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Auto trading is only thing that conquered my darkside


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Auto trading is only thing that conquered my darkside

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  #101 (permalink)
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liquidcci View Post
If you think you have the skill to beat the market by trying to read it from the hip yes you probably will blow up eventually. You are beat already you just don't know it yet. .

It's statements like this that make me think you are just having a laugh here.

"read it from the hip"?? In my opinion - if that's what you think non-automated trading is, then you really don't understand the skill at all.

Like I say - you think the markets are a problem with a mathematical solution. I think it's a skill you develop.

Still - I think this is just a wind-up.

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RM99 - I am NOT arguing against the use of GPS.

You see - all of these analogies pro automation are flawed. You are trying to accuse me of something because you fail to see the nuance in my argument. Could this be your technical nature?

Yes - an airplane can fly itself
Yes - a GPS can replace a map
Yes - a neat little machine in the Royal Orchid lounge at Narita can pout a perfect pint every time

These are examples of static implementations that operate in isolation of other humans. Hence, we don't have cars that drive themselves. This could of course be done if ALL cars drove themselves. We don't have robots that can comfort a child. We don't have programs that can design a cool looking building. We don't have a program that can outdrive Michael Schumaker on an F1 track.

The retail trading community is brainwashed to thinking that trading is a purely technical endeavour. Most trading books are all about TA. Most traders read these TA books and then follow these techniques to hand their money over to more savvy players.

Pick any career and people will accept that you can improve over time. Doctors improve over time, surgeons do, bricklayers do, pilots do etc. etc. etc. Yet a large percentage of the retail trading community believe that trading is different from any other career. That you merely have to 'crack the nut', figure out the formula and then sit back and watch the pennies roll in.

Just like anything else - trading is a skill. It's not merely a left-brain activity. Skills develop over time in trading just like in every other career.

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 rtrade 
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Hmm, I if I understand the video, the girl is on RM99 and liquidCCI's side and the boy is on DT's side.
But I'm not sure, you guys can decide.

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rtrade View Post
Hmm, I if I understand the video, the girl is on RM99 and liquidCCI's side and the boy is on DT's side.
But I'm not sure, you guys can decide.

[yt]http://www.youtube.com/watch?v=_futures.io (formerly BMT)6BfxR7w[/yt]

LMAO!

I reckon you nailed it!!!

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 liquidcci 
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DionysusToast View Post
It's statements like this that make me think you are just having a laugh here.

"read it from the hip"?? In my opinion - if that's what you think non-automated trading is, then you really don't understand the skill at all.

Like I say - you think the markets are a problem with a mathematical solution. I think it's a skill you develop.

Still - I think this is just a wind-up.


What we are really talking about here is not non automated vs automated. We are talking about a mechanical system vs discretionary. If you are not shooting from the hip, guessing the market feeling the market, or using jedi skills to determine the direction of the market then you must have a rules based system. If have rules essentially are mechanical. If mechanical then only one step away from automating that system.

I understand the 'skill" you are talking about as I traded that way for 7 or 8 years and it is a losing proposition. I had years that I made quite a bit only to give it back the next. My first year I thought I was a genius had skills like you would not believe only to find out I was foolish. The problem in that type of trading is the very things that cause alot of money to come into your hands will eventually be the very things that destroy your account.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
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 RM99 
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DionysusToast View Post
RM99 - I am NOT arguing against the use of GPS.

You see - all of these analogies pro automation are flawed. You are trying to accuse me of something because you fail to see the nuance in my argument. Could this be your technical nature?

Yes - an airplane can fly itself
Yes - a GPS can replace a map
Yes - a neat little machine in the Royal Orchid lounge at Narita can pout a perfect pint every time

These are examples of static implementations that operate in isolation of other humans. Hence, we don't have cars that drive themselves. This could of course be done if ALL cars drove themselves. We don't have robots that can comfort a child. We don't have programs that can design a cool looking building. We don't have a program that can outdrive Michael Schumaker on an F1 track.

The retail trading community is brainwashed to thinking that trading is a purely technical endeavour. Most trading books are all about TA. Most traders read these TA books and then follow these techniques to hand their money over to more savvy players.

Pick any career and people will accept that you can improve over time. Doctors improve over time, surgeons do, bricklayers do, pilots do etc. etc. etc. Yet a large percentage of the retail trading community believe that trading is different from any other career. That you merely have to 'crack the nut', figure out the formula and then sit back and watch the pennies roll in.

Just like anything else - trading is a skill. It's not merely a left-brain activity. Skills develop over time in trading just like in every other career.

I think we're speaking apples and oranges here.

Or, I think you have the opinion that anyone who's auto trading cannot make a living manually trading.

I can do it manually, but not without smoking a pack of cigarettes before the closing bell and not without getting insanely pissed when I miss a trade that I should have made (under my strategy "rules") because I was busy signing for a delivery by UPS or I was talking on the phone, etc, etc, etc.

