Money v The Game

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Dont know if anyone was listening to Mark Radcliffe on Radio 2 last night.
He had an author on who had written a novel about poker players.

Anyway, one of the characters explains, about poker:
"You keep losing. Thats because you are still in love with the MONEY.
You wont start winning until start to love the GAME".

And:
"The nature of poker, in the randomness of the cards, like life, is to assess the probabilities of what can be best done with them. To make a sense out of this chaos.".

Those remarks came as a small revelation about trading itself.

Many of the Market Wizards make references to poker-playing.
I think Ed Seykota ( Market Wizard ), once said he was interested only in playing the game.
"Money is just a way of keeping score".

Jusy thought I would share this generally.
 
If you can ignore the total amount of money involved in a trade then you can trade a lot better.. especially if you do BIG trades! LOL
 
" You keep losing. Thats because you are still in love with the MONEY.
You wont start winning until start to love the GAME ".


I totally agree with this , those who play either poker or the markets with a passion/greed for money will never win !

it's counter intuitive but true , non more so than the great genius ed seykoyta. think about it .

by the way , I am a good poker player 🙂
 
MONEY attitude!

:cheesy:
Racer said:
If you can ignore the total amount of money involved in a trade then you can trade a lot better.. especially if you do BIG trades! LOL
Click to expand...

It is so true though....and i have recently been told on probably 3 occassions.....Don't think about the money?!
Can't get to that type of thinking you know...it IS all about money isn't it?
 
like they say scared money never wins . on the other hand , what that does NOT mean is to be reckless and gamble your money away , as that will surely happen .

instead , accept the fact that you may well lose your capital , that is risk involved .

your objective is to play the game and win , rather than treating as in income source , very subtle point here .

since a source would imply a steady , ever reliable stream of income with little or no risk , which the market is most certainly not .


PS. a good analogy . I feel would be sport . the best sportsmen I've noticed don't really seem to anticipate winning , instead they concentrate on the process of winning and the moment at hand .

those who care ( emotionally ) too much about winning never seem to live up to potential .

like in tennis , borg and sampras are 2 of the greatest players of all time . look at their demeanours , cool and collected and almost detatched . their emotions are not involved in comtemplating victory or defeat , they are only interested in what they are doing and to excell at that at the moment , be it a serve or a backhand or whatever.

the winning takes care of itself.

contrast to mcenroe or becker , 2 arguably more talented players but didn't win as much as the other 2.

watch them as they play : emotional , unstable , angry at times , but the result ? great talent but never the greatest .
 
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Yes you have to trade in an ice cold manner..
It isn't about the money.. that is a bonus... it is about getting the trade right and being able to know when it is going wrong.. money clouds that judgement
 
Many of the Market Wizards make references to poker-playing.
I think Ed Seykota ( Market Wizard ), once said he was interested only in playing the game.
"Money is just a way of keeping score".
Click to expand...

I think that this represents a good approach to trading.

I am slightly different. I do not judge performance in terms of actual profit in hard cash, but in terms of profit in points/pips etc.
 
points = cash no ? , still be OK , since it's just a measurement .

I must add that the " machine " approach to trading also has a cost .

it's called burn out . why ? well humans are people , made up of imperfections and emotion.
operating too long in a machine like environment will take it's toll , in the form of tedium , isolation , monotony , repetition etc.

there's only so much of this that a trader can take , it's only a question of time before he will need to take a break or even stop what he is doing . NEVER underestimate this side effect.

very few can persist this way over the long term , the market wizards being the best at it . that is why they as good as they are . not only do they have the talent , method but the DISCIPLINE to continue over the long term with something that inevitably becomes a bore.

that's many of them move up to new roles : overseers and general managers of their own funds , leaving the buying and selling to their junior staff .
 
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I agree wisestguy

it would take a certain sort of person to be able to maintain the level of self-motivation and focus to trade the markets day after day, working alone, calculating pivot points, etc. etc. for 10 or 20 years.

I decided that this would probably not be the approach to which I am best suited. Therefore I made a few decisions..............

