Dow Index

[fudgestain]

Its wonderful how so much magic is attributed to charts and the means of identifying trends. Its not that I don't use a general chart analysis for a general background .. or as a suitable macro parameter not least because many players and institutions use them for their trading decisions. But hey a lot of the rest of it can lead to years, if not a lifetime, of frustration.

Its also not that I don't actively read the chart formations, upmoves, down moves and so on .. I do; it helps as fine tuning parameters.

And mind you 'chartitis' does have its satisfactions .. but heres the bombshell: the Dow, particularly an index rather than a stock (share), is as near as you can get to a zero sum game. Yep, if you add up all the daily ranges for a year it will come to a stonking great multiple of the net trend, up or down, for the year. Obvious of course .. but it means this: the trend is at best a tiny decoration on a zero sum game.

If you want to add up all the subranges per day - the major upmoves and downmoves - then that comes to an even bigger multiple of say the net trend per year. That there is this multiple ought to hit you in the face every day - if compared to the net trend for 1 year, 6 months, 1 month, 1 week.

So happy homework .. nothing against 'chartophiles': if for you its the only thing afloat in an empty sea you got to hang on to it, right?

 

[Helenqu]

You're not friends with Pyad are you

 

[Skimbleshanks]

fudgestain - what you've just described is why trading is so magical. Your stragegy is magical to you, mine is magical for me, and so is everyone else's to them. There's always A way to trade, never THE way - and once you find what is YOUR way, you've actually found the holy grail.

No two people will trade the same way, even if they have been given identical instructions and identical tools - one will be a winner, and one a loser, but that really is why trading is magic.

Oh, and I'm the rabbit in the hat. :cheesy:

 

[fudgestain]

Well Skimbleshanks at last.. even surprisingly.. I have been addressed by you. You are the goddess of Trade2Win .. and I do not demur.

I am reminded too of that Bond movie scene when Bond for the first time meets Dr Goodyear. "A woman", says Bond with inimitable Roger Moore innuendo. She retorts icily, "Your powers of observation do you credit Mr Bond."

So you are the rabbit, you say. I am the Hat; and from the hat I produce rabbits at whim.. or do I? Do you think anyone else has the Hat?

Was the secret given away in the simple analysis I gave above?While this BB is everywhere devoted to the TREND.. in one shape or reincarnation or another - and nothing wrong with that, the trend is the needle. Which do you think is more important? The needle or the haystack?

You are the sorceress standing guard over your secret. Is it magical that many will search, even if only erratically, and never find or never learn that secret?

 

[rossored]

I always thought it was the magician who produced the rabbits from the hat, not the hat who produced the rabbits from the hat or the hat from the rabbits hat. Or does the hat have a rabbit? Where is the carrot? And is the Dow/SPS the stick? :cheesy:

 

[Skimbleshanks]

Straighten out my left ear, and you'll see it's longer than the other. That's because I'm continually being pulled out of hats by my left ear. :cheesy:

The trend is OK; it's the ability to recognise and trade the tops and bottoms of trends. Now that's the magical part. So, Mr Fudgestain, I go for the haystack, although my bread and butter is generated from the needles.

 

[fudgestain]

Haystack is the correct answer, Skimbleshanks. Goddess indeed you are!

For 'trend' I might say a move away from or a move back towards a theoretical zero. For selling a top or buying a bottom I would refer to this as 'the turn'. "Here it is; this looks like the turn. " Yes that is the part to trade.

There is a lot lot else to this but still there is quite a significant alignment in our understanding; I'm surprised to find anyone who might travel a remotely similar road to myself in life - at any time.

Someone who I asked to look at the Trade2Win BBs was struck by what he described as the undercurrent of bitterness, jealousy and frustration .. this was not criticism, rather gentle observation. May be online trading/spreadbetting just to keep ahead making a living or just to get extra pocket money is not like the cornucopia of finding the holy grail (as you call it)? How say you?

Personality of course is so important and myself - part 1 - was fully content to make little or nothing because to be on the trail of the holy grail was enormously satisfying. Having the holy grail .. well money only measures success - so part 2: getting on with the measuring.

 

[Skimbleshanks]

As BBs go, we're probably the most easy going and 'gentlemanly' of them all - the ramping hoi polloi and desperados don't stay long. :cheesy:

I do however understand your colleague's observation; there are elements of those undercurrents in some peeps' posts, but hopefully they will have the determination to overcome them, and move on. If they don't then the bitterness and jealousy will gnaw away at them from the inside out.

The author of any 'abusive' post usually has jealousy, bitterness and frustration gnawing at them, no matter how hard they try to disguise it. Some will be able to work hard and overcome those feelings, and the rest just disappear never to be heard from again. Trading's a tough old game, and there's no room for the weak swimming round in a pond of sharks.

 

[JonnyT]

Skim,

You are a Great White. Me, I'm just a Hammer Head.

JonnyT

 

[Skimbleshanks]

Either way JonnyT, we taste great in a soup. :cheesy:

 

[fudgestain]

Very nicely answered Skimbleshanks.. kind of agree with all that you say. Thank goodness for the absence here of the inane ramping so usual elsewhere.

You are so positive for everyone! Although clearly for some (most?), it seems, nice people, unhappily, they will not find or learn the secrets of the holy grail.

"Trading's a tough old game", you say. This is where I say spreadbet trading of say the DOW is a personality test. You've got to be uncannily correct consistently and run the profit - not just bail out with some points just to ease the pressure. Of course the more you do it the more it becomes matter-of-fact fluency.