Again, the other aspect is one you're discounting. You absolutely CAN NOT scale in and out effectively (intraday) with instruments like CL or GC. Not unless you're going after huge profit/loss goals (which effectively removes the "intraday" moniker).

You cannot employ sophisticated money management schemes like parabolic stops, tiered stops, etc, etc....MANUALLY. You simply cannot calculate that quickly.

Now, on other instruments that move like glaciers, possibly.

My point is that automation encompasses more than what you think it does (or at least that's the conclusion I'm drawing from your posts).

I disagree with the notion that you're methods will eventually end up bankrupting you.

As I stated earlier, if it works for you, then great. Stick to what works. However, the flip side of that argument is the guy that's still riding his horse while everyone else is riding in automobiles. It may be effective, but how effective is another argument.

For YOUR particular strategies, perhaps discretionary and manual is perfectly fine.

I can't tell you how many times (before I learned automation) that I said "man, this trailing stop is cool, but wouldn't be even better if...." AND THAT IS THE TYPE OF NEED THAT LEADS TO INNOVATION.

So if you can make a living on the preset tools your platform provides, great. I probably can too. But it makes it MUCH easier for me to make my own tools to build my cathedral with (rather than just accepting the ones the platform gave me.)

I'll close by saying that if it wasn't effective, then people wouldn't be doing it.

It's like the whole steroid argument in baseball. Everytime I hear an idiot say "it doesn't help them hit home runs" I just ask them, then why in the SAM **** would they do it? The proof that it works is self evident in the fact that they were all doing it. If it wasn't effective, no one would do it. If wearing pink underwear helped a guy hit more homeruns, then they'd all be wearing pink underwear. But you know what? It doesn't, and that's why I'm nearly certain that most of them don't.

Using my analogy, I'll agree with you. Any random guy can't just go out and roid up and hit homeruns. He has to be a professional baseball player for it to be effective.

So your point is taken, if you don't know how to trade and you don't understand the fundamentals involved, then auto trading probably won't help you. But for those that DO understand those things, it simply helps to make us more effective.

I can't put it any more plainly than that and we've already been clowned about the bantering in here So I'll stop at that.

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 monpere 
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DionysusToast View Post
Like I say - you think the markets are a problem with a mathematical solution. I think it's a skill you develop.

I do think the market is a problem with a mathematical solution! I think the market is a problem with 1000 mathematical solutions. I think it can require very little or no skill to trade the markets depending on the way you choose to trade it. What it requires for some, is finding a market phenomenon that repeats itself, and taking advantage of that phenomenon. There are 1000 of these phenomena that can be exploited, all you have to do is find one, understand it, and devise a way to exploit it (entry/management/exit). Once you have defined that, there is no skill involved.

You may choose to watch a scrolling time and sales window and make decisions based on that, and that may make you feel you have developed a skill beyond that of others. But, guess what, if you break it down to it's core, you are looking for patterns in that T&S window, and guess what again, a pattern is a mathematical concept, it is not a skill.

If you see a double bottom, with a MACD Divergence while the ATR of the past 20 bars is greater then 10 ticks, then press the blue button. If you press the blue button 10 times, on average, you will get a smiley face 7 out of those 10 times. What skill is involved in pressing the blue button 10 times?

Your style of trading may truly require skill, I don't know, but that's because you want to trade that way, not because it is the only way to trade profitably. There are plenty of others making money without needing any special 'skill', because all the necessary thought, work, effort, and 'skill' required to identify, enter, manage and exit their trades, have been put upfront, so all that thought, work, effort, and skill does not have to be repeated for every instance of every trade. They have put a process together to streamline all those steps, whether that process is written down on a piece of paper as a set of rules, or it is written down in a computer's memory as binary 1's and 0's

Large institutions use HFT's. Do institutions use HFT's because they make money or because they loose money? Do HFT's require any special trading skills to make money? Are HFT's automated? Are HFT's mathematical solutions that make money in the market? Now consider that thought again, are special 'skills' that can only be developed with experience required to trade the market?

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 liquidcci 
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DionysusToast View Post
RM99 - I am NOT arguing against the use of GPS.

You see - all of these analogies pro automation are flawed. You are trying to accuse me of something because you fail to see the nuance in my argument. Could this be your technical nature?

Yes - an airplane can fly itself
Yes - a GPS can replace a map
Yes - a neat little machine in the Royal Orchid lounge at Narita can pout a perfect pint every time

These are examples of static implementations that operate in isolation of other humans. Hence, we don't have cars that drive themselves. This could of course be done if ALL cars drove themselves. We don't have robots that can comfort a child. We don't have programs that can design a cool looking building. We don't have a program that can outdrive Michael Schumaker on an F1 track.

The retail trading community is brainwashed to thinking that trading is a purely technical endeavour. Most trading books are all about TA. Most traders read these TA books and then follow these techniques to hand their money over to more savvy players.

Pick any career and people will accept that you can improve over time. Doctors improve over time, surgeons do, bricklayers do, pilots do etc. etc. etc. Yet a large percentage of the retail trading community believe that trading is different from any other career. That you merely have to 'crack the nut', figure out the formula and then sit back and watch the pennies roll in.

