The Great Post Thread

timsk

Legendary member
7,374 2,164
Here's a thread that's long overdue . . .

Every once in a while one reads a post that offers real trading insight. It shines brightly for a day - or even less and then it's gone - buried under a quagmire of mediocrity. Not any more! Copy and paste great posts to this thread or send me a PM with a link and I'll do it.

Here's what to do:
1. The post must be a self contained stand alone piece. If it only makes sense in the context of what was posted before or after it - it doesn't count.
2. Please quote the whole post verbatim without editing it in any way and credit whoever wrote it. Ideally, include a link to it in its original thread. (To do this, hover your cursor over the post number which can be found at the top right hand corner of every post. Click on it and then copy and past the URL.)
3. T2W trading related content only please - no external content and no lulz.

What constitutes a great post? You decide!
Tim.

PS. If this thread has legs, I'll include it in my housekeeping duties, which means that I'll edit or delete anything that's just general chat or obviously not a great post.
 
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timsk

Legendary member
7,374 2,164
To kick things off, here's great post by ffsear:

I think i became more disciplined and a better trader when i started to become a better loser.

I remember my old demo accounts, I didn't lose money but i didn't make money either. But i lead myself into this false sense of security that i was making mistakes that I wouldn't make when I went live. Yet i went live and started to lose money.

The problem? Not my method, not my risk managment, just TOO MANY MISTAKES!

I went back to demo trading, but this time I focused on my losing trades. I was determined to make sure that ever loss was a perfect trade. None of this looking back and saying "oh i shouldn't have take that trade because of XYZ, or I shouldn't of done that because I didn't check the news"

Every loss must be perfect. Where by if the situation was run again, you'd still take the trade every time. And if its a loss, so be it, on to the next one.

The result for me was less trades and a higher strike rate.

Be a perfect loser! The winners will take care of themselves


Link: Can you learn to be discplined with your trading - Discuss
 

darktone

Veteren member
3,986 1,041
This one really put global warming into perspective for me.
All credit to Pondlifedregsbutler


It gets worse....

The average human produces half a litre of fart gas per day.

Now you know.....but wish you didnee

Gas converted to litres
1 cc = 1 ml 1,000 cc = 1 litre 1 meter = 100 centimeters. 1 m^3 =100cm x100cm x100cm or 1,000,000cc. Divided by 1,000cc/ litre = 1,000 litre/m^3. So multiply m^3 x 1,000 to convert to litres.

or summick like that Shakone too drunk to look it up properly, cheers 4 linky.
 
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S

sonofcablemonster

0 0
Blackswan Wrote:

I read a few paragraphs on the (new) white Pele, Rooney the other day. What separates him from his peer group is his utterly fearless winners mentality, been like that since he could walk/talk/kick a ball/throw a punch. FA cup losers medal? He doesn't give a 5hit about it, or being voted man of the match in the final they lost...he'd play his game for nothing, just to be a winner, just to taste the glory...
D'ya know the day/s I made my big breakthroughs (mentally) with trading? Getting fooking 'stuck into it' and making it happen, casting aside all doubts over; me, my 'system' and the platform and bossing it...
Theres not half some right pussies on here, I'm off for a run...


Link http://www.trade2win.com/boards/general-trading-chat/87126-pressure-3.html#post1048760

I can't actually believe someone wrote that. It's hilarious.
 
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barjon

Legendary member
10,612 1,751
Well, there's a couple of magnificent posts full of deep insight and meaning for you Tim. Dunno why you bother really.
 

darktone

Veteren member
3,986 1,041
Really was a game changer for me, helped my find the courage to investigate what i was already suspecting.
by stevespray 88
--------------------------------------------------------------------------------------------------------------------------------------------


Hi LM, Great thread – I am very much enjoying watching the subject develop.

I hope that I might be able to add a few points to the many that have already been made.

