Lets face it you can trade mechanically or discretionary, you can use fundamentals or technical analysis, you can use Level 2 screens and tape reading, you can be a value or growth investor, you can use trend lines(support and resistance, breakouts),candlesticks, bar, point and figure charts, moving averages(simple, expoential, volume weighted, etc.), RSI, MACD, Stochastics, ADXR, you can use , Fibonnaci, Gann, Elliot Waves. Some use Astronomy, i've never heard of it but some may read tea leaves, some may even flip a coin or use a pin and a copy of the FT. I apologise if I've left yours and therefore most imortant one out. I bet most of us use one of these or a combination of some of them together. Walking into the traders toolshop can be an overwhelming experience for most, clearly there aren't enough tools yet, because statistics say that around 80% of us will fail.
It's my argument that the different tools used aren't as important as is your approach to trading. If any of you have read the Market Wizard books you'll see that no two traders trade the same way yet they're all very succesful. When asked to define their trading(this is the bit where we all draw closer so as to not to miss the masters wisdom) all we get is things like don't blow your stops, run your winners. We already know this yet 80% of us will still fail, there must be more. In ths case I often think of the of footballer when asked to talk us through a great goal he's just scored. The explanation is always hugely disappointing like " I saw the golkeeper of his line and I just hit it", yea right I do that but when I do the ball goes out for a throw in. When I short a stock because the stochastic is way over-bought and the price has ripped through the top of its' Bollinger band it carries on going up. The truth is like great sportsmen and women I don't think these great traders can explain what it is they do differently from us mere mortals, because I don't think they really know and if they do they certainly can't define it.
It's not what you use to trade it's how you do it. If you look at trading as a probability game, if you do know that your system gives you a slight edge then surely if you keep taking trades when you see your set up probabilty will work in your favour over time. Of course it aint as simple as that. Say your system back tested, wins on 60% of its setups, you don't know if your first 40 out of a hundred trades are going to be the loosers. I think you'd be only human if your not seriously doubting your so called edge at this stage.
Well what's the solution? I'm sorry but I still don't know but what I would say, is there is far too much attention paid to trading systems when what we need to do is to be able to think like the 20% that do win, it's not their trading tools that make them succesful but the way they think and if nothing else, if we begin to see and accept this we could save ourselves a fortune on trading books and systems and begin to see trading for what it is.
A probability game that s won and lost in your head.
Good trading.
Flea
It's my argument that the different tools used aren't as important as is your approach to trading. If any of you have read the Market Wizard books you'll see that no two traders trade the same way yet they're all very succesful. When asked to define their trading(this is the bit where we all draw closer so as to not to miss the masters wisdom) all we get is things like don't blow your stops, run your winners. We already know this yet 80% of us will still fail, there must be more. In ths case I often think of the of footballer when asked to talk us through a great goal he's just scored. The explanation is always hugely disappointing like " I saw the golkeeper of his line and I just hit it", yea right I do that but when I do the ball goes out for a throw in. When I short a stock because the stochastic is way over-bought and the price has ripped through the top of its' Bollinger band it carries on going up. The truth is like great sportsmen and women I don't think these great traders can explain what it is they do differently from us mere mortals, because I don't think they really know and if they do they certainly can't define it.
It's not what you use to trade it's how you do it. If you look at trading as a probability game, if you do know that your system gives you a slight edge then surely if you keep taking trades when you see your set up probabilty will work in your favour over time. Of course it aint as simple as that. Say your system back tested, wins on 60% of its setups, you don't know if your first 40 out of a hundred trades are going to be the loosers. I think you'd be only human if your not seriously doubting your so called edge at this stage.
Well what's the solution? I'm sorry but I still don't know but what I would say, is there is far too much attention paid to trading systems when what we need to do is to be able to think like the 20% that do win, it's not their trading tools that make them succesful but the way they think and if nothing else, if we begin to see and accept this we could save ourselves a fortune on trading books and systems and begin to see trading for what it is.
A probability game that s won and lost in your head.
Good trading.
Flea
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Those that have deep pockets,in my opinion, stand the greatest ( not the only) chance of success. Any errors /bad runs can be sustained at put to the back of their minds, and still have funds to continue their hard learning experiences.It often crosses my mind 'how would I do if I had a big pot of gold' ? Would I be persuaded to double down- it's only money and I've got plenty of it...I hope not, though I have seen traders do it, with success. I guess it's a case of ' do you feel lucky, punk' ? For every trader that extricate themselves from the clag by doing that, there must be dozens that don't, and therefore expire.
