid not yet Grant ;-)

Think she played in Swedish Teenage Lesbian Vampire Nyphomaniacs though, certainly displayed great, uh, talent there.

 

[new_trader]

Where were we? Oh yeah, the illusion thing… Let’s start with the physical, material stuff, in this case the £5.00 pound note. Everything you see is not as it appears – or as it is interpreted by our little brains.

Our perceptions of ourselves, of those around us and the events and situations in our lives and the rest of the world are shaped primarily by our inputs and experiences to this point in our lives. Nucleus of the atom that gives atoms their solid appearance a bit like us.



Are we all dreaming.

Everything you see is exactly as it appears. I think you mean that everything is not what it appears to be. The way our brains process visual information is thought to be not very different to the way MPEG works. This is why the brain can be tricked with optical illusions. Atoms don't give anything a solid appearance because vision is the reception of photons by the eye, not atoms.

 

[BSD]

resident US bashers

That caught my eye, just wanted to say that at least as far as I'm concerned there is a world of difference between bashing Bush and his cronies who obviously deserve it, vs bashing the entire country which clearly cannot deserve such a treatment as the wise law against generalizations clearly prevents them being relegated to a similar status as Bush & Co.

Actually, think it's sthg like 70% of US Americans that are just as fed up with him as the rest of us.

Equating an entire country with the follies of it's current leadership is just as dumb as claiming that all or even just most Blondes have certain deficiencies in the top drawer.

I have very many good American friends who see things just like the rest of us, but admit that they have less international friends at home who are occasionally surprised at the openness with which the criticism is voiced from abroad, but that's only sthg that comes with the territory, the greater the exposure and / or impact of a countries (or even persons) current activities, the greater the level of attention, be it positive or negative, being targeted at you, or, in the case of countries, at the leadership.

Nothing to do with Jack and Jane though, just with Dubya and Dick.

Here's to Jack and Jane.

 

[TWI]

Trading is all about playing the %'s. If there were hard fast rules, it would be easy, and there'd be many more traders and many more successful traders.
Just when i think i have found a hard fast rule, i realise that it wasn't - it was merely a collection of similar incidences that formed a pattern/trend, which was sure enough soon to be broken.
A while back, i realised that i don't need to find a holy grail, i just need to lay the %'s correctly, and make steady profits - which all my strats do. Capital growth (offence), & equally - capital preservation (defence) being my main goals. So I only trade when conditions are favourable, and only trading in the direction of the underlying trend.

This is it. I see so much discussion of setups and entries when in reality consistency and exits are the key. At any moment we can buy or sell and all we need is the tiniest edge and the dogged determination to be consistent in our methodology. All the work is done before the trade is on, execution should be totally divorced from the formulation of method.
If you had a stop and profit target of 1.5 average true range and flicked a coin each time before you traded to decide whether to buy or sell, over many iterations you would only lose your execution costs. So, next you introduce an edge such as only go long if price is above the 50 day average and only sell if below the 50 days average. That may, on its own, be enough to create an edge which covers your costs. So then add buy only if RSI above 65 only sell if RSI is below 35 and you may find this provides a small profit. Fiddle a bit with stop levels such that when you reach 1.5ATR profit you take half the position off and place the stop at entry price and you improve your edge again.
Ultimately run these simple scenarios over as many markets as you can and you see that it is simply a numbers game. It is actually far harder when you only have one market to play with. There are many automated funds that have staggeringly simple methodologies and yet covering many markets still churn out double digit returns year after year.

 

[laptop1]

Most loss at trading through 1 or 3 big losses, hoping price will turn around to get out at break-even.

The only edge you have, is managing your money once you in a trade. That the bottom line is....Everything else is an illusion.

 

[Rhody Trader]

Most loss at trading through 1 or 3 big losses, hoping price will turn around to get out at break-even.

The only edge you have, is managing your money once you in a trade. That the bottom line is....Everything else is an illusion.

If everything else is an illusion, and managing your money once your in a trade is based on all that other stuff (changes in price etc.), then by extension position money management must also be an illusion. Which actually makes sense since you cannot guarantee with absolute certainty when you'll be able to exit a trade.

 

[laptop1]

If everything else is an illusion, and managing your money once your in a trade is based on all that other stuff (changes in price etc.), then by extension position money management must also be an illusion. Which actually makes sense since you cannot guarantee with absolute certainty when you'll be able to exit a trade.

Yes, you are correct. but you cannot predict price, but you can predict where you getting out if you are wrong. or getting out by moving you stop till the illusion of price gets you out.

 

[Rhody Trader]

Yes, you are correct. but you cannot predict price, but you can predict where you getting out if you are wrong. or getting out by moving you stop till the illusion of price gets you out.

But that's my point. You cannot predict with certainty where you get out. You might know with a high probability, but not with certainty.

 

[laptop1]

But that's my point. You cannot predict with certainty where you get out. You might know with a high probability, but not with certainty.

Yes, that's why everything to us is an illusion. We can only go along with what "NOW is doing" not yesterday or tomorrow....Take a look at the Dow. tell me what it's going to do in the next 1min that's not to far out. Can you place your house on its next move, in this time frame.

 

[grantx]

Laptop,

So what/where is reality? How does this relate beyond trading?

Grant.

 

[Rhody Trader]

Yes, that's why everything to us is an illusion. We can only go along with what "NOW is doing" not yesterday or tomorrow....Take a look at the Dow. tell me what it's going to do in the next 1min that's not to far out. Can you place your house on its next move, in this time frame.

Doesn't that then contradict what you said earlier: "...but you can predict where you getting out if you are wrong. or getting out by moving you stop till the illusion of price gets you out." ?

 

[Paul71]

Is there an invisible equilibrium on a chart? The equilibrium is not illusion, it is fact, and only successful traders pick up on this. The equilibrium is not an average line that is drawn for anybody who happens to pay for it, the equilibrium is just something that is picked up by certain minds, after analysing certain facts.

...hold on, let me just have another big toke on my cone....ahhh, that's better....

Any thoughts, anyone?

 

[laptop1]

Is there an invisible equilibrium on a chart? The equilibrium is not illusion, it is fact, and only successful traders pick up on this. The equilibrium is not an average line that is drawn for anybody who happens to pay for it, the equilibrium is just something that is picked up by certain minds, after analysing certain facts.

...hold on, let me just have another big toke on my cone....ahhh, that's better....

Any thoughts, anyone?

I think you are referring to" The Value Area". …I make a living from trading I know all the equilibrium areas. But there are no guarantees that price will be performed in a specified manner when it get to the desire equilibium area. So we go back to the illusion thing again.

After the holiday, I may open a room and show how I day trading using simple money managment techniques.