I decided that trading is something that I want to do only if I can make considerably more money than I would by doing a regular job, as mentioned, the prospect of 20 years of continuous screen watching is not a thought that inspires or motivates me. For me trading represents a means to an ends and a possible short cut to gaining some level of financial security. I currently have a 5 year plan during which I want to achieve this objective through trading forex.

Trading offers me a path to which I can commit myself and establish some level of control over my future. I do not have to rely on anyone else and the harder I work, the more lucrative I expect the rewards to be.

I have decided that mechanical trading and perhaps fully automated trading are how I want to progress - in order to make my trading as objective as possible - and to delay/reduce the potential for burn out and stress. One day this could lead to secure fully automated trading.

I believe that the future will inevitably bring much more advanced, refined and competitive facilities and services for traders. What is possible now in terms of technologies offered by PC's, Internet, brokers and software vendors will be eclipsed by better things in 5,10, or 20 years time. Dare I say it - being a successful trader may well become an easier task 😀

Being that my (current) objectives are not to become a millionaire and then rule the World - but to make enough money to ease the pressures that many adults experience - I am also flexible as to how I apply myself to my five year plan. Although I try to make a conscious effort to live in the moment rather than the future or the past, I do need to have a plan in life so that I know "what's my motivation" :cheesy: and what I am doing from one day to the next. My current trading plan could involve 2 years of full-time trading now and then 1 years full-time trading every 5 or 10 years - if I wanted to take time out from another job etc. etc.

This flexible approach in turn eases the pressure, fear of boredom, monotony, alienation, entrapment, that can be associated with trading as with any other job. The prospect of 52 weeks full-time trading is a lot less intimidating than the prospect of 20 years of full-time trading. Although to be honest, boredom so far, has not been a huge issue because I can always find a way to fill the quiet times, by doing some form of work that increases my knowledge as a trader. 'The devil makes work for idle hands' - as they say.

What trading has given me is an outlet. It is something that I know I can always fall back on and apply myself to, no matter what I do to make 'a living' in life. I can also pass this knowledge on to other people. As a young adult, this in turn provides some peace of mind, and it's all been made possible by the help and support offered by the good members of the T2W community 😀 .For this I am extremely grateful. 😀


jtrader.
 
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good post my man,

it will be interesting to see how fully mechanised trading will affect the market as a whole . if we believe that more mechanised systems eliminates human error then a fully mech system should equal a better trader.

but then again, if this is the case, then will not more traders be trading the same things ? ie : the same patterns , if so will this cease to be a profitable trade in the way big break outs have ceased to be so.

I like your plans vis trading , you have understood my point and seem to have made realistic counter measures . as for me I am at the " fear of boredom " stage , so I am taking a break from trading right now.

cheers and good trading .
 
Hi wisestguy

being the type of person I am, the best way for me to avoid boredom is to always be moving (mentally) and looking at ways to develop/progress. like probably all traders, I am an intellectual - therefore I like to think and hypothesise. I like to learn as much as I can about subjects, so that I can continue to grow, open up new horizons and make informed decisions.

I have posed questions like yours on T2W over recent months.

The consensus of opinion seemed to suggest that -

A good discretionary trader will perform better than a mechanical system trader. However, they are perhaps more likely to burn out in a shorter space of time.

A poor discretionary trader will not perform as well as a good mechanical trading system.

Therefore by putting in the extra work day in day out trading on a discretionary basis, conquering all of the pschological elements in play, and perhaps adjusting to longer periods of screen watching - greater profits are achievable. I am happy to be slightly less profitable, but with a robust and mostly objective strategy.

but then again, if this is the case, then will not more traders be trading the same things ? ie : the same patterns , if so will this cease to be a profitable trade in the way big break outs have ceased to be so.
Click to expand...

People trade in different timescales - 5. 10, 15, 60 minute - and so make their profits in different sizes and at different times, use different indicators and parameters, and surely will always do so. Therefore in theory, this must create the space necessary for all traders to be profitable. If in the future all traders adopted a mechanical approach, doesn't mean that they'd be using the same system.

