"Trading Day by Day" by Chick Goslin

[s-a]

JohnnyT,

You likely won't see backtest results and if you did, I don't think they would be representative. Why? Because as Chick describes in his book, this method is part science and part art. How do you automate 'art'? This isn't a system you can do automagically.

Also, IMO, exits are far more important then setups.

HG

 

[Holmes]

Holmes,

There are NO GOTCHAS in the book.

As far as everyone jumping in the same signals and screwing up the markets or ruining the natural laws of the market!! LOL............ Come on now! That is amateur talk.

TGM

I am not here to start a flaming war, hey it is holiday season. In another time, on another board I have had the same discussion. And got the same reactions. But I am not going to get into that again, thank you. It will only cause friction and destroy friendships. So let's agree to disagree, no hard feelings on my side.

I am glad that I bought the book on the recommendations of someone I highly respect.

I think you misunderstood me with the gotcha's. I wish Goslin had mentioned some of those in his book. Trading is more of knowing when to stay out than jumping the gun blindly every time. As Kenny Rogers song goes: You got to know when to hold them, know when to fold them, know when to walk away and know when to run.

Sherlock

Opportunity is missed by most people because it is dressed in overalls and looks like work.
Thomas A. Edison

 

[TGM]

Sherlock,
No harm intended (it was not meant as a flame--believe me). When I read your comments, it seems as tho you read a different book! There are bound to be many different opinions on any good trading book. I just think that maybe you are acting like Sherlock Holmes and nitpicking a little to much?!? Which is Ok. Maybe that is your gift to the world.

You did make a good point. You do have to know when to NOT jump the gun. However, putting that in a book would be very difficult. Any trader on this board for minimal money could subscribe to Chick's teaching market letter (50 bucks). Then you can call him and pick his mind every day about when to NOT to jump the gun. IMO, putting all this stuff in a book is impossible (that is one reason he offers a teaching market letter every day). If anyone thinks writing a trading book is simple or easy----try it.

Mr Holmes,

Since you are a critic (and I believe a sincere one). What is your favourite trading book?

 

[Holmes]

Sherlock,
You did make a good point. You do have to know when to NOT jump the gun. However, putting that in a book would be very difficult.

If anyone thinks writing a trading book is simple or easy----try it.

Since you are a critic (and I believe a sincere one). What is your favourite trading book?

Some examples of a few simple points that I would have loved to see were: the third pullback is often failing, do not take a trade against divergence, watch volume in a triangle etc.

Chick's book is well written and is a good read. Try Alan Farley instead for size: after 5 pages in that book you have a headache! (well, that's a bit exagerated but you cannot read a whole chapter in one session, you need to keep on taking a break.....)

Have spend a small fortune on books and my favourite ones are actually some of the older ones.

Jessie Livermoore, Trader Vic, Gerald M Loeb, Schabacker, Humphrey B Neil (The art of contrary thinking) ,Nison and Richard Wyckoff are at the top of my list (and in that order). Then there come some reference books on indicators (actually Nison may fall in that too).

After that I do not know, it drops very rapidly off.

I can already see the next question coming up : In all honesty I do not know yet if Chick's book will join this list of most favourite books.

Sherlock

 

[Roberto]

Try Alan Farley instead for size: after 5 pages in that book you have a headache!

Nice to know I'm not the only one.

 

[Bigbusiness]

I also think it will be hard to backtest this system as there is a subjective decision making process that can't be programmed. It reminds me a bit of Chartman's 100ema method. Several people use it but there would be no way to program some of the decision making. Most people using it will interpret the method their own way and some will be able to make money while others wont.

It is interesting to see that several people have used Chartman's methods in different ways to make a profit. I am sure the 'simple' method in this book will also be used in lots of different ways. That is why I think it is less likely to fail than some more mechanical methods. I am also still not convinced that trading methods fail because too many people use them. Just look at the different interpretations we have from the method described in this book. The odds on all the readers trading the same market and making the same buy and sell orders must be so slim that it is insignificant.

 

[JonnyT]

I have seen a trading method fail after too many people used it. It just happened to be one of my own unfortunately.

JonnyT

 

[Bigbusiness]

How can you know that it was because too many people used it and not just because markets change characteristics every now and then? I had a trading method fail and I hadn't told anyone about it.

 

[Mr. Charts]

I have a range of trading methods which work with varying degrees of success in different types of market.
It's a matter of applying the appropriate approach to the existing market; otherwise any particular methodology will only work intermittently - there's no Holy Grail and no "one size fits all".
Richard

 

[Option1]

hi

I've brought the book and am going thru it carefully. I have the indicators loaded up in Metastock. One thing thats not clear in the book are the entry signals (just from me reading the book first time) - Have I missed out a chapter or something ??

Does anyone else use the method in an EOD way ?

Thanks

 

[s-a]

Option1,

Specifically what are you unclear on? Entries are generally determined with the SL. You take trades in the direction of the main trend, with concurrent signals having the highest probability of success.