Just like anything else - trading is a skill. It's not merely a left-brain activity. Skills develop over time in trading just like in every other career.

The market is in a sense all numbers. Behind all those numbers there are human beings that are moving the market because of fear and greed even if they are using robots to do it. But that movement is translated into numbers that then can have math applied. So in a sense the market is all mathematical and most aspects of it can be measured although not always perfectly.

My auto system takes into account momentum, trend and to a degree price action. If you look at the patterns that trigger a trade in my system they all have a psychological basis. I simply use math to measure that basis and capitalize on the opportunity. Putting that in an a system that automatically trades then removes my own bias and and mistakes.

This takes skill that can be refined over time. You can get better at seeing certain things that exists in the market and then developing a system around those things. Mechanical system trading does take a certain skill set.

I guess my point is by watching the market you can learn and become adept at certain skills. These skills are very important and take time to develop. But I believe ultimately if you do not develop what you learn into a mechanical system that can be measured it will be a losing proposition. I further believe that system does not have to be automated but can benefit most traders greatly for reasons I have already stated in this thread.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
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 rpm123 
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The more mechanical I become following my ruleset, the better day I have. Bots seems a logical extension. Not there yet, and I would not leave it unattended for at least 6 months, but I can see the advantage.

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 liquidcci 
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rpm123 View Post
The more mechanical I become following my ruleset, the better day I have. Bots seems a logical extension. Not there yet, and I would not leave it unattended for at least 6 months, but I can see the advantage.

I think that is the progression. Once you realize your success depends on the rules of your system then a bot is a natural extension. I keep an eye on my bot. I don't pay attention on a minute by minute basis but whenever I trade is entered I receive a text. I then will turn more of my attention towards it and keep at least one eye on it. I do that in case something goes wrong from a technology standpoint with hardware or software. I take a laptop with me when I go out somewhere and can access via rdp my server if needed. So I always have access to it without it controlling everything I do.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
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  #111 (permalink)
 RM99 
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rpm123 View Post
The more mechanical I become following my ruleset, the better day I have. Bots seems a logical extension. Not there yet, and I would not leave it unattended for at least 6 months, but I can see the advantage.

There is still no grail with respect to "hands free" or unattended trading.

Autotrading is still very much cruise control (you still have to be at the wheel). Coding bugs, connection interruptions, etc.

You can leave your auto strategy unattended, but not without risk. The only solution for unattended is still to hire someone to babysit for you while you golf.

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  #112 (permalink)
 dutchbookmaker 
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From my experience people don't like algorithmic trading because you can't hide so easily behind nonsense like "psychology" and all this other garbage from retail trading literature to mask the fact that your trades have negative expectancy.
When you try to turn your "discretionary" setups into algorithms you quickly see how much of your trading "intuition" or whatever you want to call it is really nothing more than noise, false perceptions and randomness.

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  #113 (permalink)
 Big Mike 
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dutchbookmaker View Post
From my experience people don't like algorithmic trading because you can't hide so easily behind nonsense like "psychology" and all this other garbage from retail trading literature to mask the fact that your trades have negative expectancy.
When you try to turn your "discretionary" setups into algorithms you quickly see how much of your trading "intuition" or whatever you want to call it is really nothing more than noise, false perceptions and randomness.

Trading Psychology is not garbage. It directly accounts for why most people have no problem making money on sim, yet most people lose trading cash.

If your methodology is flawed and has negative expectancy, then psychology is not going to help you change that. But if your method is sound, yet requires discretion and cannot be programmed, then psychology plays an important factor. Basically the factor is "execution", what your paper says to do vs what you actually do. If your paper says to hold until you have a good reason to exit, yet you exit without a good reason, that is a psychology problem of poor execution. The method was sound, you failed to execute it.

You can have a good, solid, positive expectancy method and it not be automated or it not be within most peoples realms of possibility to automate it due to the discretionary element involved. Just like only recently massive supercomputers can now beat someone at Jeopardy, if you don't have the proper hardware sophistication or engineering software capabilities it is my opinion most strategies cannot compete with a good, solid, competent discretionary trader.

That said, if you change the game --- it's no longer Jeopardy for instance, now it's HFT Jeopardy, then obviously the human player, the discretionary trader, has no hope of winning because HFT is what the computer does best.

Strategies should do what computers do best. Computers don't do everything better than us.

I don't want to come in and "stomp" on this thread because most people know I have negative views on automation and advise the majority of people to not pursue it. So I will try to keep a distance. Discussion is good, and I will try to refrain from posting further in the thread so you guys can continue on with a productive conversation without me. So that is my reason for not replying, if you are expecting me to do so...

Thx for the good thread.

Mike

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 Xeno 
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Mike - there are a few people on this thread that would support a new forum called something like

"Automated trading and testing"

How about it?

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 monpere 
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Big Mike View Post
Trading Psychology is not garbage. It directly accounts for why most people have no problem making money on sim, yet most people lose trading cash.

