Why do so few succeed?

new_trader · Mar 9, 2006

I appreciate what you say, but I have trouble understanding this:

one can still assign probabilities through the defining and testing process in order to make a determination as to whether or not to enter that particular trade.

All back test trades are made without your determination, unless you back test your plan in real time, and should go back at least 3-4 years. Why would you start making determinations when trading the same plan in the real world? Do you see what I mean?

dbphoenix · Mar 9, 2006

Backtested trades are not made without your determination since you must determine what it is that you're backtesting.

Have you read the posts I made in the Journals thread?

contrakt · Mar 9, 2006

Is this true?

Mark Douglas:
And unless these very best traders grew up in successful trading families or had super-traders for mentors
(where appropriate attitudes about risk and loss where instilled in them from the get-go), virtually
every one off them had the common experience of losing one or more fortunes before they realized how they need to think in order to be consistently successful.

If true, then what kind of mentor would I need in terms of understanding, attitude, time, passion, patience, pragmatic business-skills, commitment, etc to work closely with me to develop and achieve my definition of consistent success asap?

I need extensive mentoring for lets say a maximum of 20 trading-days. Im up for 2006. At the same time I do realize there are some important nuts to crack before I can say, with deep belly confidence, that I have masterd interacting consistently successful with my chosen target-market. This line of thinking has inspired me to create my own super(scalping)mentor :!: .

So TWN moderators/Barjon will you allow me to create and use an alias to give best practice advice to move contrakt inch by inch closer to his goals :?:

Moderators, I promise:
-that the mentor will only exchange mails with contrakt in a new (scalping)thread named: "See it now".
-I wont derail the flow of thought of this thread any further with my personal agenda.

new_trader · Mar 9, 2006

dbphoenix said:
Exactly. The problem that so many people have with this, tho, is that they can't distinguish between prediction and assessing probabilities. What D says is that the outcome of any given trade is unknowable. HOWEVER, one can still assign probabilities through the defining and testing process in order to make a determination as to whether or not to enter that particular trade.

But since you're into all this, I'm preaching to the choir. I'm glad the book's been useful to you.

I have read your trading journals but I am still left asking the same question (Maybe I'm looking too deeply...or not deeply enough)

My question: Why would you need to make a determination as to whether or not to enter a particular trade when you have a consistently profitable system/strategy that you trust?

"If you know that your system makes money over the long run it is easier to take the signals and trade according to the system during periods of losses. If you are relying on your own judgment during trading you may find that you are fearful just when you should be bold and courageous when you should be cautious.

If you have a mechanical trading system that works, and you follow it rigorously your trading will be consistent despite the inner emotional struggles that might come from a long series of losses, or a large profit."

http://www.originalturtles.org/system.htm

dbphoenix · Mar 9, 2006

new_trader said:
I have read your trading journals but I am still left asking the same question (Maybe I'm looking too deeply...or not deeply enough)

My question: Why would you need to make a determination as to whether or not to enter a particular trade when you have a consistently profitable system/strategy that you trust?

I don't know what you mean by having read my trading journals, but you're reading something into what I wrote other than what's there.

Note:

HOWEVER, one can still assign probabilities through the defining and testing process in order to make a determination as to whether or not to enter that particular trade.

new_trader · Mar 9, 2006

dbphoenix said:
I don't know what you mean by having read my trading journals, but you're reading something into what I wrote other than what's there.

Note:

HOWEVER, one can still assign probabilities through the defining and testing process in order to make a determination as to whether or not to enter that particular trade.

Sorry, I meant the "Trading Journals" link you provided.

Kunal · Mar 9, 2006

Never take the trouble of reading the post, read the user nick first before scrolling over it.

>>If you have a mechanical trading system that works, and you follow it rigorously your trading will be consistent despite the inner emotional struggles that might come from a long series of losses, or a large profit
Very true, but the problem is that finding the system is often very difficult. All systems that are in the public domain can be tweaked to work to some degree.
At least it's better than not having any system at all.

new_trader · Mar 9, 2006

Kunal said:
Never take the trouble of reading the post, read the user nick first before scrolling over it.

>>If you have a mechanical trading system that works, and you follow it rigorously your trading will be consistent despite the inner emotional struggles that might come from a long series of losses, or a large profit
Very true, but the problem is that finding the system is often very difficult. All systems that are in the public domain can be tweaked to work to some degree.
At least it's better than not having any system at all.

