Unfashionable Advice

[fxmarkets]

ASC thanks for reply. ,yes agree with what you say about your total life experience and giving it etc..... that should not if it could be done, be done. Yet developing mindsets that may/will assist an individual should perhaps be explored at some point by them for them. Now ive used or came across zen.. but many will recognise it better if i change ZEN and say "looking/being aware at my own behaviour/feelings whilst im trading" what do i do and what do successful traders do or have in common if anything, can this be used or be of help to me.

and yes each should sift through and ultimately find out and experience for themselves. Total mind/life transferance even when available to purchase should be avoided . hmmm.

fx.

 

[contrakt]

I’m far more interested in looking a level above what worked for me and finding it out how it did what it did to me to make me do what I did (or didn’t do), how it has worked for others and how it might be fashioned and fitted to work effectively for others. Efficiency. We each of us have a responsibility to think thru what it is we are doing and how this might impact others. You need to think it thru. It isn't always first flush right. It's rarely first flush right.
.

"Prince Wen Hui's cook was cutting up an ox. . . . The ox fell apart with a whisper. The bright cleaver murmured like a gentle wind. Rhythm! Timing! Like a sacred dance. . . . Prince Wen Hui: Good work! Your method is faultless! The cook: Method? What I follow is Tao beyond all methods! When I first began to cut up oxen I would see before me the whole ox all in one mass. After three years I no longer saw this mass. I saw the distinctions. But now I see nothing with the eye. My whole being apprehends. My senses are idle. The spirit free to work without plan follows its own instinct guided by natural line, by the secret opening, the hidden space, my cleaver finds its own way... Then I withdraw the blade, I stand still and let the joy of the work sink in. I clean the blade and put it away. Prince Wan Hui: This is it! My cook has shown me how I ought to live my own life!"
~ Chuang Tzu (c.360 BC-c. 275 BC)

 

[samtron]

I started a thread a few months back entitled "Must Trash Trading Book"

My choice was "The Way of the Warrior Trader" this was all about applying the Zen mind-set to trading.

The only thing I would add is

Surely once a person reaches the level of Zen material (and money) cease to matter and thus paradoxically there should be no need to trade.

 

[Platanos]

Thank you ASC for the time and effort you are putting into this thread. With respect to the “Apprentice 3” exercise I found that my initial response was diametrically opposite to what it should have been. I intuitively thought that an investment of 5 years was a small price to pay for 100% certainty for ever. However, after calculating the expectancy and incorporating the frequency of each indicator, I found that the best choice would have been the 65% indicator.
I am surprised with myself because it seems that my need to be right is more deeply rooted than I imagined. It is surprising to me because I had previously used all sorts of magical indicators (the search for the Holy Grail and all that…) that purported to provide the user with clairvoyant accuracy, something that I desperately needed. As you would expect, when I put these into practice I managed to do a lot of damage to my account. After analysing the reasons for my trading demise, I found that this natural bias was the basic cause of a lot of my problems. Furthermore, I thought that I had overcome it. Obviously I haven’t! It looks like I need to do a lot more work on myself before I move forward. Thank you for helping to point this out to me.

Platanos

 

[bracke]

Hopefully if the thread does come to a screeching halt it will be because the thread readers are absorbed in their chosen exercise.

I would like to take the opportunity to thank you Aleph for your efforts in attempting to assist us.

Regards

bracke

 

[Quercus]

The effort required to initiate a thread of this nature, is perhaps indicative of the character traits that seem essential to become attuned to the rythym of the markets.
After nearly two years of significant full-time effort applied to reach a position where I feel confident in being closely associated with the day to day machinations of the market, I remain confused, bewildered, annoyed, amused, and still absorbed by the apparent perversity of what occurs on a nearly daily basis!
It sincerely amuses me that in this world of over-capable technology available to the masses, where by default those with wealth have access to even more over-complex technology and yet they still can NOT tame this beast!
I am now more than aware of the personal issues which have denied me, even a modicum of success, funnily enough I believe that a distinct lack of success has kept me in the game for longer than I may have otherwise been allowed. This has been a tortuous journey so far, and if I am able to, I will continue to pursue the discipline required to feel completely at ease with the market, for it is this detached feeling provided by an inner comfort with "engagement", which I believe is necessary to achieve the level of consistency required.
At this point I am nearer to walking away than I have ever been, and yet still find myself drawn to the arena, and would sincerely wish that I could tame the beast within, for no other reason than the fact that I know just how hard it will be!
I truly appreciate your efforts ASC, and I hope they may help me to continue with this personal journey.
Cheers
Quercus

 

[peto]

Apprentice 3” TV ......
You can post in this thread on this last ‘exercise’ if you like, but I’m more interested in you knowing what went on in your head when you were thinking this through and what physical activities you did, if any, to confirm or help you decide upon your final decision.

