Psychology... the poll

[rols]

Since the future is unknown one cannot KNOW that a system will make you money. As your arguments rest on this assumption they are invalid.

Quad Erat Demonstrandum.

How can you be so sure this is the case for everybody?
Surely QED only applies to your own perception of the Universe?

 

[new_trader]

Personally I'd suggest that you buy (rather than rely on un-peer reviewed Wiki) read
The (Mis)behaviour of Markets and Black Swan: The Impact of the Highly Improbable

But hey, many views make a market non?

I was not implying that those articles describe the way the market behaves. They were in regard to the almost circular argument PKKFW was using to give support to his opinion.

ie/

Even if you trade completely discretionary and have been profitable every day for 10 years something may change and you could find yourself on a massive losing streak.

Would you bet against the sun rising tomorrow just because "something" may change?

 

[PKFFW]

I was not implying that those articles describe the way the market behaves. They were in regard to the almost circular argument PKKFW was using to give support to his opinion.

ie/

Would you bet against the sun rising tomorrow just because "something" may change?

My argument is circular?

You state that psychology is going to matter to the system trader because when using a system you are working with probabilities and therefore can't know that your system will produce a profit.

I was pointing out that no one can know they will produce a profit.

You can't have it both ways buddy. You wouldn't bet against your own experience it seems. Great. However, you can't know that you will continue to show a profit just as the system trader can't know their system will either. So why is it so bad for a system trader whose system has shown a profit in back test and forward tests over a significant period of time to have that same confidence as you have?

As for your aticles, Occam's razor has no bearing on this discussion. You have boldly stated that because systems traders can't know their system will produce a profit then they will always struggle with the psychological aspect. I have pointed out that by your very own logic you must therefore believe the same thing about discretionary traders. There is no logical way around it. For one who seems so proud of his own logical thinking capabilities I'm surprised you would even argue that my point isn't valid if we begin with your assumption and take it to its natural conclusion.

As for Bayesian theory, again it doesn't seem to support your view. If a system has been back tested and shown a profit and then forward tested through live trading and has continued to show a profit for a considerable amount of time then by Bayseian theory it would be considered a "hypotheses with very high support" and thus accepted as true. You seem to be arguing that a discretionary trader who has shown a profit over a considerable amount of time can consider his trading abilities "true"(for want of a better way of putting it) but a system with equally valid long term theoretical support(ie: profits over the long term) can not be considered "true". So once again your logic is selective and you seem to be attempting to back up your argument with selective application of scientific theory. Not a very logical way to go about it.

Seems to me that your argument once again boils down to "this is how I do it and this is what I think and anyone who disagrees with me is wrong".

Cheers,
PKFFW

 

[new_trader]

My argument is circular?

You state that psychology is going to matter to the system trader because when using a system you are working with probabilities and therefore can't know that your system will produce a profit.

I said this? Where?

I was pointing out that no one can know they will produce a profit.

You also said that after producing a profit, day after day for 10 years that "something" might change and cause a discretionary trader to start losing money. I was simply stating that if you really understood discretionary trading you would realise that this is a fairly ridiculous statement. Markets have been around for 100’s of years and they operate the same way today as they have since they began.

Supply & demand, buyers & sellers. What can possibly change?

 

[PKFFW]

I said this? Where?

I do apologise, I did not look carefully enough at the screen name on the post and had you mistaken for temptrader, to whom I was originally responding.

You also said that after producing a profit, day after day for 10 years that "something" might change and cause a discretionary trader to start losing money. I was simply stating that if you really understood discretionary trading you would realise that this is a fairly ridiculous statement. Markets have been around for 100’s of years and they operate the same way today as they have since they began.

Supply & demand, buyers & sellers. What can possibly change?

What can change? How about your perception of that supply and demand? Your perception of buyers and sellers?

Surely you are not suggesting that a discretionary trader never has a losing trade are you?

It logically follows that if a discretionary trader has a losing trade then his/her understanding of the forces at play at that time were not correct. IE: Their perception of the forces of supply and demand and the interaction of buyers and sellers was incorrect. It further follows that if it is possible in regards to any single trade at any single time for their understanding to be incorrect, then it is possible that for an extended period of time his/her understanding could be faulty.

My suggestion of never having a losing day in 10 years was a facetious and extreme one to illustrate a point. That point being that regardless of any other mumbo jumbo about it all being known in advance, no one can 100% guarantee that they are going to make a profit on any trade or sequence of trades.

Cheers,
PKFFW

 

[firewalker99]

It logically follows that if a discretionary trader has a losing trade then his/her understanding of the forces at play at that time were not correct. IE: Their perception of the forces of supply and demand and the interaction of buyers and sellers was incorrect. It further follows that if it is possible in regards to any single trade at any single time for their understanding to be incorrect, then it is possible that for an extended period of time his/her understanding could be faulty.

That's correct, if the trade doesn't going in the right way, it's always the trader's fault. The market is always right.