Thanks

jtrader.
 
Hi Jtrader,

I prefer the word intellegent to intellectual , as that would imply a certain nerdishness , which I'm not to ready to embrace. but I do agree that a lot of traders I put in the intellectual class.

though I have met many emotional types before , they don't tend to last as long as the " intellectuals " .

the emotionals are more what you have called the " discretionary " trader , although this term needs definition . I shall assume it means one that trades by gut feel as opposed to a large set of rules.

on this note , I'm not sure that the consensus is right , I don't think they make more money than the mechs in the long run , in fact I'm pretty sure of it .

I'm mean look at the Wizards , all of them to a man would be mech types . then look at Vic niederhoffer - where is he now , bankrupt ?
I read excerts from his book , and boy that's how I would NOT wish to trade . he has no pre ordered stoplosses and trades by the seat of his pants , shouting and screaming at the screen .

no thank you.
 
the emotionals are more what you have called the " discretionary " trader , although this term needs definition . I shall assume it means one that trades by gut feel as opposed to a large set of rules.
Click to expand...

Hi wisestguy

by discretionary trader, I do not mena somebody who trades recklessly without rules and an overall strategy. They will use rules an money management techniques - if they want to be successful. What I mean is discretionary traders can apply their knowledge of the instrument that they trade to their decision making. This is a lot harder if trading mechanically.

The word 'intellectual' does not mean that a person described as an 'intellectual person' has to be a genius, rocket scientist or the next Einstein. Intellectual can simply refer to somebody who is 'given to mental pursuits' (THE OXFORD ILLUSTRTATED DICTIONARY, 1980) i.e. somebody who thinks a lot.


Cheers

jtrader.
 
Jtrader,


so would a discretionary trader in your book have strict rules not just on MM , but for his overall trading strategy, eg) almost fixed rules as to when and where to enter and exit etc ?

Yes , your definition of intellectual is correct , but don't you find in parctice the kind of people refered to as such have some difficulty in dealing with things on a non intellectual basis . certainly I find myself a bit like this , and have lately been trying to correct it.

In trading terms , the problems come because usually " intellectuals " as you say , are able to unlock the puzzle of the markets pretty quickly , but unfortunately , that's where it stops , and after that intellectual challenge is gone , they find is difficult to sustain the practice to purely make money over the long term .

for reasons aforesaid , monotony etc being large barriers .
 
By discretionary trader, I mean somebody who choses their trades on a manual basis, while operating a strategy and money management techniques. Through their knowledge of the instrument they trade, they are able to spot potential opportunities and pitfalls and act accordingly - key s & r levels for example, Whereas a mechanical trader may be a bit slower to react to these opportunites, as their system in use must confirm an entry i.e. through an MA crossover for example. Therefore it is feasible that the discretionary trade may be able to squeeze a few extra points out of a market.

I can see that some people like a challenge to involve solving a problem, and once that problem has been solved, they move on to look for the next challenge/problem to solve. They may not classify facing more or less the same challenge on a daily basis (trading) - that much of a challenge or a problem to solve. If a trader is trading mechanically, I can certainly understand this. However, discretionary trading presents a daily mental/intellectual challenge - looking for d & r levels, calulating pivot points, deciding where to enter, sticking to a stop loss etc.

Getting back to the title of this thread - Money v the game. I would suggest that a trader or an entrepreneur has to love the prospect of money as well as the process of making that money...................I know some people who have been very successful in business (multi millionaires) for example, and they are very ordinary and down to earth (quite boring in some ways), narrow minded and materialistic people. They are around age 40, still work full-time and in actual fact, their lifestyles are not that much different to any working mans lifestyle when all said and done - afterall, money is only of so much use. People need something to do on a daily basis, regardless of wealth. While this example is only 2 people (brothers), I believe that it is somewhat typical of the mentality that 'successful' people deploy. They are happy to operate in their narrow channel of existence, chasing their goals, perhaps showing little interest in the world at large.................And there's nothing wrong with that, I think it's called dedication. Another example may be many sporting superstars.

