What Do You Consider As The Most Important Aspect Of Trading
CYOF
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I have only voted once in this poll - and that is:
"Knowing Where To Get Out When Wrong"
The reason I voted only once is that if I fail to master this most important aspect of trading, then I will never go on to experience the other aspects.
Second for me would be:
"Knowing How To Add To winning Positions"
After learning how to preserve my capital at all costs, I then need to learn how to maximise my gains when I am in a winning trade.
This, however, will depend on the strategy that I am using - so now I must also be aware of
"Understanding The Markets you Trade".
So I am now battling between "Understanding The Markets" and "Adding To winning Positions".
I think I need to "Understand the Markets" before adding, so I am now getting confused.
If I don't "Understand The Market" I am trading, then maybe I will end up just getting out of trades all the time, and I will never get a chance to add to my winning positions?
If I am getting out of trades all the time, then maybe I need "Having Sufficient Capital" so that I will be able to last long enough to come up with "Having a System With An 80% Win Rate".
Hell, maybe I should have checked all the boxes - for it is beginning to seem that way to me :idea:
"Knowing Where To Get Out When Wrong"
The reason I voted only once is that if I fail to master this most important aspect of trading, then I will never go on to experience the other aspects.
Second for me would be:
"Knowing How To Add To winning Positions"
After learning how to preserve my capital at all costs, I then need to learn how to maximise my gains when I am in a winning trade.
This, however, will depend on the strategy that I am using - so now I must also be aware of
"Understanding The Markets you Trade".
So I am now battling between "Understanding The Markets" and "Adding To winning Positions".
I think I need to "Understand the Markets" before adding, so I am now getting confused.
If I don't "Understand The Market" I am trading, then maybe I will end up just getting out of trades all the time, and I will never get a chance to add to my winning positions?
If I am getting out of trades all the time, then maybe I need "Having Sufficient Capital" so that I will be able to last long enough to come up with "Having a System With An 80% Win Rate".
Hell, maybe I should have checked all the boxes - for it is beginning to seem that way to me :idea:
damianoakley
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For me the 2 most important aspects aren't actually listed! - Psychology and Position Sizing.
But out of those listed, I would say that knowing your stop point is key.
Thanks
Damian
But out of those listed, I would say that knowing your stop point is key.
Thanks
Damian
CYOF
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"Knowing Where To get Out When Wrong" is not the same as knowing my stop point.
If I let my stop point be hit - then I am letting the market prove my position wrong.
I will never let the market prove my position wrong - but I will always let the market prove my position right.
I will close out my trade, or reduce my size, until or unless the market proves my position right.
Food for thought!
If I let my stop point be hit - then I am letting the market prove my position wrong.
I will never let the market prove my position wrong - but I will always let the market prove my position right.
I will close out my trade, or reduce my size, until or unless the market proves my position right.
Food for thought!
PitBull
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I'd second the last two, understanding the markets and also having a system. Doesn't necessarily have to have an 80% win rate, but if money management is implemented properly then a 50% win rate would suffice, as long as the winners are greater than the losers.
All basic stuff IMO.
All basic stuff IMO.
CYOF
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All good posts - thanks for the input.
On a serious note - I think all are very important (I am sure that we can all come up with some more good ones as well) and some can be viewed as basic requirements in order to run a successful trading business.
One very important aspect - depending on your approach - is having the time to learn how to trade.
This was one of the main obstacles that held me back in relation to gaining some real experience, and I had to quit my "normal job" for 1 year to get over the major learning curve for the approach that suited me best - that is daytrading Nas Tech Stocks.
I am also glad at this stage that I returned to a "normal job", which I am still in. It has allowed me to reflect on what I had been doing - and pick out the major errors that I was repeating on a daily basis.
When I return to full-time trading in 2007, I will not repeat these errors.
On a serious note - I think all are very important (I am sure that we can all come up with some more good ones as well) and some can be viewed as basic requirements in order to run a successful trading business.
One very important aspect - depending on your approach - is having the time to learn how to trade.
This was one of the main obstacles that held me back in relation to gaining some real experience, and I had to quit my "normal job" for 1 year to get over the major learning curve for the approach that suited me best - that is daytrading Nas Tech Stocks.
I am also glad at this stage that I returned to a "normal job", which I am still in. It has allowed me to reflect on what I had been doing - and pick out the major errors that I was repeating on a daily basis.
When I return to full-time trading in 2007, I will not repeat these errors.
roguetrader
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Precisely, and I think that trying to attach a ranking of how important has the undesirable effect of trivialising whatever fits lower down the scale
CYOF
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Good point.
Just because I post a poll outlining some aspects of trading, does in no way mean that these are the only things that one should be aware of in relation to developing ones trading skills.
in fact, who is to say that I know anything about trading!
I may just be posting some points I read in a book, or online website?
One should question everything that one reads, and also keep an open mind as to what pieces of information can be of use in assisting with the learning curve.
Learning how to recognise the difference between "time wasting information", and "relevant information" can greatly shorten the learning curve that one has to go through.