Notice that I haven't entered the technical and other factors for entry and exit so my data and strategy are not being divulged .. but the point here is you come face-to-face with your weak side; all the times you may have turned or backed away in life. Now .. conquer. So my question could be, is it the 'personality test' that people fail? And so you couldn't put the holy grail in their hands and make them win?

 

[Helenqu]

I think you are 100% correct about the personality aspect defeating people. Traits that can be masked in many professions, impatience/impulsiveness/inconsistency get punished when you trade and it takes a lot of experience and honest scrutiny of yourself to begin to reduce errors caused by character flaws.

I don't agree with you about niceness being incompatible with trading well. If you are comfortable with yourself and know yourself well you will be at ease with others and you have no need to be aggressive or difficult. In fact I have found with several years on the boards now that those who are nasty don't last very long.

 

[fudgestain]

Helenqu, I was only saying that it seems many otherwise nice people don't get to the holy grail. But, I haven't anywhere said anything "about niceness being incompatible with trading well". But it you're asking me, my view is if you can't be nice it completely fudges up your own life - quite apart from who else you might be irritating.

You rightly point out that "Traits that can be masked in many professions, impatience/impulsiveness/inconsistency get punished when you trade.." However, I sure as heck, like your comment that it "takes a lot of experience and honest scrutiny of yourself to begin to reduce errors caused by character flaws."
Amen.

The truth is that to lose is the emotional 'hit' often, subliminally being sought (and it won't anywhere be admitted) - you can prove you are/were wrong! Emotional masochism. See how many posts unconsciously mirror this in lets, say, 'its been hard day' type of report or comment.

If anyone has this common problem, you've got to work on it to get past this obstacle.

 

[Helenqu]

I think whatever your Achilles Heel is trading will expose it at some point. Unless you come to trading totally straight emotionally you will have to face and slay your personal dragons to survive. Even if you try to sidestep the psychological issues and system trade mechanically you'll still find yourself overiding the system and screwing it up. Which is why, small stakes, good trade documentation and rigorous money management are so important. Oh, and lots of patience with yourself while you get your act together

 

[fudgestain]

As you say Helenqu you have to slay your personal dragons. And as you note even be patient with yourself if you are still not psychologically there yet.

But finally if its not for you then as Skimbleshanks has said "...there's no room for the weak swimming round in a pond of sharks. "

 

[Skimbleshanks]

For trading you have to go with the flow, and acknowledge a) quickly, and b) often, that you were totally wrong and the market was right. That may sound easy, but it does in fact take a lot for certain people to do. Women often admit to being wrong just to 'keep the peace' in the home and appear to have fewer qualms about admitting to the market when they are wrong. I really don't, however, want this to lead to a 'are women really better than men' thread as that has been done to death elsewhere!

It's the continual admittance that you were wrong that separates those who will end up being competent traders and those who won't.

You only have to look at some of the responses on these boards to know who is/will be a good trader and those who will disappear never to be heard of again. A trader easily acknowledges when he got it wrong, and moves on. The 'wannabe but willneverbe' won't drop a subject and will argue and argue until they are blue in the face just to score a 'win'. I found this far more apparent in a chat room situation than on the boards however.

It can be hard to admit failure, just as some find it hard to say sorry. That is probably why they end up bitter, jealous, frustrated and have resentment.

Perhaps the entry criteria for the world of trading should be 'can you apologise no matter whether you are actually right or wrong'?

 

[fudgestain]

Skimbleshanks, I take your point about admitting to yourself your mistakes and moving on .. I don't see why this should be difficult for anyone really. If anything the danger is that beating up on yourself for your own weakness or error can make you lose your focus completely. Stay cool as a cucumber and get back into the game: concentrating, focussing but cool, calm, relaxed.

The key here is an open mind. If its preset to an expectation that for example the market is going up then you're not going to be a confident seller if the indicators you use are telling you to sell. So I get myself into an open mind. A market expected to go up may well go up .. after its dropped say 40 or 50 points.

As I have said I leave trends and trend identification to defeat others or at least make their lives an unhappy rollercoaster.

My mantra is 'Keep my mind open'. This is a zero sum game; it ain't going anywhere that it won't come back from.. put very very roughly. Play the moves, period. Simple; not at all. But a simple open attitude: it sure is that.

 

[Skimbleshanks]

I agree - an open mind and no emotion is all you really need.

 

[barjon]

so simply said - so difficult to achieve

 

[fudgestain]

Getting back to one of the things I regard as important, I said earlier in this thread, "As I have said I leave trends and trend identification to defeat others or at least make their lives an unhappy rollercoaster."

Little did I remotely foresee tipping over this can of worms.. and so soon and how! On the 'Intra-day' thread I had complemented Rglenn on his correct forecast that the Dow was heading first for 9400 to which he in a reply to me simply said that "the markets are not that difficult to forecast".

Soon hair was flying everywhere along the lines of "if its so easy, then forecast this that and the other". But look again at what he actually said. He didn't say it was easy; he didn't say it was not difficult .. no, he did not. He said, "the markets are not that difficult to forecast".

So again, everyone can choose what they need to have or need to use to assist their trading - such as the whole enchilada of trend identification, trend analysis and trend forecasting. I don't place great store on trends; you have to recognize that the Dow is a zero sum game. So in short I've got an easier route to go; most however as is their sovereign choice will stay fixated on the TREND.