Although greed etc. can be a traders downfall, I would imagine that a trader who does nothing but dream about money, big cars, private yachts, luxury holidays etc. as being the end product of their efforts in trading, will be more motivated to succeed in trading by doing whatever it takes to succeed and achieve their dream lifestyle, than the trader who isn't all that bothered about the end product - money and the material things that it can buy.
 
The difference between mech and disc has always interested me. Good thread folks.

All just my opinion...

A discretionary trader ought to trade mechanically, with a rigid set of basic risk/money management rules underlying their strategy at all time. However the level of complexity at which a DT processes dynamic market information is simply too high to be coded into a consistent rule based system. The variables (and their relative significance) are constantly in flux, with the market changing its character by the minute, hour, day and week.

For instance: A mechanical system says 'always buy when a 5 min bar breaks out of x channel', but, unlike the DT, it would be unlikely to spot a weekly trendline looming above the BO zone, one that would almost certainly negate the signal and spare the account from a loss. A DT operates mechanically but is paid a premium to sift variables in a superior manner to a simple system. A DT may trade nothing but 1-2-3s, but (s)he has to be there to separate the iffy from the high probability ones, to set the stop and target according to "the market of the moment", to adjust these in real time as the action unfolds if necessary, to be on the button if a bit of unexpected news comes out etc.

I would imagine that even a gloriously specified neural net would have trouble doing these tasks.

---

On the subject of money:

Try removing the profit and loss column from your trading platform and just look at the instrument's price. Be aware, obviously, if you are already long, short or flat. Continually ask yourself "Is this a buy, a sell or a sit on hands price?" as the orders go through, and act accordingly without question.
Ignore your entry price entirely, just concentrate on the current one. If the current is a "sell" in yr opinion then cover any longs you may have and go short. Despite my oversimplification, I'm sure you get the idea, which is to trade the game while removing monetary aspects as much as possible. The result may surprise you; it did me and I haven't yet reinstated the P&L column. It is amazing how differently one can trade without a plus or minus $800 staring one in the face to stir up the old emotions.

Of course we are interested in money to the extent that we need some to exist. But I would rank the puzzle (which I believe is never truly solved even by the most ardent, talented intellectual mind, because some of the rules must keep changing, novel situations must continually arise, and the trader must evolve or die) the autonomy and the personal satisfaction of succeeding in one of the hardest professions going in a far higher position. I am lucky, perhaps: I look forward to every trading day with a passion, an unflinching curiosity as to what she'll chuck at me today and how I'll cope with it. This is true even after the worst year in my trading career, during which I have suffered a meagre income mingled with crippling self doubt and oft considered packing it in for good. But the passion has always won out in the end. As long as I can pay the bills I don't care what it takes.

I agree that just trading one or two purely mechanical systems day on day out is not particularly mentally stimulating and it might well be tedious to do nothing but daily doggedly execute their signals for a score or more years. (I'm not, incidentally, claiming it's easy or in any way demeaning or inferior to do this - many fall way before this fence.) But remember that we are human and we can do so much more. So what if we robotically spend one minute a day actually buying or selling? That leaves another 7 hours and 59 minutes of a typical working day to do something interesting. There is system tweaking, adapatation, imporvement to think about, books to read, walks to be taken, novel pursuits to try, discussions to be had. Mental stimulation is only absent if you decide or force it to be so. The boundary between work and play is not a definite one; indeed in my life I now have absolutely no idea where it lies and that pleases me, though I accept that attitude is not for everyone. Whether reading about probability or learning a new bouldering move or scrutinising a chart to see where the optimum entry is that will lose me the most amount of money 🙂-) everything I do seems interconnected in some way and they all contribute towards a more fruitful life. Anyway I witter and start to sound like a pretentious fool. Bring on the next twenty years!
 
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Jtrader,


Well , you could still be mechanical without physically mechanising everything , unless this is your definition of a mechanised trader.