Regards,
Just because I post a poll outlining some aspects of trading, does in no way mean that these are the only things that one should be aware of in relation to developing ones trading skills.
in fact, who is to say that I know anything about trading!
I may just be posting some points I read in a book, or online website?
One should question everything that one reads, and also keep an open mind as to what pieces of information can be of use in assisting with the learning curve.
Learning how to recognise the difference between "time wasting information", and "relevant information" can greatly shorten the learning curve that one has to go through.
Regards,
Mr. Charts
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Self-discipline and eradication of ego are pre-requisites of success.
Having said that, there are many analogies with driving a car.
One cannot ask which is the most important single factor, or even rank them. For example, which is most important, using the clutch, changing gear,steering, braking, looking in mirrors, Highway Code, reversing and so on. Once you've moved beyond those then what about reading the road ahead, anticipating events and other people's actions and good road sense.
Not to mention character under stress then the diminution and final eradication of emotion.
These are all essential parts of an integrated whole.
Richard
Having said that, there are many analogies with driving a car.
One cannot ask which is the most important single factor, or even rank them. For example, which is most important, using the clutch, changing gear,steering, braking, looking in mirrors, Highway Code, reversing and so on. Once you've moved beyond those then what about reading the road ahead, anticipating events and other people's actions and good road sense.
Not to mention character under stress then the diminution and final eradication of emotion.
These are all essential parts of an integrated whole.
Richard
CYOF
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True,
But as we all know, only too well, many car drivers are killed each year, and most of these are actually good drivers - one of the main problems been the speed at which they drive.
In line with the original analogy, just because a trader has learned how to trade, this does not mean that the trader is not going to crash - as a lot of car drivers do.
Education and experience are not the main factors to guarantee success - let it be driving or trading - but how one interprets and applies the acquired knowledge can be a very important factor.
Regards,
But as we all know, only too well, many car drivers are killed each year, and most of these are actually good drivers - one of the main problems been the speed at which they drive.
In line with the original analogy, just because a trader has learned how to trade, this does not mean that the trader is not going to crash - as a lot of car drivers do.
Education and experience are not the main factors to guarantee success - let it be driving or trading - but how one interprets and applies the acquired knowledge can be a very important factor.
Regards,
peto
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Mr Charts: remarkably apt analogy, esp the latter stages.CYOF said:
CYOF: Over 70% of drivers believe they are above average....... does a parallel belief fuel most new aspiring traders?
Speeding drivers...i.e. a tendency to unnecessarily increase risk in order to (hopefully) reach their destination quicker... obvious trading parallel again.
The analogy fails however when we see flawed drivers (those who often drive too close to the car in front, for example, or who allow their emotions to affect their behaviour and become stressed) who repeatedly reach their destinations and "get away" with it time after time, year after year, perhaps because the others on the road make allowances for them. The markets are less forgiving.
CYOF
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Hi Peto,
Don't take this the wrong way - but I am trying to stay away from been drawn into discussions about analogies and metaphors.
My main purpose in starting the poll, was to create a discussion around some important aspects of trading, with the hope that it will bring out further discussion as to why we traders think we have to have a strict set of rules and guidelines to adhere to in order to become successful.
Maybe some traders do, and maybe some traders don't?
Maybe this question can be answered - and maybe it can't?
Q: Grey 1 has a proven method for trading stocks using TA techniques that he has developed. This is shared with other traders. Why then, are all traders who look at this technique, not using it to make money. The fact that it works can be seen on a near daily basis.
I for one, have looked at the system and decided that it is not for me (more exact to say that it is not for me at this present time). Why is that.
A: Because I am unable to give the time and attention - including the testing and understanding of the setups - that it will require in order to use this approach. On the other hand, I have a simple system that I can use for trading the YM Futures and DOW & TRAN stocks, which is a little risky due to web access and limited monitors / data - hence I need to papertrade first to iron out any glitches.
But the fact is that I am looking at what I can realistically achieve at the current time - I know that I am only going to waste my time looking at Grey 1's setup - it is not practical for me at the moment.
I think this is a very important point - for a lot of us traders fail to confront reality and ask ourselves the very important question - what approach is most likely to allow me place a trade with the minimal amount of risk, and fits in with my current circumstances..
IMHO, if one can work out this, then it should be only a matter of time before one sees some results. The amount of potential profit will be in direct proportion to the amount of risk taken - very small risk should be taken if your current situation does not allow you to maximise your risk control.
Regards,
Don't take this the wrong way - but I am trying to stay away from been drawn into discussions about analogies and metaphors.
My main purpose in starting the poll, was to create a discussion around some important aspects of trading, with the hope that it will bring out further discussion as to why we traders think we have to have a strict set of rules and guidelines to adhere to in order to become successful.
Maybe some traders do, and maybe some traders don't?
Maybe this question can be answered - and maybe it can't?
Q: Grey 1 has a proven method for trading stocks using TA techniques that he has developed. This is shared with other traders. Why then, are all traders who look at this technique, not using it to make money. The fact that it works can be seen on a near daily basis.
