SIUYA

Ekshay - "All we need, is enough losses to uncover our personal patterns of losing, and then STOP doing those things either by changing the system or by managing personal behaviour. " So for Attila and Ekshay.... This sentence just reminded me of something I did years ago with a mutual trading friend. we analysed each others trading history, and did not really ask why we did certain things, but we looked at it to analyse from the point of view to give a new approach/an alternative way of thinking to the historical analysis. eg; while a public forum may just add to the confusion, or make it too public to be honest, possibly its worth actually swapping trading histories with only one or two others who are in a similar situation and giving each other feedback. (without all us) Such feedback could be - "you seem to be running losses", or "you seem to be taking trades too early", and then having to explain it to the other. While I think the thread of the race is a very good documentation of the reality of some trading and I hope it continues, I also feel this little bit of private extra feedback can help.

I am sure there are better solutions, however, if someone makes a pertinent point that resonates with me..... I have a word document - just one, that I subdivide into various sections - eg; autotrading, interesting setups, Psychology, exits, money management. All I then do is cut and paste certain posts people make, or sentences,and then make my own notes to go with this...... Sort of like study notes at school. To date -its 18- pages, full of charts, and ideas. Its a personal thing and only makes sense to me, but it also works for me as a ready reminder of the things I find important or interesting.

Interesting given the similarities between anti smoking, seat belt, laws etc and Forex rules. These are all marketed that they protect us from ourselves. When in reality, they are usually enacted as a result of a cost benefit analysis. eg; smoking - as I understand it - it was the US states heath care systems in particular, and court cases in Australia that sued the places whereby passive smoking could cause cancer. The people sued were employers, public places etc. So it became cheaper to ban smoking. There are some interesting calls around the world to re-asses the current failed war on drugs, via the exact same approach. Are they better pumping the money into health and rehabilitation rather than fighting what has clearly been a failed attempt to stop supply? So apart from trying to force most people onto exchanges for better, centralised regulation and monitoring, and by reducing excessive leverage (probably not such a bad thing) what other cost benefit analysis would there be in FX? Maybe they should protect us from the banks..... it certainly might be cheaper for us as individuals at least ,

Just adding to Thales input two points (that I hope might help rather than confuse) There is a good book that I bought about 15 years ago that was written about 100 years ago, about "the rule that will make you rich" (sorry cannot remember many of the other details, but I found it on traders press, read it and its somewhere in a garage) but the basis of the book was that... you took a trade at every 50% reversal of a previous move, and then if this went further than the 61.8% re-tracement then you use this as a stop, as it meant it was more than a reversal. A very broad, blunt, but still a good rule of thumb. Additionally, if you like a quick and dirty wave count (ala elliot waves and threes and fives) I often figure if something does more than a 123 or abc up, then its likely to continue and extend the move, especially in an established up trend that clearly visible. As you are always worried about it only being a 123, then you can skip the missed in between trade, but then definitely after its confirmed that its more than a 123, you take the next break..... (There are a few 123 swings that can be found)

Off thread a little (or maybe not) but seatbelt laws and similar laws in many places are nothing to do with freedoms. They are put in place because of the costs to society of not having them. Same as the no smoking bans. You can always choose to ignore them, but then in the great freedoms go the costs..... are you going to cover the costs if something goes wrong? or will society?

