Why do so few succeed?

[Kunal]

So, as suggested earlier, the problem is not you but your system, or rather lack of a system. Contemplating your navel isn't going to be of much benefit..

This needs to be nailed onto these threads.

He needs to make a distinction between "him" losing money, and his system losing money.
Maybe the thread should have been named "Why do so few trade profitable systems?"

 

[dbphoenix]

DB,

Respectfully, I do not think the process you outlined is what Douglas talks about at all when he talks about going through the exercise. He states that the reader should consider the exercise to be "tuition". Get a simple mechanical system and trade it. If I remember right, he says that it's not important if the system is profitable. If it turns out not to be profitable, that is tuition for the education you will receive by the exercise. I don't believe the point of the exercise is to develop a winning system, but to develop the right mental framework. However, it's been almost a year since I finished reading it, so I will go back and review those chapters discussing the exercise to see if I missed the point, as you suggest. Thanks.

By the way, are you a completely mechanical systems trader or do you exercise discretion in the setups you trade?

There is no point in trading a system that isn't profitable. Whatever "lessons" might be learned will be irrelevant to the task of learning how to trade. One might "learn", for example, that wide stops are critical. Or they that must be extremely tight. Or that stops should not be used at all. Each of which can lead to disaster.

The point of developing the system -- or of testing the "system" that is touted as a profitable one (most of them aren't) -- is more than just to create a list of rules. The point of developing the system is to learn something about how the market works. If he lasts long enough, he eventually learns that most of what we believe to be absolutely essential isn't even moderately important (like "candlesticks").

As for "mechanical" vs "discretionary", you err in separating the two. "Mechanical" is not the same as "automatic". If you haven't defined your setup, much less tested it, then you have only a vague idea of what it is you're looking for, if that. If you have only a vague idea of what you're looking for, your entries will tend to be sloppy. Your stops, therefore, will tend to be nearly always inappropriate.

There is no virtue in feeling your way through your trades. If one's strategy is not consistenly profitable, the trader has no reason to trust it. If the trader can't trust it, he will regularly override it, usually but not always to undesirable results (that the results sometimes justify the override encourages the trader to continue this behavior). And if he is regularly overriding it, there's really no point in having the strategy at all. And the consequent lack of success leads to all the hand-wringing about psychology and kharma and so on, none of which would be necessary if the trader would simply develop a consistently profitable strategy.

 

[dbphoenix]

This needs to be nailed onto these threads.

He needs to make a distinction between "him" losing money, and his system losing money.
Maybe the thread should have been named "Why do so few trade profitable systems?"

Ego

 

[charliechan]

Isn't it interesting how the more experience one has, the better able he is to tell the future?

sorry, i cant agree.

the more experience one has, the more able to understand that predicting the future is pointless.

reacting to circumstances correctly however is quite different. as is intuition.

 

[dbphoenix]

sorry, i cant agree.

the more experience one has, the more able to understand that predicting the future is pointless.

reacting to circumstances correctly however is quite different. as is intuition.

I won't argue the point or pointlessness. But when one has seen dozens/hundreds of novice traders tred the same well-worn road to failure over and over again, it's not difficult to "predict" that the next traveller will end up in the same place. And there's very little that one can do to prevent the crack-up.

 

[charliechan]

DB,

Respectfully, I do not think the process you outlined is what Douglas talks about at all when he talks about going through the exercise. He states that the reader should consider the exercise to be "tuition". Get a simple mechanical system and trade it. If I remember right, he says that it's not important if the system is profitable. If it turns out not to be profitable, that is tuition for the education you will receive by the exercise. I don't believe the point of the exercise is to develop a winning system, but to develop the right mental framework. However, it's been almost a year since I finished reading it, so I will go back and review those chapters discussing the exercise to see if I missed the point, as you suggest. Thanks.

By the way, are you a completely mechanical systems trader or do you exercise discretion in the setups you trade?

i think you are right regarding the point of the exercise. it is simply to get the person to execute a strategy with out fail and with discipline - win or lose. the difficulty is, that unless there is a profit in the end, then the point of the exercise could be wasted - if the pain of the loss is sufficient.


a similar exercise often given on the floor was to get a trader to take a position (either long or short), and then immediately get out of it - usually with a tick won or lost - but often break even. the next drill would be to hold it for a minute, then 2 etc. next part would be to plan to hold for 5, but wash as soon as it shows a loss. these drills are really just to get the blue button used to holding a position along with the fear, greed, panic etc that goes along with it. it was taken that losses would come, but it was viewed that a £2k loss over a week or so was better than the past 12-18 months salary, aspirations and time going down the drain.

 

[ZDO]

lists

There are no lists. That was just ZDO's abstract.