I for one, have looked at the system and decided that it is not for me (more exact to say that it is not for me at this present time). Why is that.
A: Because I am unable to give the time and attention - including the testing and understanding of the setups - that it will require in order to use this approach. On the other hand, I have a simple system that I can use for trading the YM Futures and DOW & TRAN stocks, which is a little risky due to web access and limited monitors / data - hence I need to papertrade first to iron out any glitches.
But the fact is that I am looking at what I can realistically achieve at the current time - I know that I am only going to waste my time looking at Grey 1's setup - it is not practical for me at the moment.
I think this is a very important point - for a lot of us traders fail to confront reality and ask ourselves the very important question - what approach is most likely to allow me place a trade with the minimal amount of risk, and fits in with my current circumstances..
IMHO, if one can work out this, then it should be only a matter of time before one sees some results. The amount of potential profit will be in direct proportion to the amount of risk taken - very small risk should be taken if your current situation does not allow you to maximise your risk control.
Regards,
Because the market offers us an infinte number of unique events - a series of probabilities and only we can impose guidelines, not on the market, but on ourselvesCYOF said:
Because Grey1 is Grey1 and we are not Grey1.CYOF said:
Exactly we must confront OUR reality.CYOF said:
We should listen to the marketCYOF said:
You have prompted some very important questions
Charlton
CYOF
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Hi Charlton,
All important questions, as you rightly say, and as you also point out each trader will have to find their own individual answers.
IMHO, a lot of traders put too much emphasis on reading trading material and listening to others - myself included of course - and actually forget about two of the the most fundamental requirements - i.e. 1) learning how to actually place a trade with the least amount of risk and 2) how and when to exit a trade if wrong.
1) will be dependant on a lot of things - and each trader must pick the appropriate market / strategy / times that will best suit their individual circumstances.
2) should not be dependant on a lot of things - but for some reason a lot of traders make it so. One of the best things that any trader can do to to improve their chances of success is to exit a trade, until or unless the trade is proven correct - Rule No.1 - we should never let the market prove us wrong - only let the market prove us right.
Another way of explaining this is as follows: I should never let the market price take out my initial stop loss price after entering the market - stop loss levels should be placed to cater for the worst case scenarios - which in reality may be of little use since in these type of market movements(worst case scenario) the stop price will more than likely be traded through - fast market.
It follows then, that if my stop level is really of limited use, then I must concentrate on my entries so that when I enter the market the price moves as anticipated in the shortest time possible. If I am wrong, which will be the case for some trades (the number of wrong trades will be dependant on my understanding of the market I am trading and the amount of trading experience I have) then I need to exit as soon as I recognise that the price is not moving as I thought it might.
I can, of course, always re-enter at any time, and repeat this process until my desired outcome is achieved. When I have mastered this technique, I can then look at maximising my profits when in a winning trade - Rule No.2 - press your winners correctly.
Regards,
All important questions, as you rightly say, and as you also point out each trader will have to find their own individual answers.
IMHO, a lot of traders put too much emphasis on reading trading material and listening to others - myself included of course - and actually forget about two of the the most fundamental requirements - i.e. 1) learning how to actually place a trade with the least amount of risk and 2) how and when to exit a trade if wrong.
1) will be dependant on a lot of things - and each trader must pick the appropriate market / strategy / times that will best suit their individual circumstances.
2) should not be dependant on a lot of things - but for some reason a lot of traders make it so. One of the best things that any trader can do to to improve their chances of success is to exit a trade, until or unless the trade is proven correct - Rule No.1 - we should never let the market prove us wrong - only let the market prove us right.
Another way of explaining this is as follows: I should never let the market price take out my initial stop loss price after entering the market - stop loss levels should be placed to cater for the worst case scenarios - which in reality may be of little use since in these type of market movements(worst case scenario) the stop price will more than likely be traded through - fast market.
It follows then, that if my stop level is really of limited use, then I must concentrate on my entries so that when I enter the market the price moves as anticipated in the shortest time possible. If I am wrong, which will be the case for some trades (the number of wrong trades will be dependant on my understanding of the market I am trading and the amount of trading experience I have) then I need to exit as soon as I recognise that the price is not moving as I thought it might.
I can, of course, always re-enter at any time, and repeat this process until my desired outcome is achieved. When I have mastered this technique, I can then look at maximising my profits when in a winning trade - Rule No.2 - press your winners correctly.
Regards,
Just do it !
I have extracted what I think is the most important part of your post. After going around the houses alot myself, I am increasingly of the opinion, that simplicity counts.
Do it, do it, do it.
Don't dwell on it.
Don't over-analyse,
Go with the flow
It's a psycho-technical-analytical approach but without all the angst. Just do it !
Charlton
CYOFCYOF said:
I have extracted what I think is the most important part of your post. After going around the houses alot myself, I am increasingly of the opinion, that simplicity counts.
Do it, do it, do it.
Don't dwell on it.
Don't over-analyse,
Go with the flow
It's a psycho-technical-analytical approach but without all the angst. Just do it !
Charlton