I expect I should have constructed a spreadsheet but I tapped furiously into a pocket calculator instead. I initialy assumed a 1000 groat account, 10% wins and 10% losses. I further assumed that losses and wins would be evenly distributed over time. After 10 years the 60% trader was happily tending nearly 30 million groats, and the 100% girl under 7k accumulating at under 50% a year compounded.

10% risk per trade is suicidely high since the assumption of evenly distributed wins and losers is not valid especialy over a small sample, so I repeated with a 1% risk/reward strategy. The advantage to the 60% trader was still much superior, his annual gain was over 10% compared with the 100% trader's 4%ish.

Moral? Don't peer at your screen for ever waiting for the 'perfect' trade setup. But make sure your edge comfortably exceeds 50% after coms.

AH BUT ..... and I was just about to press the Submit button........... The 100% trader has no need to minimise risk because she hasn't got any (she knows she'll win). So she is going to trade on maximum margin. If that means (say) 10% wins as in my first example then she will have the edge, compounding her capital at about 46% annualy and overtaking other trader's headstart after a couple of years. Sooner if she re-mortgages her house and max-es out her credit cards to add to her margin (why not?).

Moral? dunno now!

pete

 

[jcwonder8]

I expect I should have constructed a spreadsheet but I tapped furiously into a pocket calculator instead. I initialy assumed a 1000 groat account, 10% wins and 10% losses. I further assumed that losses and wins would be evenly distributed over time. After 10 years the 60% trader was happily tending nearly 30 million groats, and the 100% girl under 7k accumulating at under 50% a year compounded.

10% risk per trade is suicidely high since the assumption of evenly distributed wins and losers is not valid especialy over a small sample, so I repeated with a 1% risk/reward strategy. The advantage to the 60% trader was still much superior, his annual gain was over 10% compared with the 100% trader's 4%ish.

Moral? Don't peer at your screen for ever waiting for the 'perfect' trade setup. But make sure your edge comfortably exceeds 50% after coms.

AH BUT ..... and I was just about to press the Submit button........... The 100% trader has no need to minimise risk because she hasn't got any (she knows she'll win). So she is going to trade on maximum margin. If that means (say) 10% wins as in my first example then she will have the edge, compounding her capital at about 46% annualy and overtaking other trader's headstart after a couple of years. Sooner if she re-mortgages her house and max-es out her credit cards to add to her margin (why not?).

Moral? dunno now!

pete

great thread,thanks for the thought provoking posts so far. In relation to the Apprentice Problem unless we get immortality with the indicator package the 100% option isn't the one to go for as part of the benefit of being a successful trader is using the cash to fund a free and enjoyable lifestyle which doesn't start till year 5 in that example. Also I assume like Pete this one is a metaphor for the futility of the perfect indicator search and need to accept that trading is a probabilities game involving uncertainty. I would use a fixed % of current capital on every trade and believe choosing a higher percentage than 60% allows you to reduce drawdowns and be more aggressive in size of trade and compounding.