Early in the thread several references are made to Jesse Livermore and his trading techniques. Several questions are then raised by his comments. I’m fascinated by Livermore and have been so for many years.
My feeling is that Livermore’s comments were perhaps cloaking a greater understanding of the markets than most of us perceive. Our ‘perception’ of what goes on is limited by our self imposed rule structures which we may consciously or sub consciously apply to ourselves. My feeling is that Livermore attached absolutely no value to index or stock values other than to acknowledge that each stock or index had to trade at a particular price. Naturally in a bull market prices tended to trend higher whilst a bear market would lead to an overall decline in prices.
Livermore’s techniques were not based around moving averages or any other indicator – this is important to understand since it is this understanding which paves the way for us to understand things beyond our current perception. The basis of this thread is an attempt to develop a largely mechanical trading system of sorts. The trigger to trade being a move away from a predetermined level. I would question everyone who feels the need to use a ‘rule based’ trading system. Most people choose a rule based system because they are looking to absolve themselves of trading responsibility – sub consciously life has taught them to do this – I guess you could call it ‘human nature’ of sorts. Most people will not make money from these systems for many reasons.

What I like about LM’s system are the comments regarding the trade going the right way from the start. This is the kind of ‘taking responsibility’ which makes a system potentially profitable. There is a massive reason for this which I will mention shortly.

Just getting back to Livermore and his techniques – These were, for the most part, based around what we would term as ‘tape reading’. As I said before, the level of an index or stock was not important, what Livermore saw as important was how the prices reacted to the activities of the larger market participants. He would examine how the market ‘absorbed’ buy and sell orders. His key tactic was to try and identify the key areas of what today we call ‘distribution’ and ‘accumulation’. Livermore would record findings in his various journals for later reference. The reason that Livermore was so successful was because he was able to uncover longer term trends right from their outset. The reason that most ‘mechanical’ trend following systems don’t make money is because they spot the trend late. Having ‘spotted’ a trend you join it and hope that the trend continues. Often this happens. The problem is however the exit from a trend. Again a mechanical system falls foul of apparent ‘lag’ – by the time the systems calls an end to the trend the price has retraced significantly and therefore a large percentage of the profit has been eroded. Likewise if we manually intervene, and close it ourselves, the trend will carry on much further and again the profit is missed out on!

Potentially profitable trading....

My own studies have uncovered what I feel are pretty important aspects of trading if one is to become and remain profitable. I feel that these ‘theories’ tie in very nicely with LM’s proposed trading system. This is because I feel that the sudden / rapid movements which LM is looking for are of a particular nature and caused by a particular set of events. People have questioned whether there will be too many false entries (“death by a thousand cuts”) – this is certainly going to be a problem and I would suggest that a volume study is going to be needed either as a set up or a conformation tool.

In my opinion it is important to understand that these types of breakaway techniques are only going to work when there is a significant level of ‘speculative money’ within a particular market. This is because speculative money tends to be ‘fast in – fast out’ in nature meaning that the speculative punter is easily persuaded to alter his market position and this is generally caused by the price movement itself. If the amount of speculative money in a market is low then the reactions to price movements will be very much more damped in nature – this leads to a marked increase in ‘false breakouts’ and the like and a more ‘random walk theory’ starts to prevail.
These theories are backed up by theories such as ‘reversion to the mean’. Someone mentioned earlier about the ‘true value’ of something – this is a very valid point since the true value of something can become vastly distorted by an increase in speculative money. Livermore talks in a number of his books about how certain commodity traders ‘cornered the market’ in certain things. In fact Livermore lost some large sums of money betting against these traders. Livermore commented that ‘no price is so high that it cannot double again in a month’ (or words to that effect). Likewise ‘no price is so low that it cannot half in a week’ (I hope no Northern Rock shareholders are reading this now!).
So, as speculative money enters the market the price can potentially move further and further away from its ‘true value’. In the markets price movements and bigger volumes in turn attract more speculative money which often creates small self perpetuation cycles. Mean reversion shows us that as volumes drop back off the market will return back towards its area of ‘true value’ – ie a fair value which is established by market participants who trade on much longer timeframes and are not persuaded to alter their positions by price movements in the shorter time frames.
As an example you can often spot this in the FTSE in the last 30 minutes of trading. Quite often the FTSE will move independently of its US counterparts (in that last 30 minutes) as the days speculative positions are unwound – this is a reversion towards true value.