If your methodology is flawed and has negative expectancy, then psychology is not going to help you change that. But if your method is sound, yet requires discretion and cannot be programmed, then psychology plays an important factor. Basically the factor is "execution", what your paper says to do vs what you actually do. If your paper says to hold until you have a good reason to exit, yet you exit without a good reason, that is a psychology problem of poor execution. The method was sound, you failed to execute it.

You can have a good, solid, positive expectancy method and it not be automated or it not be within most peoples realms of possibility to automate it due to the discretionary element involved. Just like only recently massive supercomputers can now beat someone at Jeopardy, if you don't have the proper hardware sophistication or engineering software capabilities it is my opinion most strategies cannot compete with a good, solid, competent discretionary trader.

That said, if you change the game --- it's no longer Jeopardy for instance, now it's HFT Jeopardy, then obviously the human player, the discretionary trader, has no hope of winning because HFT is what the computer does best.

Strategies should do what computers do best. Computers don't do everything better than us.

I don't want to come in and "stomp" on this thread because most people know I have negative views on automation and advise the majority of people to not pursue it. So I will try to keep a distance. Discussion is good, and I will try to refrain from posting further in the thread so you guys can continue on with a productive conversation without me. So that is my reason for not replying, if you are expecting me to do so...

Thx for the good thread.

Mike

I whole heartedly agree with this post. Here's the statement I have a comment on, "If your paper says to hold until you have a good reason to exit". If your trading plan says that, you will not survive very long as a discretionary trader. You will be one of those guys writing posts saying, I should have held longer, I should have exited here, I should have cut my loss here, I should have done this, I should have done that.

I believe your exit is more important then your entry. If you are going to leave your exit that vague, with no specific rules to define it, your profitability will be ruled by your emotions, and the psychological ramifications of that will be the end of your trading career. It will always cause you to say "I should have...". I don't think there are too many successful traders who have that phrase in their regular vocabulary.

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  #116 (permalink)
 Xeno 
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monpere View Post
"If your paper says to hold until you have a good reason to exit". If your trading plan says that, you will not survive very long as a discretionary
trader. You will be one of those guys writing posts saying,

Monpere - while your point is valid, I think it was just a hypothetical example where it is assumed that the 'good reasons' are defined on paper somewhere. It was just an example of not following your plan, and the difference between your plan and what you actually do being the 'psychology factor'

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  #117 (permalink)
 monpere 
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Xeno View Post
Monpere - while your point is valid, I think it was just a hypothetical example where it is assumed that the 'good reasons' are defined on paper somewhere. It was just an example of not following your plan, and the difference between your plan and what you actually do being the 'psychology factor'

Yeah, I understand. The point I was trying to get across is, if you find yourself regularly saying "I should have..." you will have a short trading career, because your trading methodology is not concrete enough. This kind of statement in and of itself is a sign that your trading is being affected by your psychology.

I have never said "I should have..." for any trade, ever. I have never said "That was a nice trade", I have never said "This trade should run pretty far...", etc. Every trade is the same because my method uses exact trade selection/entries/stops/targets, you cannot get more concrete then that. The market is going to give me 10 ticks, or it will take 5 ticks from me, period. Every win is 10 ticks, every loss if 5 ticks. I don't care if I make my 10 ticks, and the market moves another 100 ticks in my favor. My expectancy was calculated on that defined trade selection/entry/target. Anything outside of that is immaterial to me, and cause me no regret whatsoever, therefore I have no psychological burden in those aspects.

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  #118 (permalink)
 liquidcci 
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I have a rhetorical question.

If not trading a mechanical rules based system and trade in a discretionary manner how you have any expectancy at all?

From my perspective you can't fully measure anything if discretionary because everything is always changing. To me this really means you have nothing to hang your hat on for draw downs, expected profit, probabilities or really any kind of measure.

You could say well I base that on what I did last year. Okay but discretionary is always changing so last year carries no weight with this year.

Let the debate rage on.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
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 Xeno 
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liquidcci View Post
I have a rhetorical question.

If not trading a mechanical rules based system and trade in a discretionary manner how you have any expectancy at all?

From my perspective you can't fully measure anything if discretionary because everything is always changing. To me this really means you have nothing to hang your hat on for draw downs, expected profit, probabilities or really any kind of measure.

You could say well I base that on what I did last year. Okay but discretionary is always changing so last year carries no weight with this year.

Let the debate rage on.

Funnily enough I asked the exact same question here

and not a single discretionary trader told me how they test, or how they measure their performance.

The implication being that they don't ;-) ;-)

(and the winners are just lucky ;-) ;-) ;-)

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  #120 (permalink)
 BCNTrader 
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liquidcci View Post
I have a rhetorical question.

If not trading a mechanical rules based system and trade in a discretionary manner how you have any expectancy at all?

From my perspective you can't fully measure anything if discretionary because everything is always changing. To me this really means you have nothing to hang your hat on for draw downs, expected profit, probabilities or really any kind of measure.

You could say well I base that on what I did last year. Okay but discretionary is always changing so last year carries no weight with this year.