My suggestion of never having a losing day in 10 years was a facetious and extreme one to illustrate a point. That point being that regardless of any other mumbo jumbo about it all being known in advance, no one can 100% guarantee that they are going to make a profit on any trade or sequence of trades.

Cheers,
PKFFW

I agree that 100% isn't realistic, because there's always the odd chance that something totally unexpected might happen, for example some unexpected news is leaked before the official release or a plane crashes into a tower . I can't see how one can anticipate these kind of events. But apart from that, I think traders can achieve a very high win ratio, much higher than I used to believe possible in the past.

I'm not saying I have attained this level of proficiency, far from, but I've realized that I shouldn't be content with a system that provides a 60-70% win rate when 90% is possible. This is something I've only come to believe recently though, in the past I was much more convinced of the 'chance' element.

 

[nine]

That's correct, if the trade doesn't going in the right way, it's always the trader's fault. The market is always right.

For my 1000th post on the board, and my elevation to legend, I'd like to say something wise and perspicacious but I doubt I can manage it. I certainly didn't want to say anything about moderation.

Firewalker, although the market is right, it isn't the trader's fault. It is simply the statistical nature of what we do - we take a trade and we know that when we manage it by our strategy some percentage of trades will go the wrong way.

Proving that the market is right and so are we, even when wrong. :smart:

 

[firewalker99]

For my 1000th post on the board, and my elevation to legend, I'd like to say something wise and perspicacious but I doubt I can manage it. I certainly didn't want to say anything about moderation.

Firewalker, although the market is right, it isn't the trader's fault. It is simply the statistical nature of what we do - we take a trade and we know that when we manage it by our strategy some percentage of trades will go the wrong way.

Proving that the market is right and so are we, even when wrong. :smart:

Welcome to the club of legendary members, drinks are on you

If the trader takes every trade as they come, with no disregard to the specifics of each situation than he'll always have a certain percentage of trades that go the wrong way.

You're right, that is the nature of trading and it's not as is the trader is to blame. But neither is the market. If one considers each moment in time to be unique, and therefore analyses each and every trade by the context, he'll soon come to realize that by correctly identifying the conditions that make up for a succesful trade, he can attain a surprisingly high percentage of winning trades.

 

[new_trader]

Surely you are not suggesting that a discretionary trader never has a losing trade are you?

NO! You misunderstand and it's clear you haven't grasped the concept of discretionary trading.

Discretionary trading is both an evolutionary and revolutionary process. In the beginning an inexperienced discretionary trader is going to have many losing trades. Many of the losses will be the result of incorrect perceptions and assumptions about supply, demand and market mechanics, so you are correct about that. By studying and learning from previous mistakes the discretionary trader will have new realisations and hence refine and improve their methodology and will progress. Perceptions and assumptions will inevitably change and eventually the winning trades will outnumber and outsize the losing trades. This is directly the result of an improved ability to discern between real opportunities and apparently real opportunities. Notice that I didn’t say eliminate losses altogether. This would be nearly impossible and a discretionary trader understands why and accepts this.

Imagine two people who own a car, one person is a car enthusiast and does all their own repairs whilst the other person has no interest in cars apart from driving and always takes it to a qualified mechanic. Out of the two people, who is in a better position to comment about whether or not they will still be able to do their own car repairs in 10 years time?

 

[black bear]

Bit of a none debate imho

A good discretionary trader will be able to work / set up a good system and trade it with confidence because he understands when its time to switch it off

The reverse is just not true and the traders confidence will evaporate on the 1st bad drawdown period (assuming systems are all he or she as ever traded and understands)because he just will not understand what really is going on, he only as 2 choices ~

Hold out and keep going in blind faith or fold because discrection is the better part of valour

Certain conditions require an airline pilot to switch off the auto pilot, only an experienced pilot can do that with absolute authority in the moment

He or she is the person I want flying the plane, the junior less experienced pilot can fly but I want the good chap just behind ~ watching and waiting just in case.

 

[PKFFW]

NO! You misunderstand and it's clear you haven't grasped the concept of discretionary trading.

Discretionary trading is both an evolutionary and revolutionary process. In the beginning an inexperienced discretionary trader is going to have many losing trades. Many of the losses will be the result of incorrect perceptions and assumptions about supply, demand and market mechanics, so you are correct about that. By studying and learning from previous mistakes the discretionary trader will have new realisations and hence refine and improve their methodology and will progress. Perceptions and assumptions will inevitably change and eventually the winning trades will outnumber and outsize the losing trades. This is directly the result of an improved ability to discern between real opportunities and apparently real opportunities. Notice that I didn’t say eliminate losses altogether. This would be nearly impossible and a discretionary trader understands why and accepts this.

Imagine two people who own a car, one person is a car enthusiast and does all their own repairs whilst the other person has no interest in cars apart from driving and always takes it to a qualified mechanic. Out of the two people, who is in a better position to comment about whether or not they will still be able to do their own car repairs in 10 years time?

I fully understand the concept of discretionary trading. However, you are arguing a completely irrelevant point to mine. I'm not sure if you are deliberately or ignorantly doing so, so I will assume it is from ignorance rather than an intentional attempt to be obtuse for the sake of argument.