No - most of the original turtles probably initially did not understand the edge..... the edge in the turtle system - what is it? Is it the pyramiding, the loss taking (70% losers/30% winners), the running of the profits, the diversification, the combination of them all. From my extensive reading, testing and trading this style - its pretty much about diversification of instruments. This is however always debated amongst many people. But enough of that..... the thread is more about mindset, and on that note, here is a quote from the book by Curtis Faith - Trading Instincts pg 31. He was one of the few successful Turtles right from the get go.... "My intuition told me that the most important factors would be how well we displayed the spirit of our training, took advantage of the opportunities that arose, managed our risks and handled the trading on an emotional level. Most of the other turtles thought our goal was to make as much money as possible" "It wasn't my intellect that made me take that trade.......The difference was intuition: I followed my instinct." He followed the rules....so in this respect the rules came first. But the point is the mindset to just follow the rules in itself is an edge If you like its an "edge over other traders on the edge." Given this, and that there are lots of entries, exits, strategies that have a positive edge (this again is debatable) that are readily available, why so many traders continually try to invent new ways of doing things - finding a new edge, surely the mental aspect of understanding the edge, why it works, and WHEN it works (as context is king) and then applying it is the extra edge. (I think everyone can relate to the initial trading winning then loosing mindset Keys to the Castle described above.... kinda makes us all seem like hopeless gamblers) Edit: while writing this FXGirl, submitted a similar point..... the wheel already exists, why reinvent it. Additionally, just about every supposed trading edge is a variation of some sort, but they all have a few similar attributes.

My guess is regards what gets classed as a major they will say something like "USD, GBP, JPY, EUR, AUD (etc:)" and that ANY combinations between these will be classed as majors, the rest and any combinations of those will be considered not major. regards the leverage 50 or 20 to 1 seems about right. All it will mean is that anyone who is using even more leverage will have to reduce their size. It may be interesting how it affects spread betting accounts (mainly relevant in the UK) I feel its all about ultimately forcing everything onto a regulated exchange

One thing that seems to have been missed (or maybe its me who has missed the point ) Having the right psychology (mindset - if you like) is an edge when it comes to trading. This is always part of the debate about whether or not great traders can be taught....ala the Turtle trading bet. End result is that given the same set of rules and opportunities, a group of traders will differentiate themselves between successful and unsuccessful traders due to the difference in their mindset and their ability to follow the rules.

There is plenty of free information on the web first without having to pay for it. Unless someone can completely summarize this information in a manner that perfectly suits your own abilities/ideas, then I would not suggest paying anyone first up. Unfortunately this can be a long winding road and while we all like to short track things often thats not possible. In my mind the best way is learn it yourself, or join a small group (and help each other through shortcuts, or learn in your own time) (For my definition - a mentor does not charge you money) I would also add....something that many dont do is actually study trading. Just reading is not studying..... take notes and formulate thoughts of why and how, dont just regurgitate others. Understand in your own mind these things....then on the day the penny drops, everything will be much clearer, much quicker.

Kiwi - we all live in a world of self deception. from the way we perceive our world in the present , to the way we build our memories, to the way we think we shape our futures. so whats new? I am more surprised at the lack of common courtesy and the fact that (reportedly) grown adults cannot rationally discuss an issue without reverting to the name calling, and the fact that as successful traders who are meant to be able to put ego aside, and have thick skins, get so riled when someone disagrees with them. Equally so while it can be that trolls etc; can hijack forums, this is then up to the moderators and the forum participants to self regulate (?) otherwise the competition will end up taking the customers.....which is effectively what we are.

TRO - just out of interest, how many forums have you been banned from, and is the stint here at TL possibly going to head toward a record? I for one, appreciate the simplicity of the style/manner you use....even though it did take me a little while to follow (but thats just cause I am slow)

as a guess and from my experience. Futures dont move as much as stocks via gaps from a percentage point of view (exception maybe the equity indexes) There are many instances of stocks gapping 1-2-3% over night. Most futures also have a globex session that can help minimise these gaps as well. Additionally - day trading does not have the gaps over night that a style such as swing trading over 2-3 days will have.