So back to profitable trading....

In order to trade profitably on an intra-day basis one has to examine the habits of losing traders. This is, at times, much harder than it sounds. Most of my theories on this subject come about after studying my own unprofitable trading periods. In particular I had a period, about six years back, of intra-day trading on foreign exchange (USD/GBP to be exact) which was of particular annoyance to me since my trading was so consistently bad. By ‘consistently bad’ I mean that I was consistently able to ‘donate’ cash to the markets on a daily basis. As it was I was only trading with £1 per point whilst I ‘got the hang of it’ but it didn’t stop me losing, on average around £120 per week over the course of about 3 months. Statistically I was averaging just under two trades per day – say eight per week. This meant that with a spread of two pips my trading costs were only 16 pips per week which obviously meant that my net market losses were around 104 pips per week. This quite frankly amazed me and, once analysed, lead me to conclude that consistently profitable trading was very possible given that I could show (and indeed demonstrate live!!) that consistent losses could be achieved over and extended 3 month period. I continued studying my failings but to no avail. I could not place any logical reasoning behind this ‘consistency of losses’.
My ‘eureka moment’ came when I was relaxing whilst lying on a beach in Spain. My girlfriend at the time was most amused to see me scribbling away frantically with my demented ramblings. So what had I stumbled across??

What it all comes down to is ‘Stops’! Of course everyone will tell you that keeping good stops is the key to profitable trading but it simply isn’t as straight forward as that and I can now (attempt to) demonstrate why.

I would ask these following questions;

What is a stop and where is it generally placed?

What has happened once a stop has been tripped?

I will attempt to answer my own questions in an attempt to demonstrate my theory. Firstly, stops are generally placed at price extremes in terms of current market action. That is to say that when a stop gets activated the price will have moved to a point of local extremity (at the split second it is triggered) – if the price wasn’t at an extremity then the stop would not be triggered.
Secondly, once a stop has been triggered you are exchanging ‘piece of mind’ (that you loss cannot get any bigger) for a price which is very likely away from ‘true value’ (which is consistently to your detriment). I therefore consider that stops consistently triggered (due to price movements) will always represent bad value from a trading perspective because each and every time a stop is triggered you will be trading at a point in time where the price is least favourable to you in terms of deviation from true value.

Likewise when we think about wining trades – how often do we let winning trades reverse on us before closing? This is the second part of the theory. With stops we set ourselves up to trade at unfavourable price extremes and then compound the issue by only closing winning trades once the price has regressed a good way back towards true value. So, as you can see, we are trading in a manner which is a reverse of what is required.

In my opinion to trade successfully intra-day we must adopt a policy which takes advantage of the theory. This simply means closing bad trades on a regression whilst only ever taking profits on prices of local extremity. By trading this way we will only ever be exchanging ‘value’ at points which are beneficial to ourselves.


End of part one!


Steve.
 
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darktone

Veteren member
3,986 1,041
And a follow on
By stevespray 102
-----------------------------------------------------------------------------------------------------

An excellent post Steve that captures a number of key fundamentals to price action and speculative psychology very succinctly. Nice work.

Before anybody considers now placing their targets where their stops are and their stops where their targets are, they need to be able to have a reasonable shot at establishing the mean and extremity you refer to. The longer TFs which effectively drive this process have their own idea of future value as I’m sure you’re aware.

One of the most intelligent and informed posts for a while (apart from my own of course….)

Unfortunately it simply isn’t as simple as swapping your targets and stops around. It’s actually quite difficult to try and explain the point that I’m trying to get across. Can you see that with a stop the moment that it is triggered you are out of the market? Ask yourself what function a stop like that is actually performing? When we understand that a stop is performing a ‘service’ for us we can then move on to understand that this ‘service’ comes at a cost. It is this ‘cost’ that makes us consistently lose money. In simple terms, if we react to price is such a manner as to make us close our trade then we will more than likely be losing money.