My point is not who could do their own car repairs in ten years time. My point is not about which type of trading is better. My point is not whether a discretionary trader is more likely to be able to adjust to changing market conditions. In fact my point really has nothing to do with discretionay trading.

My point is that no one can guarantee 100% that they will make money on any particular trade, nor can they guarantee 100% that they will even continue to make money in the markets.

It simply can't be 100% guaranteed.

Therefore temptraders' assertion that the psychological issues will plague system traders because they can't 100% guarantee they will make money is a bit silly because no one can do that.

Cheers,
PKFFW

 

[black bear]

agree nothing is 100 % guaranteed

well except

Taxs


they are 100 % guaranteed

good weekend all

 

[Splitlink]

agree nothing is 100 % guaranteed

well except

Taxs


they are 100 % guaranteed

good weekend all

And that hole in the ground.

Split

 

[black bear]

Dirt nap

And that hole in the ground.

Split

Hi Split

ye that ones guaranteed ~ trust you to bring it up


on that note !

this conversation is effecting my psychology for the weekend


good weekend to you to Split

 

[new_trader]

I fully understand the concept of discretionary trading.

No, you don't. How can you claim to undertsand it and then say the things you do?

Nothing is 100% :-0

Thanks for sharing that astonishing revelation with us.

 

[new_trader]

Forgot to add:

Therefore temptraders' assertion that the psychological issues will plague system traders because they can't 100% guarantee they will make money is a bit silly because no one can do that.

That isn't what he said as fas as I can see and I know how much you enjoy setting up straw man arguments.

What he said was:

And no amount of probability theory will guarantee 100% that during a losing run it will turn and get better, and I personally think that is where the psychology comes in.

Do you see the difference?

 

[PKFFW]

Forgot to add:

That isn't what he said as fas as I can see and I know how much you enjoy setting up straw man arguments.

What he said was:.........

Do you see the difference?

Ah selective quoting, got to love that tactic.

Yes I see the difference. I also see that this is one particular line taken out of context to attempt to argue your point.

I could point out that temptrader also posted...

the operative word here is "know". If someone were to 100% guarantee the system they sell was fool proof, then believe me, there would be no psychological issues from users.

temptrader has quite obviously shown his opinion is that the psychological issues of trading plague system traders because they can not 100% guarantee that their system will produce a profit. If you can not understand that from reading the entirety of his posts then that is your own short coming.

I will not continue to attempt to explain things to you. I have made my point.

Cheers,
PKFFW

 

[PKFFW]

No, you don't. How can you claim to undertsand it and then say the things you do?

Nothing is 100% :-0

Thanks for sharing that astonishing revelation with us.

If you believe I do not understand the concept of discretionary trading, please advise where any of my posts regarding discretionary trading are incorrect.

If you can show me a discretionary trader that has a 100% guarantee then I'd be happy to retract my statement.

Cheers,
PKFFW

 

[temptrader]

Since the future is unknown one cannot KNOW that a system will make you money. As your arguments rest on this assumption they are invalid.

Quad Erat Demonstrandum.

In case you did not get my argument, I was merely drawing attention to the fact if a 100% guarantee was possible no psychological issues arises. That was the hypothesis of the argument. Whether the hypothesis is possible is another matter entirely.

Apart from people who make the systems and understand them inside out, people who buy systems and trade them are doing something totally lazy and brainless. You tell me that there are psychological issues, I'm saying that most of those psychological issues are from users' distrust that the system will not deliver. There are loads of systems that have made money in isolated periods (and some of these periods have been quite long, years even), but to say that psychology is what prevents systems being profitable for their users is absurd. This might possibly be true for some systems over certain periods, but I think you'll find that the majority of systems don't make money regardless.

I think it's easy for the public to get into system buying and try it out hoping it will work. It requires basically no effort and no thinking, and it's a great sales pitch for the sellers who ultimately are the ones who are making money out of it. If the systems are doing well the sellers talk it up and advertise the results in their flyers, if not then can always go away with the money made and start making different systems to sell saying that they had learn from their mistakes last time etc. . . as any newbie trader should you be following someone else's work or should you be doing your own?

 

[temptrader]

Ah selective quoting, got to love that tactic.

Yes I see the difference. I also see that this is one particular line taken out of context to attempt to argue your point.

I could point out that temptrader also posted...

temptrader has quite obviously shown his opinion is that the psychological issues of trading plague system traders because they can not 100% guarantee that their system will produce a profit. If you can not understand that from reading the entirety of his posts then that is your own short coming.

I will not continue to attempt to explain things to you. I have made my point.

Cheers,
PKFFW

no, you've miss read me out of context, see previous post.

You know, on the "have you've backed up your data" thread I said I might need to back up my house and contents - or something like that, I can't remember because I was having a laugh. I've now realised that it's you and FireWalker I need to back up because you're both so damn entertaining. Every time I think I might be getting big headed or have too long a winning streak I consider it a duty to have you two take the p*ss out of me to put me back to earth.