when do i say 'i was wrong'

[rockablogger]

Re: Never,

In answer to your original question I am now never "wrong", seriously never. I stick to my plan, if the market moves in a way that my probability based trading strat. didn't work then I wasn't wrong, neither was the market. Quite simply the billions of folk constantly pulling the market in opposite directions exerted enough power in the opposite direction to which I believed probable...
...

Im sorry Black Swan, but i didnt understand this, doesnt this mean that your succeptable to big drawdowns ?
just to give u an example, if your buying at support levels when the market was going up, ... then on the way down whenever it hits a support level you buy (hoping for a bounce) but instead it chops straight through... you may then try the same at the next support level, but the same happens again,... pretty soon it gets pretty bad as you realise that the billions of people are all pulling in the one direction ?

on another note, id like to get some software as iv only been using the charts on IG, id like to start using some indicators which i can back test with historic data, and my criteria / plan to be highlighted to me accross as many instruments as possible.
i checked out the ones listed but there are pages and pages of software providers, .. a few names poped out like Tradecision, or Tradestation, or one mentioned earlier in this thread NinjaTrader ....

thanks again for your recent replies Blackswan, Tomorton, on the question about sucessful traders, although it isnt an indication of my future success, it is encouraging.

 

[SteamRoller]

I think what Blackswan is saying is that he isn't wrong because he manages to follow his plan properly according to his rules. He has therefore traded correctly, irrespective of whether that trade ultimately wins or loses.

This is not the same as saying he never has a losing trade, losing trades are an inevitable part of any successful trading strategy/plan/method etc. A succesful strategy with an edge will identify situations where probability is on your side, i.e. there is a better than random chance of you winning. Of course, the edge can fail to work on any one particular trade, without the plan being faulted.

To give an example from my own trading, out of my last 12 trades, 7 have been winners and 5 losers, but I followed the plan for 11 of them (the one exception was where I wrongly managed a trade through making a mistake). I have therefore stuck to my plan (except for the one error) and I would say I was right 11 times and wrong once.

If i have followed my plan then I have made a successful trade, whether it is ultimately a monetory winner or loser is a separate issue, and over time, is a function of how successful my edge is.

Does that help?

 

[Black Swan]

I think what Blackswan is saying is that he isn't wrong because he manages to follow his plan properly according to his rules. He has therefore traded correctly, irrespective of whether that trade ultimately wins or loses.

This is not the same as saying he never has a losing trade, losing trades are an inevitable part of any successful trading strategy/plan/method etc. A succesful strategy with an edge will identify situations where probability is on your side, i.e. there is a better than random chance of you winning. Of course, the edge can fail to work on any one particular trade, without the plan being faulted.

To give an example from my own trading, out of my last 12 trades, 7 have been winners and 5 losers, but I followed the plan for 11 of them (the one exception was where I wrongly managed a trade through making a mistake). I have therefore stuck to my plan (except for the one error) and I would say I was right 11 times and wrong once.

If i have followed my plan then I have made a successful trade, whether it is ultimately a monetory winner or loser is a separate issue, and over time, is a function of how successful my edge is.

Does that help?

Bingo...

 

[virtuos0]

For the majority it would be better to say 'I was wrong' before they put the trade on. That would save them making the mistake of trading in the first place.

 

[virtuos0]

I think what Blackswan is saying is that he isn't wrong because he manages to follow his plan properly according to his rules. He has therefore traded correctly, irrespective of whether that trade ultimately wins or loses.

This is not the same as saying he never has a losing trade, losing trades are an inevitable part of any successful trading strategy/plan/method etc. A succesful strategy with an edge will identify situations where probability is on your side, i.e. there is a better than random chance of you winning. Of course, the edge can fail to work on any one particular trade, without the plan being faulted.

To give an example from my own trading, out of my last 12 trades, 7 have been winners and 5 losers, but I followed the plan for 11 of them (the one exception was where I wrongly managed a trade through making a mistake). I have therefore stuck to my plan (except for the one error) and I would say I was right 11 times and wrong once.