Let me try the following as a semi practical demonstration....

Let us imagine we are trading GBP/USD. We will ignore trading costs to start with but will consider that a round trip cost is 2 pips.
Let us also assume that we are looking to scalp around 17 – 20 pips from a trade.
So, we see that GBP/USD has rallied to a round number at 1.9700. At this point we sell short at 1.9700. A trader prone to loss would now place a stop close by as he considers this ‘good practice’. Lets imagine that our generally losing trader places a 20 pip stop order to get him out of his short at 1.9720. At the same time he feels that his target for profit would be around 1.9680. He may or may not place a limit order to buy to close at this level. His feeling is that his ‘edge over the market’ is the fact that the market will normally reach points of resistance and support at round numbers and therefore by consistently making this kind of trade at these points in time he will, over the longer run, make money. At the moment this all sounds perfectly logical. (I will in due course try to prove otherwise.)
Imagine now that the market spikes higher still and reaches the stop at 1.9720. In an instant the trade is ‘stopped out’ and our friend is ‘flat’. Then what happens? Well obviously the market can still run higher or perhaps turn back lower. The chances are however that the market will run back lower and at some point will return to a level below the stop level set by our losing trader.
Try imagining now what would have happened if the trade would have gone into profit. Let’s suggest that over the course of 20 minutes the market fell those 20 pips. What would our trader do? The most likely thing is that he would have thought “Oh, this looks like it’s going lower” and held onto the position. Then, before you know it, the 20 point winner has diminished backwards into a 12 point winner... whoops... now it’s only an 8 point winner.... oh bugger lets close it for 8 while there’s still some profit left!

Do you see how both methods of ‘trade management’ are detrimental to profits? This is why our friend is a ‘generally losing trader’.

Psychologically our trader cannot win in the longer term because he is not capable of taking control of the trade management aspect of his trading. Instead he uses a ‘fixed stop loss’ because that ‘comforts’ him and causes him to believe that by doing this his potential losses from each trade are ‘under control’. Whilst this may be true to an extent our trader has failed to realise that, by allowing stops to get hit time and time again, he is consistently paying a premium to trade out of his positions at points of price extreme.

Of course the correct way to manage this type of trade is to use a mental stop which does not trigger an automatic exit from the market. Suppose in our example we set the following loose rules.

1 Mental stop of 20 pips.

2 Hard stop of 40 pips.

What we could do in terms of trade management is this. If our trade goes into loss then we will monitor it closely. If our mental stop is triggered we will move into ‘damage limitation mode’. This means that we have now accepted that our trade is a poor one and we are looking to get out. What we are waiting for is a better price than is currently available. It is possible that the market will move either way. If our mental stop of 20 pips gets hit and then the market retraces 12 pips then we can get out for a loss of 8 – see how remaining in the trade beyond our mental stop has saved us money? In most cases it will! Suppose, instead of retracing 12, the market moves on another 10 so our loss is now 30 – this can and does happen – it is still more than possible that the market will retrace 10 – 15 pips in the short term which still means a loss of less than 20 pips.
I hope that you can see that by taking responsibility for the trade management the losses can be far better controlled. This is because your exit from a trade is likely to be nearer to ‘true value’ than if you have a fixed stop set which is guaranteed to exit you from a trade at a price extreme.
Likewise by placing a limit close at a price extreme you are fair more likely to take advantage of poor losing traders when your trade closes at a point well away from ‘true value’


I hope this explains a bit more.

Steve.
 
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darktone

Veteren member
3,986 1,041
In the interests of saving space, id like to present these two masterpieces in one post. I hope im not thought less of by nominating some of my own work. :D All who seek shall find
-----------------------------------------------------------------------------------------------------

Anyone who thinks it's better to use a limit order instead of a stop can't be a real trader.

Providing hes not taking the p**s its goto be deadbroke! And of course the twanger above!