 

[TheMoneyMachine]

I have one other ‘exercise’ which anyone can play and is real easy. It’s more a game than an exercise. You are offered a chance to be on the “Apprentice 3” TV show with a Trading Wizard. The Donald Trump of trading. He will assist you attain your goals in trading. Well, your purely financial goals anyway. He’s nothing like me and has a set of magic indicators. (No, they’re not for sale – this is just a game). You only ever get to use one of these indicators. They each have varying degrees of difficulty in learning requirements. There is an approximate but reasonably direct relationship between the difficulty, and therefore the time needed to learn, how to use any of these indicators and their effectiveness in trading. The easiest indicator takes only 6 months to learn to use with a probability of winning 60% of all your trades. The most difficult indicator will take, we are not surprised to hear, 5 years to learn. But will give you a 100% probability of winning all your trades. You will start your trading career with the same amount of capital whenever you start. The number of trades you can make per period of time is also directly proportional to your trading indicator difficulty/profitability. The 6-month indicator gives trade signals about once every week. The 5-year indicator generates signals about once every 3 months. For the purposes of this ‘exercise’ you can take it that it’s as easy to fill a large order as a small one, there’s no slippage, you get filled immediately at your price and it doesn’t hurt when you fall over. There’s no commission or costs either – let’s keep it real simple.

You can only opt to learn one of the indicators. For ever. That’s it. You don’t get to learn the 6-month, then the 9-month. No. You choose. Up front. That’s it. Decision made. There’s no progression and there’s no re-training.

Which do you choose? What logic, what rationale did you use to justify your decision?

There is below (I hope!) the table of indicators, their learning effort requirement (time) and their effective probability along with their signal frequency.

You can post in this thread on this last ‘exercise’ if you like, but I’m more interested in you knowing what went on in your head when you were thinking this through and what physical activities you did, if any, to confirm or help you decide upon your final decision.

(see attached table)

Using a standard position size over a 100 year sample the 2nd indicator in the table is the most profitable, but is this a red herring.........?!

but I’m more interested in you knowing what went on in your head when you were thinking this through and what physical activities you did, if any, to confirm or help you decide upon your final decision.

I created a spreadsheet to carryout the calculations over the sample period. Did not think to deeply into the exercise and just worked with data & information provided and avoided making any assumptions.

Excellent thread ASC, enjoying this.

Kind regards

TMM

 

[fxmarkets]

Theres more to coffe beans than meets the eye or is there.......

with my little foray on the mentioned I set off thinking right..... I wont look for the target, focus bean by bean etc detail..... i'll scan and see if brain registers.... curiosity what would happen if anything, I wont look purposely? intent consciously, just physical scan flick of the eyes and see if mind gets anything, mind was prepared for the task but the eyes secondary in a way.......what use are the eyes if it doesn't register upstairs anyway, what use is touch if you dont feel anything..... lordy...

now my mind at the time was happily tired after having a nice snooze previous so was I more receptive to anything in this state or less? relaxed, passive.... Ive also noticed that when having a similar state of mind in front of the screen.... passive, that frequently I see the man in the coffee beans so to speak...... then focus to carry out surgery if its needed. hmmm I'm experiencing more often this passive state even though it doesn't mean sloppy actions, the opposite really , but if the mind is clear or relaxed,and youve programmed?asked, it what to do ,( find the man in the beans) then judgement? umm productivity of you getting on with, is best placed to operate freely maybe.

Jurys open on this one ish...

 

[contrakt]

buildingblock

Ouote:
Time-frames. Don’t think you need to work the intra-day markets like the ‘big boys’ do. I am one of the ‘big boys’ and I trade whatever time-frame makes most sense.
End Quote

How to decide what potential timeframe make most sense?
I like to focus on 1 instrument so efficiency in finding the "right" time-frame, given current market and available time, will add value to my action guide.

Aleph Sigma Chi I saw "the Natural" yesterday. I liked the slow shots when the quality of Hobs play was closest to perfection.

 

[fxmarkets]

contrakt........ time thingy

contrakt..... sense to one "non" sense to another, not even that maybe just a technical issue dictating which to us etc. that time thing again....... maybe it or should be termed "Price Bars" I can see the sense of maybe not for beginners to be in on smaller times, purely based on ability to get on with it without hinderance from your mental self which can kick up at any time even on bigger frames, but the feedback is perhaps more swift and frequent for you to overcome? . hmm lessons and opportunity for learning do you want, one a week, one every 2 weeks, one every month, one every 3 months, or half dozen per day, per 2hrs etc. etc.

to me anyway a bar is a bar is a bar... is it not? unless its a pub of course. Price bars and time..... depends on how you see them , whats been told, what to believe.... someone say dangerous for small timeframes? ohhh. yes ok then... they are no different to any other are they? apart from time.. is that a danger.