If i have followed my plan then I have made a successful trade, whether it is ultimately a monetory winner or loser is a separate issue, and over time, is a function of how successful my edge is.

Does that help?

That's what losers tell themselves to make themselves feel comfortable.

 

[Prawnsandwich]

That's what losers tell themselves to make themselves feel comfortable.

Ah come on - makes perfect sense...

 

[cycletracker]

On planning - does anyone know any charting software that allows the user to create a blank space at the right edge and draw in a number of possible price patterns in the future? And derive their MAs and other indicators? It certainly might help beginners plan more thoroughly.

@tomorton - This thread has changed direction but here is the promised tutorial on using NinjaTrader to create different future price patterns. As you'll see in the tutorial, NinjaTrader doesn't really allow you to "draw" the price patterns directly on the chart, but you can easily modify the data NinjaTrader uses to display the chart to depict any scenario you wish.

http://www.cycletracker.com/articles/chart_scenarios_with_ninjatrader_12_19_2009/

Perhaps I'll create another thread for this...it took a little longer to put together than I had imagined and it would be nice for others to possibly benefit from it as well.

Andrew

 

[tomorton]

Many thanks for that exercise Andrew, its a thorough piece of work. I think that reflects the lack of thought programme designers have so far put into this aspect of charting. IF TA is, as some say, like driving by looking in the rear-view mirror, then the lack of planning tools in charting software is like taking away the steering wheel.

I use Sharescope Gold - a budget-range EOD package that covers UK equities global indices, forex, commodities, interest rates, news etc. with a decent range of chart options and indicators. It does allow a user to print a blank 'future' time band on the right of a chart and you can draw trendlines across it - but no way to input fictitious prices as you have done on NinjaTrader: even then, your work on this suggests its pretty intensive.

Of course, I would really like this fictitous future price data to also generate indicator responses too - at least MAs, RSI, momentum etc. I would like the chance to overlay several possible future price patterns across the same chart - every trade should surely generate a plan for what happens if the position goes up, or if it goes down. Surely price-predictive TA has to be the next objective for the software designers as this market matures - rather than an ever-growing battery of more and more obscure indicators?

Please do start a thread on this - you've got the better software for it and maybe traders can demonstrate demand that TA should now be moving from just stockpicking to a more mature trade planning and management.

 

[Splitlink]

For the majority it would be better to say 'I was wrong' before they put the trade on. That would save them making the mistake of trading in the first place.

You are a trader, or not, by nature. Those who are not are, already, following your advice. Those, who are traders, are never wrong before they open a trade! It's always the other trader who shouldn't have dunnit. Their own self criticism comes after the open.

 

[SteamRoller]

That's what losers tell themselves to make themselves feel comfortable.

Yeah? Really? I'm up nearly 1000 pips for the month, adding 17% to account with those 12 trades. If thats losing, then I'l be very happy to keep losing as well as this on an ongoing basis. (By the way, its been a poor month).

 

[Splitlink]

Virtuos0 was talking to the real losers. Not to the brilliant moneymakers like yourself. I'm sure you don't need any advice except on deciding how many pips you can get away with telling us you've made this month. :whistling

 

[virtuos0]

Yeah? Really? I'm up nearly 1000 pips for the month, adding 17% to account with those 12 trades. If thats losing, then I'l be very happy to keep losing as well as this on an ongoing basis. (By the way, its been a poor month).

ok

 

[zupcon]

That's what losers tell themselves to make themselves feel comfortable.

Thats perhaps a little unfair. Im sure many losers do, and in my experience, I've found often found that losers tend to latch on to stuff like positive thinking as a crutch. It always makes me laugh when I read about about the need to "develop a winning attitude".

However, in some circumstances, there is a great deal of truth in what SteamRoller was saying.