HG

 

[Holmes]

I have seen a trading method fail after too many people used it. It just happened to be one of my own unfortunately.

JonnyT

I have seen it happen too.

And if you stop more than a few seconds to think about it then you come to the conclusion that it cannot be any different.

Given:
The market is a zero sum game.
Given:
There is a "solid" system that pulls money out of the market in a consistent way.
Result:
More and more people start using it resulting in that the pool that is loosing is loosing more and more. The loosers will then take appropriate action as the losses mount; They may stop, they may leave the specific market, they may make changes.

Conclusion:
Just another "natural law" if you think about it: The markets adapt.

Sherlock

 

[MartinD]

I have seen it happen too.

And if you stop more than a few seconds to think about it then you come to the conclusion that it cannot be any different.

Given:
More and more people start using it resulting in that the pool that is loosing is loosing more and more. The loosers will then take appropriate action as the losses mount; They may stop, they may leave the specific market, they may make changes.

this is where the self fulfilling prophesy comes into play - assuming EVERYONE trades the same method at the same time with the exact same entries and exits - all buyers, no sellers and price goes thru the roof.

The only issue would be whether you could get a fill, not whether price is going to go the way you think it should.

but then, this assumes everyone does exactly the same thing. The reason I feel this could never be a problem with Chicks method is simply because it can be used on ANY market and ANY timeframe - so really, apart from the fact that no two people will trade the same method in the exact same way, the element of differing timeframes for different traders invalidates your argument

 

[neil]

Literacy corner

I have seen it happen too.

And if you stop more than a few seconds to think about it then you come to the conclusion that it cannot be any different.

Given:
The market is a zero sum game.
Given:
There is a "solid" system that pulls money out of the market in a consistent way.
Result:
More and more people start using it resulting in that the pool that is loosing is loosing more and more. The loosers will then take appropriate action as the losses mount; They may stop, they may leave the specific market, they may make changes.

Conclusion:
Just another "natural law" if you think about it: The markets adapt.

Sherlock

Look at the "Turtle" method; despite the identical system being given to a group of traders, not all of them achieved identical results. It's been said that if the Lord gave the same winning system to twenty traders, several of them would still manage to lose

HOLMES:

"Loose" = opposite of "tight"

"Lose" = opposite of "win"

"Loosers" ???.....you mean "Losers"

 

[The General]

Neil, chill man !!

 

[timsk]

Red Herring - Not

On the subject of many people trading the same system, I have this to offer. It may sound like a red herring, but I think it's relevant to the thread . . .

In the early 90's, way before I had any interest in trading, I became a distributor for a very large network marketing company. Such companies are, in themselves, contentious and I don't propose to get into the merits or otherwise of this way of doing business. That really would be a red herring! The point is this: at the time (and I suspect it's one raised by new participants to the industry now) - one of the common objections to it was market saturation. If EVERYONE became a distributor for XYZ Co., then the whole thing would grind to a halt. No new customers, no new distributors, no growth etc, etc. At the time, when I raised this very concern, I was told it could never happen. Human beings are just that, human. They are not machines. Not everyone will want to be a customer or a distributor. Many more won't even hear about the wonderful opportunities available through XYZ Co., and, of those that do, some may reject the idea now, only to change their minds in 6 months time.

All this was brought home to me by my own sister who announced about a year ago that she was becoming a distributor for a networking Co. although not the same one that I was involved with. I was concerned, as I really tried very hard back in the early 90's: invested a massive amount of time and a considerable amount of £££'s and failed miserably. I didn't want the same fete to befall her and so I tried to put her off. Well, doubtless you can guess the outcome. In spite of the fact that she's a single mum on a very low income with fairly advanced Multiple Sclerosis, she's doing very well indeed. In fact, I'd wager that she's making more money from her business than most members of T2W make from trading! Anyway, the point, should it need explaining, is this: just as MartinD suggests, there is absolutely no way IMHO, that Chick's methods could fail as a result of too many people trading them. It simply won't happen, period. Human beings are just that, human. They are not machines, thank god.
Tim.

 

[neil]

Neil, chill man !!

I am General...note the "wink" after my post. :cheesy:

The post was intended as a bit of light humour. Happy new year to both my readers

 

[TGM]

I am General...note the "wink" after my post. :cheesy:

The post was intended as a bit of light humour. Happy new year to both my readers

very crafty ------

 

[Holmes]

Look at the "Turtle" method; despite the identical system being given to a group of traders, not all of them achieved identical results. It's been said that if the Lord gave the same winning system to twenty traders, several of them would still manage to lose

And once the Turtles system became public knowledge it got faded a lot, making it marginally profitable, if it is profitable at all. This is depending on the position sizing strategy. ( What do I know? I just happened to have had some discussions on this subject with one of the Turtles.)

You really think that people will trade knowing that a garanteed loss will occur? I think not. This is not a win-win situation.

Trading is based on the premise that people will keep on making the same mistakes as before. Bring on the gullible.

Sherlock

 

[Roberto]

Bring on the gullible.

Don't encourage him, _please_