I mean take off the x y axis descriptions price scaling etc, off a 520 bar chart toss it to someone and ask. "now tell me is that a daily ,4hrly, 1hrly or 1 minute chart?" the funny thing is ,Ive had a thought, someone who really knows would be able to tell you which is which,. if they are it ?

Nice question contrakt... price and time........ whats that all about ..

edit... contrakt do you mean rate of change within your chosen time bar time frame, and using that as a potential filter/measure or something...... ?

 

[contrakt]

fxmarkets my first priority is to percieve, learn to judge and eventualy act on Price-Change, given the relative lenght of time it took to make a particular move.

 

[TheMoneyMachine]

Ouote:
Time-frames. Don’t think you need to work the intra-day markets like the ‘big boys’ do. I am one of the ‘big boys’ and I trade whatever time-frame makes most sense.
End Quote

How to decide what potential timeframe make moste sense?
I like to focus on 1 instrument so efficiency in finding the "right" time-frame, given current market and available time, will add value to my action guide.

Aleph Sigma Chi I saw "the Natural" yesterday. I liked the slow shots when the quality of Hobs play was close to perfection.

Contrakt,

A price bar is a time division, not an indicator. There is no right or wrong time frame, always remember this. You select a time frame based on how much price dynamic/detail you wish to observe.

Regards

TMM

 

[contrakt]

Contrakt,

A price bar is a time division, not an indicator. There is no right or wrong time frame, always remember this. You select a time frame based on how much price dynamic/detail you wish to observe.

Regards

TMM

I use fixed (price) range bars , time is flexible.....
So in my (trade)universum without price-change, beyond my personal threshold, time is literally...............standing still.

 

[TheMoneyMachine]

I use fixed (price) range bars , time is flexible.....
So in my (trade)universum without price-change, beyond my personal threshold, time is literally...............standing still.

Apologies Contrack you have completely lost me...........

 

[SOCRATES]

I use fixed (price) range bars , time is flexible.....
So in my (trade)universum without price-change, beyond my personal threshold, time is literally...............standing still.

Yes, quite so. And if it changes, it is because it is made to change, the use of time is a different argument altogether.

 

[LookAtThat]

What do you think Donald?

I had a go at the apprentice exercise last night and came up with the simple answer that option 2, with a fixed bet size, would give the best result (see picture).

Then I thought about bet size. I could have calculated vince style bet sizes for each and then accumulated the results over, say, the remainder of 20 years but I decided to look at just one. The last option has a 100% win rate so your risk of ruin if you bet 100% of your stake each time is zero. I assumed that a 5% bet size on option 2 had an acceptable risk of ruin for comparison.

For simplicity I assumed you took a part time job while learning so that your capital wasn't spent on living during your training period. Your stake was/is $1 and interest was zero.

So the first will let you bet 5% each week for 20 years (less 1 week learning) and the last will let you bet 100% each 12 weeks. So the first has 20*52=1040 bets of 5,000 and an expectancy of 0.3 per bet. The last has 15*4=60 bets of 100,000 and an expectancy of 1 per bet.

If my maths is right then the 65%/5% calculation is:
=1*(1+(0.05*0.3))^1040 = 5,304,982
and the 100%/100% calculation is:
=1*(1+(1))^60 = 1,152,921,504,606,850,000

Which is large when you started with 1 dollar.

I reason that all other bets are worse because all have a risk of ruin. So if you took the 99% option you still cant bet 100% each time because you risk hitting a loss during your string of 96 trades. Even a 50% bet will seem too risky to me - perhaps 33%; but either way the 100%, zero risk of ruin bet is best.

The moral - lol - find that 100% winner and bet your whole stake on it

 

[LookAtThat]

Below is a table using a simple optimal betsize calculation. I also discovered small errors in my calculation of the number of bets above when I built the table. I also wondered what would happen if, instead of assuming that the win/loss ratio was the same and only the % of wins changed the win loss was varied so that the expectancy was constant - this is the second table below. There may be mistakes in my reasoning so please point them out.

 

[Fader]

You are talking about meditation, not the navel contemplation of the yogi's but the meditation of life itself, by neccesity it must start with quiet moments within the self but the ultimate goal is to meditate your life until every moment is sartori