There are no trading plans. They are also a zdo abstract...

 

[tunnel1x1]

Tunnel, I'm afraid you missed the point entirely. Or almost entirely. Yes, the "exercise" is partly to develop an understanding of the nature of probability in trading, of loss, of being sensitive to what the market is telling you.

However, there's a "Part A" that you missed, which is the development of the system in the first place. Taking 20 or 25 or 30 trades that are not prompted by a consistently profitable trading system/strategy is useless. You have to initiate the development of the system, THEN test it by implementing these trades, then re-working it, then trading it again in a closed loop until you have something that is consistently profitable.

So, as suggested earlier, the problem is not you but your system, or rather lack of a system. Contemplating your navel isn't going to be of much benefit. Of greater benefit will be to buy a package of lined paper and a box of pencils, a cheap/free software program (preferably with replay), a cheap/free data feed, and several pounds of coffee.

DB,

I went back and checked Trading in the Zone over lunch. In setting up the exercise, Douglas states that it is not about developing a winning system nor about developing one's analytical skills. If fact, he states that the system you end up using might even be considered mediocre. However, he says that the insight gained will be invaluable and has nothing to do with being profitable. He says that the losses which may occur should be viewed as tuition. Therefore, I think the exercise has more to do with the psychological intangible than the tangible development of a system. I understand that you might disagree with Douglas as to the value in such an exercise, and you might be correct. However, I think I accurately conveyed what he was getting at.

tunnel

 

[ZDO]

why...

tunnel1x1,

I’m not questioning Bramble’s intentions to help you, but advising you to “throw away your system and take on another one” may be shortsighted advice – unless he knows things about you and the system that all the rest of us don’t.
Such advice could be likened to “tunnel, take off your pants and put my bramble pants on”.

zdo

 

[dbphoenix]

DB,

I went back and checked Trading in the Zone over lunch. In setting up the exercise, Douglas states that it is not about developing a winning system nor about developing one's analytical skills. If fact, he states that the system you end up using might even be considered mediocre. However, he says that the insight gained will be invaluable and has nothing to do with being profitable. He says that the losses which may occur should be viewed as tuition. Therefore, I think the exercise has more to do with the psychological intangible than the tangible development of a system. I understand that you might disagree with Douglas as to the value in such an exercise, and you might be correct. However, I think I accurately conveyed what he was getting at.

tunnel

There would likely be no point in suggesting you look at it again. But ask yourself what "insights" can be gained from accepting losses resulting from an unprofitable system. What insights can be gained from having been burned by setting yourself on fire?

 

[SOCRATES]

There are no trading plans. They are also a zdo abstract...

ZDO, I cannot disagree with anything you say. You are absolutely right. But you see, who wants plans or lists etc., if this implies #### has to be done ? Better for people to have systems etc., much easier, you know. Off the shelf, just like that, you know ?

It seems that when it comes to this topic people are averse to DIY, and prefer Off the Shelf, you know, Pret a Porter...

People don't like having their lives made difficult, they want their lives made easier.

As a consequence of this realisation, I am now beginning to see the merit myself in not persisting with unpopular ideas.

They create a lot of controversy and don't change the status quo one iota.

 

[dbphoenix]

tunnel1x1,

I’m not questioning Bramble’s intentions to help you, but advising you to “throw away your system and take on another one” may be shortsighted advice – unless he knows things about you and the system that all the rest of us don’t.
Such advice could be likened to “tunnel, take off your pants and put my bramble pants on”.

zdo

What I took from his post was that he was suggesting that tunnel stop using an unprofitable system and begin using -- or developing -- a profitable one. Granted the idea of trading a profitable system may be revolutionary even to some "experienced" traders, but it's certainly an idea worth trying.

 

[SOCRATES]

What I took from his post was that he was suggesting that tunnel stop using an unprofitable system and begin using -- or developing -- a profitable one. Granted the idea of trading a profitable system may be revolutionary even to some "experienced" traders, but it's certainly an idea worth trying.

That's right....now you are talking sense. Swap an unprofitable system for a profitable one.

It appears that there are many of these systems freely available, so therefore advantage ought to be taken of what is available immediately.
And...it is only Thursday, and there is the whole weekend ahead to pursue the topic.

 

[tunnel1x1]

There would likely be no point in suggesting you look at it again. But ask yourself what "insights" can be gained from accepting losses resulting from an unprofitable system. What insights can be gained from having been burned by setting yourself on fire?

I think your argument may be more with Mark Douglas than me. I looked at the passage in his book only an hour ago and the words I used were what Douglas stated. When he states that the exercise is not about developing a winning system or improving your analytical skills and that even a mediocre losing system may be used, I'm not sure how I'm misinterpreting what he wrote. Again, I understand you may disagree with him. If I've misunderstood what he wrote, I'd be happy to be referenced to how so given the words he actually used.