I mean..Wudda
:LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL:
:LOL::LOL::sneaky::sneaky::sneaky::LOL::LOL::sneaky::LOL::LOL::LOL::sneaky::LOL::sneaky::LOL::LOL::LOL::LOL::sneaky::LOL::sneaky::sneaky::sneaky::sneaky::sneaky::LOL:
:LOL::sneaky::LOL::LOL::LOL::sneaky::LOL::sneaky::LOL::LOL::LOL::sneaky::LOL::sneaky::sneaky::LOL::LOL::LOL::sneaky::LOL::LOL::LOL::sneaky::LOL::LOL::LOL:
:LOL::sneaky::LOL::LOL::LOL::LOL::LOL::sneaky::LOL::LOL::LOL::sneaky::LOL::sneaky::LOL::sneaky::LOL::LOL::sneaky::LOL::LOL::LOL::sneaky::LOL::LOL::LOL:
:LOL::sneaky::LOL::LOL::LOL::LOL::LOL::sneaky::LOL::LOL::LOL::sneaky::LOL::sneaky::LOL::LOL::sneaky::LOL::sneaky::LOL::LOL::LOL::sneaky::LOL::LOL::LOL:
:LOL::sneaky::LOL::LOL::LOL::sneaky::LOL::sneaky::LOL::LOL::LOL::sneaky::LOL::sneaky::LOL::LOL::LOL::sneaky::sneaky::LOL::LOL::LOL::sneaky::LOL::LOL::LOL:
:LOL::LOL::sneaky::sneaky::sneaky::LOL::LOL::LOL::sneaky::sneaky::sneaky::LOL::LOL::sneaky::LOL::LOL::LOL::LOL::sneaky::LOL::LOL::LOL::sneaky::LOL::LOL::LOL:
:LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL::LOL:!
 
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Mr. Charts

Legendary member
7,367 1,185
Here's a thread that's long overdue . . .

Every once in a while one reads a post that offers real trading insight. It shines brightly for a day - or even less and then it's gone - buried under a quagmire of mediocrity. Not any more! Copy and paste great posts to this thread or send me a PM with a link and I'll do it.

Here's what to do:
1. The post must be a self contained stand alone piece. If it only makes sense in the context of what was posted before or after it - it doesn't count.
2. Please quote the whole post verbatim without editing it in any way and credit whoever wrote it. Ideally, include a link to it in its original thread. (To do this, hover your cursor over the post number which can be found at the top right hand corner of every post. Click on it and then copy and past the URL.)
3. T2W trading related content only please - no external content and no lulz.

What constitutes a great post? You decide!
Tim.

PS. If this thread has legs, I'll include it in my housekeeping duties, which means that I'll edit or delete anything that's just general chat or obviously not a great post.

....hope springs eternal
 

counter_violent

Legendary member
10,610 2,817
Possibly the greatest post ever.


The Great Post Thread

Here's a thread that's long overdue . . .

Every once in a while one reads a post that offers real trading insight. It shines brightly for a day - or even less and then it's gone - buried under a quagmire of mediocrity. Not any more! Copy and paste great posts to this thread or send me a PM with a link and I'll do it.

Here's what to do:
1. The post must be a self contained stand alone piece. If it only makes sense in the context of what was posted before or after it - it doesn't count.
2. Please quote the whole post verbatim without editing it in any way and credit whoever wrote it. Ideally, include a link to it in its original thread. (To do this, hover your cursor over the post number which can be found at the top right hand corner of every post. Click on it and then copy and past the URL.)
3. T2W trading related content only please - no external content and no lulz.

What constitutes a great post? You decide!
Tim.

PS. If this thread has legs, I'll include it in my housekeeping duties, which means that I'll edit or delete anything that's just general chat or obviously not a great post.
 

darktone

Veteren member
3,986 1,041
I like this a lot :)
(btw, instead of the handbagging/moaning, why not spend the effort in finding a post you like, little bit of lulz here and there wont hurt none)
------------------------------------------------------------------------------------------------------
post 8
Your edge is your Method.