True, but I am trading a system that I have back tested myself. No curve fitting.

tunnel1x1 · Mar 9, 2006

new_trader said:
I have read your trading journals but I am still left asking the same question (Maybe I'm looking too deeply...or not deeply enough)

My question: Why would you need to make a determination as to whether or not to enter a particular trade when you have a consistently profitable system/strategy that you trust?

"If you know that your system makes money over the long run it is easier to take the signals and trade according to the system during periods of losses. If you are relying on your own judgment during trading you may find that you are fearful just when you should be bold and courageous when you should be cautious.

If you have a mechanical trading system that works, and you follow it rigorously your trading will be consistent despite the inner emotional struggles that might come from a long series of losses, or a large profit."

http://www.originalturtles.org/system.htm

I think you are starting from the back end of this to the front, rather than where we all actually start. If you have a system that you know makes money and you are able to follow it perfectly without allowing emotions to derail your system, then you have succeeded in the rewiring process of the brain that has allowed you to think differently. If you can follow a profitable system consistently, then you will be successful. That is, until your system degrades because of a market change. But, you cannot get to the point of following your system consistently until you have begun to change your belief system about the markets. You will always override the system even though it may have back tested positive, until you change the way you think.

Also, many traders are somewhat discretionary so they do not follow a mechanical system. The rewiring might be more difficult for those types of traders.

If you have a purely mechanical system that is profitable, I suppose you could let a computer trade it and remove all human input. I'm not sure how many such systems for the average size account are out there.

ZDO · Mar 9, 2006

Kunal,

Kunal said:
Very true, but the problem is that finding the system is often very difficult. All systems that are in the public domain can be tweaked to work to some degree.
At least it's better than not having any system at all.

In the long run, imo, having no system at all (while persisting in finding one) is better than using someone else's system that is not congruent with your true nature (whether it is profitable or not)

Trading successfully requires extremely high 'certainty' with Self while paradoxically requiring almost nonexistent 'certainty' with 'conditions' (as they use that word in the far east) and 'outcomes'.

All the best,

zdo

dbphoenix · Mar 9, 2006

tunnel1x1 said:
I think you are starting from the back end of this to the front, rather than where we all actually start. If you have a system that you know makes money and you are able to follow it perfectly without allowing emotions to derail your system, then you have succeeded in the rewiring process of the brain that has allowed you to think differently. If you can follow a profitable system consistently, then you will be successful. That is, until your system degrades because of a market change. But, you cannot get to the point of following your system consistently until you have begun to change your belief system about the markets. You will always override the system even though it may have back tested positive, until you change the way you think.

Also, many traders are somewhat discretionary so they do not follow a mechanical system. The rewiring might be more difficult for those types of traders.

If you have a purely mechanical system that is profitable, I suppose you could let a computer trade it and remove all human input. I'm not sure how many such systems for the average size account are out there.

You beat me to it, Tunnel

I was going to say that if one has a consistently profitable strategy in something other than a backtest, there's really no reason to get into all this. Why fix what ain't broke?

However, overriding the system isn't necessarily a function of beliefs about the markets. It is often -- perhaps more often -- the result of believing that one is smarter than the system, and that may not have anything to do with the markets at all.

new_trader · Mar 9, 2006

dbphoenix said:
You beat me to it, Tunnel I was going to say that if one has a consistently profitable strategy in something other than a backtest, there's really no reason to get into all this. Why fix what ain't broke?

However, overriding the system isn't necessarily a function of beliefs about the markets. It is often -- perhaps more often -- the result of believing that one is smarter than the system, and that may not have anything to do with the markets at all.

OK. This leads to the $64 question. At what point do you decide a system needs fixing? Double your maximum historical drawdown?

dbphoenix · Mar 9, 2006

new_trader said:
OK. This leads to the $64 question. At what point do you decide a system needs fixing? Double your maximum historical drawdown?

Since you're in control of the process, that's entirely up to you. You may decide that it needs fixing if your maximum string of uninterrupted losses is exceeded. Or if the extent of your worst loss is exceeded. Or you can hang on and hope for the best.

Again, if you're truly interested in this, you'd do well to read the book(s). Otherwise, consider starting a thread which specifically addresses Douglas' process, perhaps under Styles & Strategies. I'm sure there are many people out there who are interested in Douglas who have no idea this is being discussed here.