Insights: Treat the market like a casino where you're the house. No individual trade (bet) is important. With a winning edge, over the long run, the house will make money even though it may lose a number of times, and sometimes a number of times in a row. You cannot predict which trade will be a winner. Do not get emotionally invested in any particular trade, whether winner or loser. Those are some. Even trading a losing system can help develop the correct frame of mind.

 

[the blades]

ZDO, I cannot disagree with anything you say. You are absolutely right. But you see, who wants plans or lists etc., if this implies #### has to be done ? Better for people to have systems etc., much easier, you know. Off the shelf, just like that, you know ?

It seems that when it comes to this topic people are averse to DIY, and prefer Off the Shelf, you know, Pret a Porter...

People don't like having their lives made difficult, they want their lives made easier.

As a consequence of this realisation, I am now beginning to see the merit myself in not persisting with unpopular ideas.

They create a lot of controversy and don't change the status quo one iota.

the thing is, some of us profitably operate "systems" without all the years of sweat and tears that you've spent the last 3,000 posts telling us all about Soc. I can offer you a few tips if you like, in posts of less than 10,000 words

Maybe it's our greater ability, conduct or merit? You tell us, your majesty.

UTB

 

[SOCRATES]

When a system ceases to work for whatever reason, it is prudent to bin it immediately and get a new one. This is the age of free consumerism, so there is no problem in binning what is obsolete.

Why hang on to something wonky if there is something better available ? The number and variety of systems available nowadays is dazzling. If I had to start again from scratch, I would end up being really confused too I must admit, in this atmosphere in which everybody appears to be right.

 

[dbphoenix]

I think your argument may be more with Mark Douglas than me. I looked at the passage in his book only an hour ago and the words I used were what Douglas stated. When he states that the exercise is not about developing a winning system or improving your analytical skills and that even a mediocre losing system may be used, I'm not sure how I'm misinterpreting what he wrote. Again, I understand you may disagree with him. If I've misunderstood what he wrote, I'd be happy to be referenced to how so given the words he actually used.

Insights: Treat the market like a casino where you're the house. No individual trade (bet) is important. With a winning edge, over the long run, the house will make money even though it may lose a number of times, and sometimes a number of times in a row. You cannot predict which trade will be a winner. Do not get emotionally invested in any particular trade, whether winner or loser. Those are some. Even trading a losing system can help develop the correct frame of mind.

Tunnel, I'm not arguing with anybody, either you or Douglas. But I'm talking about a book, not a passage.

Try to focus here. You do not have a consistently profitable system or strategy or plan or whatever one wants to call it. Therefore, if you're unsuccessful with it, all the self-examination in the world isn't going to improve your results if you do not also change your strategy.

If this makes no sense to you now, then perhaps it will make sense before you go bankrupt.

 

[SOCRATES]

the thing is, some of us profitably operate "systems" without all the years of sweat and tears that you've spent the last 3,000 posts telling us all about Soc. I can offer you a few tips if you like, in posts of less than 10,000 words

Maybe it's our greater ability, conduct or merit? You tell us, your majesty.

UTB

Dear Sheffield,

thank you very much indeed. It is very kind and considerate of you to offer.

But it is best if you operate your system and get all the benefits for yourself.

I am not as fortunate as you to have so many gadgets.

All I know, is how to press buttons and make showers of points every time, and, although it is embarrasing as I feel others ought to have a chance as well, I don't want to change what I have, lest I become contaminated with mainstream ideas, and become like everybody else.

Merit, Ability and Conduct is for the few, only for the very few, who can resist all the temptations that lead to being ordinary.

KInd Regards.

 

[DepthTangent]

I used to think that there was something fishy going on in the various markets. How could I be so close, so "unlucky" so often, very nearly on the edge of a regular profit, but never quite being given enough to survive, yet still the carrot that was dangled before oneself hypnotised me into maintaining market participation. Now I'am absolutely certain there's something fishy going on! There's so many aspect's to consider along the road to achieving market resonation that I cannot bear to think about them all. Well I can actually, its who I am now, know the drill boys ?

 

[SOCRATES]

This needs to be nailed onto these threads.

He needs to make a distinction between "him" losing money, and his system losing money.
Maybe the thread should have been named "Why do so few trade profitable systems?"

I am writing this because you declared earlier in this thread I was to be ignored and probably you yourself will not read this until much later.

What you need is a good hammer and six inch nails to do the job, nothing else suffices.

You should ensure that the post is squarely visible on the screen and then drive the nails in with as much force as you can muster to ensure the job is done properly.

One six inch nail in each corner is enough.