Let the debate rage on.

Nice debate here

So, are you assuming that a mechanical rules based system never, ever, change?

I think that most discretionary traders have some kind of mechanical system and also mechanical traders make some kind of discretionary decision over her mechanical rules. Even automated strategies change over the time (usually after a big drawdown, further than past ones). In my opinion market is changing everyday, like traffic jams so many people are involved and everybody has a different reason to be there.

Mi point is, there is a mechanical trader out there using exactly the same mechanical rules for months/years? do she ever fade a trade? do she ever begin a trade before the rules are set, because she is assuming that will be true in seconds/minutes... and so on.... The same happens with auto trades (not changing it for years).

--offtopic-- ** I'm self-taught in english, not sure if I should use she/he when talking about an hypothetical person instead of specific male/female person***

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  #121 (permalink)
 liquidcci 
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BCNTrader View Post
Nice debate here

So, are you assuming that a mechanical rules based system never, ever, change?

I think that most discretionary traders have some kind of mechanical system and also mechanical traders make some kind of discretionary decision over her mechanical rules. Even automated strategies change over the time (usually after a big drawdown, further than past ones). In my opinion market is changing everyday, like traffic jams so many people are involved and everybody has a different reason to be there.

Mi point is, there is a mechanical trader out there using exactly the same mechanical rules for months/years? do she ever fade a trade? do she ever begin a trade before the rules are set, because she is assuming that will be true in seconds/minutes... and so on.... The same happens with auto trades (not changing it for years).

--offtopic-- ** I'm self-taught in english, not sure if I should use she/he when talking about an hypothetical person instead of specific male/female person***

No my assumption is not that mechanical traders never change. But the change is very slow, very methodical and based on data. It is non emotional and has a grounding in probabilities that can be measured.

If discretionary traders have some type of mechanical system are they really not mechanical traders that don't always follow the plan. I traded that way for a few years. I had a mechanical system but would at my discretion leave the rules of the system based on what I thought the market would do. Problem is every time I broke out of system it skewed my probabilities essentially invalidating the system. I would then look back at past year and if had stayed with system would have done much better than having a system but constantly using my own discretion.

Even if at end of year I had done better (which I did not) using my discretion. I could not measure that going forward because those discretionary trades would not be repeated. Trading is a difficult business. To make a living year in and year out I need to be able to hang my hat on probabilities. I need to be able to measure year after year. No system is perfect but discretionary has much less certainty from year to year than mechanical. To me this is massive problem if I am going to eat.

Let me also say this I had a few fantastic years trading in a pure discretionary manner. When I say fantastic I mean fantastic. Problem is like an NBA championship it is hard to repeat. Hard to setup a dependable business around that style. Ultimately I also gave the fantastic gains from those years back to the market.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
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 BCNTrader 
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liquidcci View Post
No my assumption is not that mechanical traders never change. But the change is very slow, very methodical and based on data. It is non emotional and has a grounding in probabilities that can be measured.

If discretionary traders have some type of mechanical system are they really not mechanical traders that don't always follow the plan. I traded that way for a few years. I had a mechanical system but would at my discretion leave the rules of the system based on what I thought the market would do. Problem is every time I broke out of system it skewed my probabilities essentially invalidating the system. I would then look back at past year and if had stayed with system would have done much better than having a system but constantly using my own discretion.

Ok, I agree with that. The problem I have (personally, imho) with mechanical/automated trading systems is that all worked very well in the past to start doing drawdowns on forward testing, and I even used 2 ticks slippage plus commissions

I have to run right now but nice chat here.

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 liquidcci 
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Ok, I agree with that. The problem I have (personally, imho) with mechanical/automated trading systems is that all worked very well in the past to start doing drawdowns on forward testing, and I even used 2 ticks slippage plus commissions

I have to run right now but nice chat here.

This is always a possibility and where good a good money management system is paramount. Good money management can buy you time to make adjustments if necessary or let your system trade through until the draw down is done. I personally never make an adjustment unless it something that I am changing for the long term.

Mechanical is by no means perfect. To me it is just the better of the two incredibly insane ways to make a living.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
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 liquidcci 
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Another rhetorical question(s)

Could a few successful years trading at a persons own discretion be just a setup for a fall latter?

Kind of like a gambler on a lucky run. Is it possible the better you do the more risk you take which ultimately leads to your own demise? Can you become confident in your own genius as a trader but really just be in a streak?

Three separate times I took 5k to 100 k trading discretionary. No system, no stats just pure gut. Guess where that 300k eventually went?

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
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 monpere 
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liquidcci View Post
Another rhetorical question(s)

Could a few successful years trading at a persons own discretion be just a setup for a fall latter?

Kind of like a gambler on a lucky run. Is it possible the better you do the more risk you take which ultimately leads to your own demise? Can you become confident in your own genius as a trader but really just be in a streak?

Three separate times I took 5k to 100 k trading discretionary. No system, no stats just pure gut. Guess where that 300k eventually went?