Baruch · Mar 9, 2006

A god forex blog about swing trading: http://tradingforaliving-assess.blogspot.com/

sp1 · Mar 9, 2006

SOCRATES said:
It is called "Something" and it is one of the mirrors amongst all the other mirrors in the halll of mirrors.
That is what makes it so difficult to detect, because it has a nasty habit of hiding itself when you look for it.
I wish I could be more helpful.

Regarding that something holding barjon back - I have been considering a few ideas but have not progressed far enough to know.

These ideas will sound off the wall but here goes.
The something is;

(i) wanting to remain in this world. Doesn't embrace the killer moves with sufficient size because the freedom and changes it would bring will raise identity issues with regards to how one relates to the rest of society.

(ii) that limitations of knowledge or skill or the execution of the right things to be done as events develop will leave the door open to a great losses.

(ii) not prepared fo the burden of responsibility of taking slippage and comission losses for getting it wrong if the price moves against the entry ie the basic supply/demand structure of the market at that moment was misjudged.

(iv) Socrates you have previously said that you have been astounded to find it is the right character that money cant buy. I accept this but my understanding of it is not complete. Is it the level to which a person embraces the competitive brutal ugliness of open conflict?

Further you can fail because you allow your self to, meaning that one is trading without confident knowledge that the trades are very very good ones. So we leave our self open to failure by trading in a parameter space beyond our own tested reliable advantages. I.e. doubt and weakness remains but we continue to trade rather than to only trade when there are eradicated. Does this relate to a characteristic of analysing our failings and not brushing them out of mind and out of sight?

Hope some of this makes sense

sp1

SOCRATES · Mar 9, 2006

sp1 said:
Regarding that something holding barjon back - I have been considering a few ideas but have not progressed far enough to know.

These ideas will sound off the wall but here goes.
The something is;

(i) wanting to remain in this world. Doesn't embrace the killer moves with sufficient size because the freedom and changes it would bring will raise identity issues with regards to how one relates to the rest of society.

(ii) that limitations of knowledge or skill or the execution of the right things to be done as events develop will leave the door open to a great losses.

(ii) not prepared fo the burden of responsibility of taking slippage and comission losses for getting it wrong if the price moves against the entry ie the basic supply/demand structure of the market at that moment was misjudged.

(iv) Socrates you have previously said that you have been astounded to find it is the right character that money cant buy. I accept this but my understanding of it is not complete. Is it the level to which a person embraces the competitive brutal ugliness of open conflict?

Further you can fail because you allow your self to, meaning that one is trading without confident knowledge that the trades are very very good ones. So we leave our self open to failure by trading in a parameter space beyond our own tested reliable advantages. I.e. doubt and weakness remains but we continue to trade rather than to only trade when there are eradicated. Does this relate to a characteristic of analysing our failings and not brushing them out of mind and out of sight?

Hope some of this makes sense

sp1

All of it It is absolutely huge.

Kunal · Mar 9, 2006

>>True, but I am trading a system that I have back tested myself. No curve fitting.
IMO, the curve fitted ones work better.
I would think most systems have to utilize the meaty parts of statistically proven curves to provide any edge at all.
Brute forcing a fit is Ok as long as the sample size is sufficient. Of course, a walkforward is mandatory.

sp1 · Mar 9, 2006

SOCRATES said:
All of it It is absolutely huge.

the effort

SOCRATES · Mar 9, 2006

sp1 said:
the effort

No, not just the effort, how you have to be, how you have to think, how you have to act, how you have to percieve, how you have to not act, not think, not be, not percieve, what you have to know, what you have to ignore, how and what you have to understand, how you have to respond, everything. Huge, and what is more, all of it at the same time. It is multitasking at its limit.

barjon · Mar 9, 2006

sp1

Since you bring my "something" back into (almost wish I hadn't mentioned it

) as the discussion had progressed in talking about new-trader's questions there is some danger of confusion, but I think I can bring the two together to a degree.

Firstly, I know my limitations which is why my main trading activity is mechanically based. Unless you let a computer trade for you, as tunnel1X1, mentions a mechanical system does have human intervention since it is a person who presses the button, which - for me at least - inevitably raises a should I / shouldn't I element which I try to keep to a minimum with resting orders (ah, but where will they rest - decisions, decisions

)

I don't suppose I'm uncommon in finding that a back-tested system works less well when I forward test it, less well again when I paper trade it and less well again when I put real money on the line. Part of that is to do with the rigour of the process (alright, db - work harder

) and part of it due to the increasing influence of the "wrong" mindset that people have talked about.

But maybe that's just me.

good trading

jon

Why do so few succeed?

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