An edge in trading is a method of picking an entry and/or exit from the markets that is better (ie more profitable) than randomly entering or exiting the market.

Some edges can be mathematically proven to be profitable others can be demonstated by rigourous
backtesting, some are just intuitive (chart reading/tape reading/level II etc).

Elder splits trading into three categories Mind, Money (Management) & Method.

You have all three sorted if you want to succeed in the markets. Although your mind probably has to
be sorted first as you wont be able to define your Money management rules or to even correctly
discover a proper Method if your Mind hasnt been tuned properly.

Trading with the trend is an obvious edge, a novice trader tends to trade counter trend, this
effectively gives them a negative edge (worse than random performance).
 

darktone

Veteren member
3,986 1,041
Dont get me wrong, while I think this poster slots nicely into 'I am always right therefore you must be wrong!' arrogant [email protected] box. He does imo make some great points.
-----------------------------------------------------------------------------------------------------
post 5
there are no 'basics of trading'. it is all very advanced.

it is also beyond the classroom.

you can study markets if you wish, but it will only take you so far and most certainly will not guarantee any success.

this is why so many fail. all effort is placed in academia and learning market history/past action. most likely because this is the norm in life.

this is why so many fail. they spend all their time reading books like edwards & magee, pring, trade2win threads & the rest. all of it is dog eggs and kebab meat quite frankly if you do not know what needs to be done and when. yet this is not discussed because no one knows what to discuss.

the answers are not so much in market evaluation, but self evaluation - in peratio proportions, not fibonacci i may add!

anyone for a game of endless circles? it really is a very amusing game to watch i promise!

when new rules are introduced to the game, the bringer is scorned for spoiling the nature of the game.
 

tar

Legendary member
10,443 1,313
Posted that a while back but its not mine :

I believe that there is no secret edge and there is no static set of rules which will make u money always . I found these posts useful it is in FF from Porkpie :

" Most noobs are taught to trade what they think or see which by default puts you on the same side as the herd. If 95% are losing, what are the chances that a new approach using a variation of the same old defunct concepts using the same old indicators is going to put you on the winning side of the curve?

Making a living in the markets requires that you identify and react to the behaviour of others, not analyzing patterns and using indicators to time trades.

The market makes sure that nobody has a static edge by repeating the same exact strategy. Otherwise, it would get massively exploited with huge capital. If there was such a loophole that developed, it would be quickly closed. If participants instantaneously catch onto it then the price returns to complete efficiency. This action is not created by any individual or specific group, it is the auction itself and all the participants acting in the entirety that create the movement. "

" The bars, indicators, patterns, systems, structure, and action are all driven by what the other party is doing. The other party is the cause and everything else is the effect.

This is why some of the best "setups" you see still often fail to produce winning trades. We use tools and visuals to have context in what we decide to do relevant to direction and timing but the outcome after the entry is made is driven by the other party.

There are no "winning" entries. There are no winning trades that are decided in advance as many would like to believe. It is a game of who has the will to hang in there and who will push the other out. It is a game of poker and a game of chicken. I best compare it to a tennis match in which one player will wear the other down to the point that an unforced error is made.

Many of us are correct in direction and premise on our winning trades but still end up donating to the market. This is the a result of the trader on the other side having the ability to wear us down and force an error. "

"The market cannot be defeated with a static set of rules because it is dynamic. The players have to constently change up the action in order to keep the price fair. Those that play poker will agree that you can not win repeatedly at poker by making the same bets on the same types of hands. Same goes for trading. Either you are going to get pushed out or your opponent is. Successful trading is about engagement with the other traders. You get a random hand each time. Whoever plays the hand the best wins. The player with the best hand is not always going to be the winner.

Judging by all the systems/methods and discussions on FF, very few traders think about the person on the other side of their trade (ok we know its the broker but their prices come from the interbank of competing traders). This is the single most important factor in trading imo and will often decide the outcome of your success. Next time you stick an indicator on your chart, think about what you are doing and why. "
 
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