Actually, that is not a rhetorical question. It is a real psychological question that many discretionary traders face, and most are not even aware of it. Here is an excerpt from another post I made that exemplifies this scenario "During the raging bull market in the dot com era, many traders were making money hand over fist. Once the tech bubble burst, they lost everything, and could not make a dime to save their life. In that era you could throw a dart at a chart and make money going long. They mistook the nature of a raging bull market, and thought it was their natural trading ability and skill."

By nature, psychologically many traders develop a god complex after a long winning streak. They start to think they are invincible, start taking ridiculous risk, and that's when the market puts them back in their place with extreme prejudice. I had that issue. That is actually one of the very few reasons I think is valid to have a daily profit goal, for discretionary traders who realize they might have that psychological issue.

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 Massive l 
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People that use pure gut are not traders.

They are gamblers and almost all gamblers lose
their money eventually.

Every trader has a different story to tell.
I have a handful of trader friends that are all successful
using their discretionary method with a set of rules that they
have changed and developed over the years.
Three in particular have been at it for over 20 years.
I meet in person with two of the three every week on Friday.

Discretionary trading is not a guessing game. It should still be a very calculated method.
The difference is that we do not take every trade, only the ones that have the
highest probability to hit or exceed our expectancy target.

Expectancy is determined at the end of each month. If I'm not hitting my expected target,
I reassess what I'm doing and look for ways to improve. This may range from my stop being
too tight, using a ranging method in a trend (cutting winners short), attempting to fade trade
during a reaccumulation period, etc. We all make mistakes as traders whether it's in your
programming or your set of rules as a discretionary trader. Just like in nature,
only the ones that adapt the quickest survive. Understand your mistakes and learn
from them as quickly as possible.

What I used to do for my rules was as soon as I made the same mistake twice,
I created a rule for it. My rules are my fortress around my capital. Protect your capital.

I don't trade just one instrument, but a handful, which all present their unique
opportunities.

Again, everyone is different and nobody is the same; discretionary or auto.

Trading is an art and a skill that is acquired through thousands of hours of thinking,
planning, writing, doing, screwing up, and trying again.

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 liquidcci 
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Massive l View Post
People that use pure gut are not traders.

They are gamblers and almost all gamblers lose
their money eventually.

Every trader has a different story to tell.
I have a handful of trader friends that are all successful
using their discretionary method with a set of rules that they
have changed and developed over the years.
Three in particular have been at it for over 20 years.
I meet in person with two of the three every week on Friday.

Discretionary trading is not a guessing game. It should still be a very calculated method.
The difference is that we do not take every trade, only the ones that have the
highest probability to hit or exceed our expectancy target.

Expectancy is determined at the end of each month. If I'm not hitting my expected target,
I reassess what I'm doing and look for ways to improve. This may range from my stop being
too tight, using a ranging method in a trend (cutting winners short), attempting to fade trade
during a reaccumulation period, etc. We all make mistakes as traders whether it's in your
programming or your set of rules as a discretionary trader. Just like in nature,
only the ones that adapt the quickest survive. Understand your mistakes and learn
from them as quickly as possible.

What I used to do for my rules was as soon as I made the same mistake twice,
I created a rule for it. My rules are my fortress around my capital. Protect your capital.

I don't trade just one instrument, but a handful, which all present their unique
opportunities.

Again, everyone is different and nobody is the same; discretionary or auto.

Trading is an art and a skill that is acquired through a lots and lots of thinking,
planning, writing, doing, screwing up, and trying again.

That sounds more mechanical than discretionary. Seems to me once you cross the line of using probabilities and rules you have formed a system and are no longer discretionary.

Could it be some traders who believe they are discretionary are really system traders who do not follow the rules all the time?

Could it be that the natural evolution is to move away from discretionary towards rules based system?


Massive l View Post
"If the difference is as you mentioned Discretionary trading is not a guessing game. It should still be a very calculated method. The difference is that we do not take every trade, only the ones that have the
highest probability to hit or exceed our expectancy target.""

I have built a mechanical system that weeds out the the low probability and takes only what I consider high probability yet I am not discretionary at all. The only thing close to discretion I have is I turn my system off on certain reports but even that is a rule so is not really at my discretion. However, according to your comment above I am discretionary. I don't think you can be discretionary and use calculated probabilities per say. I think once you move towards calculated probabilities you have moved towards the mechanical side. If you have moved toward mechanical side and you take trades outside of the things that define your high probability rules or pass on trades that meet those rules you are simply a mechanical trader violating your rules.

Again if you have identified high probability trade based on certain criteria is that not a system and shouldn't you take that trade every time it presents itself. Really in my mind to have rules and then use discretion to not take a trade or take a trade outside rules skews probabilities. So in that scenario you really can't say you use probabilities or must come to realization that you may have started but are no longer using probabilities but what you feel thus changing the probabilities you have based your trades on..

This is getting deep.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
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 rpm123 
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Fun Thread. Good talking points. Meanwhile, I had a great day following my system, but discretionarily almost lost almost half of my profit. DFD, exceeded target.