 

[Prawnsandwich]

Surely Steamrollers example was fairly simple - his trading method delivers a winning expectancy, so if he continues to stick to it over time then he wins, notwitstanding the occasional loser ? In this sense you can be happy with losing trades in the knowledeg that they are part of the process and that over time the method will deliver positive returns....

 

[Prawnsandwich]

But the importtant thing is that the method has already proven consistently profitable in the past, as opposed to hoping it will become profitable in the future....

 

[SteamRoller]

Surely Steamrollers example was fairly simple - his trading method delivers a winning expectancy, so if he continues to stick to it over time then he wins, notwitstanding the occasional loser ? In this sense you can be happy with losing trades in the knowledeg that they are part of the process and that over time the method will deliver positive returns....

Quite right, thank you. I wouldn't say I was 'happy' with losing trades, I find them an annoyance of course, but as you say, I accept they are an inevitable part of trading a strategy, which incidentally has a win rate of about 65%. Obviously therefore a third of trades on average are going to lose, so you've got to get used to this and accept it as part of the results process, otherwise there is no way you are going to be able to trade the plan, psychologically speaking, if you're going to beat yourself up 1 trade in every 3!

I'm sorry if my comment regarding results for December sounded arrogant, certainly wasn't my intention...Look at eurusd, gbpusd, eurjpy and cadjpy weekly moves this month (which are nothing unusually spectacular) and you'll see that across these 4 pairs there has been ample opportunity for this return. I'm not making it up, but if people don't want to accept that, then I'm fine with that too!

 

[cycletracker]

Many thanks for that exercise Andrew, its a thorough piece of work. I think that reflects the lack of thought programme designers have so far put into this aspect of charting. IF TA is, as some say, like driving by looking in the rear-view mirror, then the lack of planning tools in charting software is like taking away the steering wheel.

I use Sharescope Gold - a budget-range EOD package that covers UK equities global indices, forex, commodities, interest rates, news etc. with a decent range of chart options and indicators. It does allow a user to print a blank 'future' time band on the right of a chart and you can draw trendlines across it - but no way to input fictitious prices as you have done on NinjaTrader: even then, your work on this suggests its pretty intensive.

Of course, I would really like this fictitous future price data to also generate indicator responses too - at least MAs, RSI, momentum etc. I would like the chance to overlay several possible future price patterns across the same chart - every trade should surely generate a plan for what happens if the position goes up, or if it goes down. Surely price-predictive TA has to be the next objective for the software designers as this market matures - rather than an ever-growing battery of more and more obscure indicators?

Please do start a thread on this - you've got the better software for it and maybe traders can demonstrate demand that TA should now be moving from just stockpicking to a more mature trade planning and management.

Thanks for the kind words tomorton. When I was in the process of choosing a trading platform, I did a pretty extensive survey of the available products. I was blown away by the lack of creativity and thought given to, as you say, this aspect of charting, but also across-the-board basic usability issues and innovative tool design now present in almost every other commercial software product domain.

When it comes to trading software, everyone seems to follow the same basic template. It's clear that by and large, trading platform manufacturers cut corners by requiring that software engineers design and implement the user interfaces. The result is an unintuitive and clunky experience that makes it difficult and error prone to place an order and manage a trade in a way that keeps risk at a minimum. There are exceptions to this of course. TradeStation, for example, has done a fair job of designing a pleasant user experience. But enormous room for improvement remains. And the software has evolved at a glacial pace.

I believe there is vast opportunity in this area for someone to finally step up and redefine the expectations of what good trading software should provide; an Apple of the trading world if you will. I'm not holding my breath though...

Andrew

 

[tomorton]

You're so right Andrew. Though we might be told (and actually think) we have sophisticated and flexible charting tools, these are mostly not much more capable than MS Excel. I was not surprised when a couple of years back a trader friend of mine told me that our favoured charting software provider was staffed by IT experts who had zero trading activity or even experience between the lot of them. I don't see us making much progress.