this should be a good thread. I have come to a number of conclusions in agreement with the previous posters on hard stops - - 1) you are new to trading and should have them in place to understand their importance, and to help you get used to taking them. Ideally when you first start it does not matter too much where you place them - this comes with time, practice and personal preferences 2) they are also good to use as a worst case - "stop my account from taking too much damage" - this should be used by every trader even old hands. 3) otherwise hard stops that are close to the market but not so close are not really helpful - these are the ones whereby you get stopped out by a tick and the market then goes the right way. Better to either have a very close stop, or really watch what occurs in the market. 4) too often these stops are used as a crutch, whereby traders become lazy and lean on them. This distracts from what is relevant, and that is the question - "is the market doing what I thought it would?" if not do I need to be there.....I am already wrong, so get out, dont wait for the stop..... this questioning also should help determine the type of stop you should be applying. 5) The reward element should also be asked in a similar fashion. Having a fixed R:R is nice but potentially lazy, and as mentioned is an interesting historical statistic. Otherwise the reward should be dependent on the market and the setup and be independent of the risk. (While the Dr Tharp books are interesting I am starting to think they do more harm than good in some respects as they distract from the real issue of the actual trade management) 6) context (watching the market and reacting to it - applying appropriate setups and triggers) and consistency is far more important. The measuring or R:R is really only a historical measurement of these two.

thankfully all the recent hullabaloo has ensured I found the ignore list. Under UserCP > Content Filter > Modify Ignore List

I am sure I have read this article some time before they will be back..... Trend following strategies are routinely declared dead, and then they have a good year - lately they are dying a slow death. Again - consistency is key (of course so long as you have something that works - and the final sentence basically says this).- I seem to be saying this a lot, maybe I will change my TL saying! But here in lies one of the problems of setting up a fund and running other peoples money. They need to believe and then you need to deliver when times are good. But they also need to support you when the system does not work. Hence I guess even good fund managers may not survive as a business. Sort of like expecting the corner store to be there when you need milk at 10pm when you do all your major shopping at the Hyper mart...... (Also BF are you having a roundabout dig at a style or someone in particular? :rofl:)

Bf - I know very little about baseball but the home run analogy sort of works except that the most you can gain from a home run is (loaded bases ) 4 (?)..... Its something that I have been working on lately and slowly coming to the conclusion (at least for me) while the singles and the occasional home run does work. It also provides a living Going for just home runs is tough work. Alternatively the other option is change the sport and go for the home run whereby the ball is never ever found again..... that is where the upside is really unlimited. I cant think of a good sport analogy for this (maybe baseball in outer-space). This is then where the payoff for a lot of scratch/Break even trades works. No R:R of 1:4 etc, but 1:1000. This is more suited to the retirement fund. (The millipede that Daedelus found - in rethinking concepts - thankyou to him) Its the in between phase that is tough. It causes inconsistencies and doubt. Its like the swapping and switching between styles that many people do.... puts a better perspective on "you need commitment, and focus".... not just to trading but to a style.

If you view intraday trading as the market in fast forward, then it makes sense to take lots of small chunks, as you are basically looking for a continuous series of small profitable opportunities. It does not matter which style you take so long as you are consistent. Its the chopping and changing that seems to do the damage.

also try this Analysis Tools for ETF Investing

"For price action only traders it is not worth much at all." - UB I think this says it all. If you are a price action trader then UB does something different.

As a suggestion - while its good a thread can get rated 0-5, and people can post thanks. And while there is a button to report posts......is there a way to possibly rank posters more with a "are they positive or negative" or "was this actually beneficial/funny/helpful or just a waste of time and space/ignore button" That way you could possibly read a thread and drop out certain posters in the future? Or is this just overkill? Otherwise I like the site, ignore the ads, appreciate that glitches will occur and if anything find it funny that supposedly adults cant manage to discuss things without name calling - and we complain about the children of today.