I think some of this comes down to agree to disagree. And that a highly mechanical trader has more in common with an automated bot. And a successful discretionary trader is more mechanical than discretionary. But discretionary does not mean gambling from the gut. Show me a trader without rules, well, he won't be around long.

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 Massive l 
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^That sums it up pretty well.

If you can't conquer your emotions, give programming a try.

I personally don't feel like programming my method yet, but quite possibly in the future.
It takes time that I don't feel like making at the moment.

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 liquidcci 
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rpm123 View Post
Fun Thread. Good talking points. Meanwhile, I had a great day following my system, but discretionarily almost lost almost half of my profit. DFD, exceeded target.

I think some of this comes down to agree to disagree. And that a highly mechanical trader has more in common with an automated bot. And a successful discretionary trader is more mechanical than discretionary. But discretionary does not mean gambling from the gut. Show me a trader without rules, well, he won't be around long.

Good comment.

If a discretionary trader has rules to identify a potential trade but uses discretion on when or when not to enter what they define as a high probability setup. If that discretion is a rule that they use every time then the whole system is really mechanical and they are not really using discretion imo.

If discretionary trader sits somewhere in between and uses a system to identify entries and exits but uses discretionary gut on entering and exits. Then I believe they could take it one step further and set a rule for those things that will give much better probabilities that can be measured and banked on. It skews any probabilities once your gut comes into it or you get in and out on what you think.

In other words if I know a particular setup with certain stop and target has a 70% win probability but I move my stop, change my target or pass on the trade based on my discretion. I have effectively changed the probabilities of my entire system into the unknown.

I just don't believe you can really use probabilities and discretion together with any consistent results over time. Only way probabilities are accurate is if you follow what produced the probability to the letter.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
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  #131 (permalink)
 rtrade 
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Massive l View Post
I have a handful of trader friends that are all successful
using their discretionary method with a set of rules that they
have changed and developed over the years.
Three in particular have been at it for over 20 years.
I meet in person with two of the three every week on Friday.

Hi Massive, can you tell me what are discussed in those Friday meetings?

"Faith is the substance of things hoped for, the evidence of things not seen." --- "Therefore, I Believe it and I will see it. And every day and in every way, I am healthier, wealthier, and wiser."
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  #132 (permalink)
 BCNTrader 
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monpere View Post
"During the raging bull market in the dot com era, many traders were making money hand over fist. Once the tech bubble burst, they lost everything, and could not make a dime to save their life. In that era you could throw a dart at a chart and make money going long. They mistook the nature of a raging bull market, and thought it was their natural trading ability and skill." .

Thanks, this example is nice for me.... Where's the difference between auto/mech and discretionary here? an automated system carefully created to fit the market that made lot of money on 1999 and 2000 should fail the same way that discretionary traders did on 2001 bubble burst or even lose more money.

The worst thing about this is that I bet that lot of people that think that auto trading is better are in fact backtester masters.

I think that good traders must have some set of rules, and very few can say that they are 100% discretionary or mechanical. So I'm not against one or another, just some people fit better with one kind of trading or the other. I know successful traders but they are more discretionary than mechanical and I would be more confident to give my money to these traders than auto strategies, is just my experience, not the truth.

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 Massive l 
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rtrade View Post
Hi Massive, can you tell me what are discussed in those Friday meetings?

:tape:

A recap of the week

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  #134 (permalink)
 monpere 
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BCNTrader View Post
Thanks, this example is nice for me.... Where's the difference between auto/mech and discretionary here? an automated system carefully created to fit the market that made lot of money on 1999 and 2000 should fail the same way that discretionary traders did on 2001 bubble burst or even lose more money.

The worst thing about this is that I bet that lot of people that think that auto trading is better are in fact backtester masters.

I think that good traders must have some set of rules, and very few can say that they are 100% discretionary or mechanical. So I'm not against one or another, just some people fit better with one kind of trading or the other. I know successful traders but they are more discretionary than mechanical and I would be more confident to give my money to these traders than auto strategies, is just my experience, not the truth.

A mechanical system, if it was designed for that environment would not have been trading when the environment was no longer present, or if it was a generic system, it would have failed within the parameters it was designed. The example was addressing some of the psychological issue of winning. Those traders were taking increasingly massive risks, because they thought they were invincible, as a result of their prolonged winning streak. It is the natural psychological greed complex, and natural god complex. There are good mechanical system, and there are bad ones, but in this case, a bad mechanical system that did not take the market environment into consideration, would have had controlled losses according to it's design.

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  #135 (permalink)
 mainstream 
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It seems there are a lot of generalities here, and along those lines, one other note, a mechanical system will have a tough time scaling in and out of trades like some of the guys on this forum, FULCRUM TRADER, comes to mind. That IMO that is more the top level of discretionary trading and basically is for seasoned pros. But for scalpers, I don't see too many mechanical draw back other than price improvement on entries and exits. And that is a limitation of the software...