If I am technically a discretionary trader but I manually use what is essentially a mechanised system , then I am machine like to some degree , remembering that the costs of computerising is beyond the reach of most ordinary traders.

I have traded as such and the problems of boredom etc have still cropped up.

the fact that the ordinary guys you mentioned have done well but still live a regular lifestyle tells me that they are more motivated by the process of money making than money itself . otherwise they would be splashing it out like nick leeson wannabes .

to me that actually confirms what I say , after all they are not necessarily doing the thing that made them rich forever are they ?

Re: traders that are motivated by lavish lifestyles - that's greed in another form . a real trader's worst enemy , this is the leeson syndrome . like the man said " greed is a funny thing, makes people do things they don't want to " like take stupid and reckless trades .

So you still need to be motivated playing the game first and foremost , money takes care of itself if you are any good at it.
of course , the boredom factor not withstanding.
 
Originally posted by frugi
That leaves another 7 hours and 59 minutes of a typical working day to do something interesting. There is system tweaking, adapatation, imporvement to think about, books to read, walks to be taken, novel pursuits to try, discussions to be had. Mental stimulation is only absent if you decide or force it to be so. The boundary between work and play is not a definite one; indeed in my life I now have absolutely no idea where it lies and that pleases me,
Click to expand...

Hi frugi

some good points well made.

I enjoy the learning process as this gives me fresh stimulus and enables me to grow mentally.
While I consider trading to be work, and approach it very seriously, I do consider there to be a fine line between it being a work and an interest (i would not say that it is a passion though). I enjoy the challenge and I enjoy the learning and accomplishment process.............

wisestguy

mechanical trading (in my definition) can mean trading a mechanical system that creates entry and exit signals that you execute manually, or trading a mechanical system which you fully automate with your broker - meaning that you do not have to execute anything.


I agree that if people concentrate on the task at hand and give the level of dedication needed to succeed in anything - the rewards will/should build up form themselves and that focusing upon what you are doing rather than the financial rewards that you may attain - is the best way to probable success............For me, a desire to attain the financial rewards is still necessary at the end of the day though IMHO - and is a large chunk of the motivation a trader needs to continue day after day. Perahps the key may be to learn to love and become so engrossed in the game, that the financial aspect becomes less important.

the fact that the ordinary guys you mentioned have done well but still live a regular lifestyle tells me that they are more motivated by the process of money making than money itself . otherwise they would be splashing it out like nick leeson wannabes.
Click to expand...

Well actually I would say that they are flash gits, have big egos and are quite up themselves - but essentially do live normal enough lives and do work hard still and are decent chaps. Talks of new Mercedes cars, plasma screen TV's etc. etc. I believe that they enjoy doing what they are doing, but they also like to be the people in charge - the centre of peoples attention, and the social confirmation that this brings.


A couple of examples of hugely wealthy and successful people, who love doing what made them wealthy are Micheal Jordan and Shaquille O'neal.
Micheal Jordan made around $40,000,000 a year throughout the late 1980's and most of the 1990's, through salary and endorsements. He loved what he did (playing pro basketball) and for this reason made a second comeback in 2001 aged 38. He went on to play two more seasons before retiring again in 2003. He had no other reasons to make a comeback other than he simply got bored and found that he missed basketball and thought that he could still perform to a high level. Throughout his career MJ has also been involved in coaching basketball for kids at summer camps etc.............These are in effect very down to earth things for a person to do...........while some may be attracted to such 'glamorous' careers for the potential financial rewards, perhaps those who succeed the most are those who love the process of what the job actually involves, and would do it for a fraction of a % of the salary they earn.


On a different note Shaquille O'neill has earned very similar sums over maybe the last decade and has enjoyed comparable success to MJ. I remember reading a couple of years ago that after retiring from basketball, he plans to join the Police - although many didn't believe him, he was very serious. This would indicate that money again, is not the biggest motivating factor in his life - and that perhaps the process (the game) of actually doing what he does on a day to day basis is the major motivator.

jtrader.
 
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