MaxR - I think windsurfer makes some good points about doing one thing and one thing well. Especially the shorting - I also know a couple of equity traders that only every short..... perpetual bears, they make money quick and fast and usually still make money in bull markets. Dont get me wrong on the previous post, scaling in/pyramiding/stacking orders works and works well, but you really need to understand the various scenarios you can get into trouble, and really understand why you make or lose money. I have seen a lot of styles and its often scary the variation between the risk assumed and the actual risks in a disaster. If you are pyramiding while day trading, you effectively are just looking for trend days. Again I would look to test and see if your setup is good at picking these, or you have some other measure to help minimise the losing days when there is no trend. Its actually something I have been working on, but more longer term....thanks for a couple of recent threads (thank you Daedalus ) they are topical. like every trading style there is usually a trade off with regards drawdowns, required capital and how far to run things. Do a test....look at the various scenarios.... really understand what suits you.

On a similar vein for those more interested in management and motivation a good read is "hard facts dangerous half-truths and total nonsense profiting from evidence based management" - Jeffery Pfeeffer, Robert Sutton......it looks at the evidence and not the myths behind a lot of corporate ideas. One of them is the financial rewards carrot and stick gospel/baloney. This is also relevant to trading as it gets you to focus on the evidence and not on the hype and myths.

Have to agree with you UB - the only really relevant thing is an actual trade, not just a bunch of phantom trades. This shows up when markets have pre-market and post market orders which often show a lot of phantom orders that never actually trade. Some of these are based off other spreads, arbitrages etc. eg; there are always option market makers making markets....these are live and not phantom orders, but are generally waiting for one end to get filled. However it does raise an interesting question about the technicalities of these phantom trades. If they are miles away from the market then its less relevant, however, if they are feeding off each other, and some other 'flash crash' or fat finger, or plane into a building occurs, then these out of the money orders can very easily start to transact. If they are not just quote requests, and actual orders then they can be filled, will this potentially start a domino effect? Especially given the thousands + of orders that can be sent.

Good find - very interesting - potentially very scary. One explanation that did not get mention was maybe it the exchanges themselves - they are trying to get people to trade, the more trades, the more exchange fees? Nah...probably not.... the exchanges are not that sophisticated. If its market spoofing in order to drag out orders or likely interest - then that is nothing new, people have been doing this every since markets have been going, and market regulators need to draw the line been market manipulation and innovation.....they will probably get that wrong too. Personally this sort of stuff does scare me as I hear it too often that even the programmers are not even 30% sure about what is happening with their own programs, even if there is nothing sinister about it..... sort of like the nutters running the asylum, and all the nutters are the psychiatrists..... The nice thing may be the increase in external exchanges (the dark pools), OTC markets etc..... after a while people then try and game the gamers. The never ending cycle of life.

- it is as long as a piece of string....with many questions of how to pyramd in, pyramid out, is it better to buy things all at once, exit all at once, how to control the overall risk. Will you put a limit on things.... Most will depend on your personality and risk tolerance. I think you really need to have in your head as well exactly what you are doing, how you view it and why (proove to yourself ) that is makes sense mathematically, sensibly and that it works well in the market. Understand there is a big big difference in viewpoints of risk...... eg; you may think you have zero risk, but what then is your gap risk, what is your actual exposure..... dont forget most futures contracts are actually highly leveraged. Your comment "so you enter with another 2 lots (which gives you total 1% risk now)" I would say you have some confusion..... You determined that you would risk 2 contracts based on 2% risk, just because you had some unrealised PL does not change this. Are you going to base everything off you original stake going forward, or are you going to trade the equity as you have more or less PL? How soon do you enter after the original trade, an ATR level, a PL level, on a time basis? I understand what you are getting at but more info, thought and scenario analysis needs to be done for the whole process. But lets just say you have entered really quickly, you have now bought 3 units (6 contracts) and you have all the stops at break even. What happens if there is a gap through the stops? Also "guaranteed profit on 50% of the position" - 50% of what? the original stake, from where? There are also no guarantees in trading! Best bet is to take something like Ninja trader or something that can easily show you the difference between what happens when you pyramid..... use a very simple model eg, a MAtrigger and then a continual pryamiding as it goes your way.... dont worry about what happens to the PL - look at the series of trades...... can you live with that?