Example:

You program a system to buy when the Stoch crosses above 80 and the ADX is greater than 20, then sell when Stoch crosses back below 80. But you can't always enter with price improvement because your limit order (minus one tick from the bid or from the previous bar close) will cancel on that bar if not filled and you might frig up other parameters, so you're left with market orders. And you might grab those extra few ticks by watching price on the DOM and clicking to get out of the trade, instead of waiting for your bot's set target or trail stop to kick in.

Generally, discretion allows for faster decision making because the market is in flux, but the mechanical doesn't give a shit what the market does.

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  #136 (permalink)
 monpere 
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mainstream View Post
It seems there are a lot of generalities here, and along those lines, one other note, a mechanical system will have a tough time scaling in and out of trades like some of the guys on this forum, FULCRUM TRADER, comes to mind. That IMO that is more the top level of discretionary trading and basically is for seasoned pros. But for scalpers, I don't see too many mechanical draw back other than price improvement on entries and exits. And that is a limitation of the software...

Example:

You program a system to buy when the Stoch crosses above 80 and the ADX is greater than 20, then sell when Stoch crosses back below 80. But you can't always enter with price improvement because your limit order (minus one tick from the bid or from the previous bar close) will cancel on that bar if not filled and you might frig up other parameters, so you're left with market orders. And you might grab those extra few ticks by watching price on the DOM and clicking to get out of the trade, instead of waiting for your bot's set target or trail stop to kick in.

Generally, discretion allows for faster decision making because the market is in flux, but the mechanical doesn't give a shit what the market does.

Huh? have you programmed in NT C#, with unmanaged orders?

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  #137 (permalink)
 mainstream 
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Please post a specific example of code.

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  #138 (permalink)
 monpere 
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mainstream View Post
Please post a specific example of code.

Unmanaged orders bypass the internal NT order rules. But you don' t even need that, all you need is to specify LiveUntilCancelled, in your regular orders, to prevent unfilled orders from canceling on new bar.

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  #139 (permalink)
 Big Mike 
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Xeno View Post
Mike - there are a few people on this thread that would support a new forum called something like

"Automated trading and testing"

How about it?

Created a new thread in the feedback section and we will discuss it there.

Mike

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 mainstream 
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monpere View Post
Unmanaged orders bypass the internal NT order rules. But you don' t even need that, all you need is to specify LiveUntilCancelled, in your regular orders, to prevent unfilled orders from canceling on new bar.


so then...

if (Close[0] == Swing(5).SwingHigh[0])
{
EnterShortLimit(1, Close[1] + 1 * TickSize, "Short1");
LiveUntilCancelled
}

Will look for that instance on every bar??? But what if it doesn't occur again? You have to wait a full bar for a new order to generate...

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 monpere 
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mainstream View Post
so then...

if (Close[0] == Swing(5).SwingHigh[0])
{
EnterShortLimit(1, Close[1] + 1 * TickSize, "Short1");
LiveUntilCancelled
}

Will look for that instance on every bar??? But what if it doesn't occur again? You have to wait a full bar for a new order to generate...

I'm not sure what your code is trying to do, and the code you show is not proper C# syntax. Check the following link from the NT7 Manual about how LiveUntilCancelled orders work.

NinjaTrader Version 7

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  #142 (permalink)
 mainstream 
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monpere View Post
I'm not sure what your code is trying to do, and the code you show is not proper C# syntax. Check the following link from the NT7 Manual about how LiveUntilCancelled orders work.

NinjaTrader Version 7

I think you missed the point. If you don't enter when the close of the bar is at the swing high and you have to wait another bar you're entering potentially in the middle of the range... that clips your potential profits in half.

And that is why I suggested that discretionary trading can overcome this, code can not.

I'd post a picture but it has Vendor indicators on it....

FYI that code was created by NT7, I didn't write it.

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  #143 (permalink)
 RM99 
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mainstream View Post
I think you missed the point. If you don't enter when the close of the bar is at the swing high and you have to wait another bar you're entering potentially in the middle of the range... that clips your potential profits in half.

And that is why I suggested that discretionary trading can overcome this, code can not.

I'd post a picture but it has Vendor indicators on it....

FYI that code was created by NT7, I didn't write it.

If you can conceive it, it can be coded. Trust me. Most of the time, it's usually something elegant and simple (or even unkown) that unlocks a programming challenge by someone craftier and smarter.

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  #144 (permalink)
 Xeno 
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mainstream View Post
I think you missed the point. If you don't enter when the close of the bar is at the swing high and you have to wait another bar you're entering potentially in the middle of the range... that clips your potential profits in half.

And that is why I suggested that discretionary trading can overcome this, code can not.

I'd post a picture but it has Vendor indicators on it....

FYI that code was created by NT7, I didn't write it.

There are two answers to this. The first is you can calculate values on each tick of the bar and enter as soon as the conditions are fulfilled. The second is, if doing scalping, you are unlikely to have conditions designed to occur at the end of a bar. In fact you're likely to have one tick bars.

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  #145 (permalink)
 monpere 
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Xeno View Post
There are two answers to this. The first is you can calculate values on each tick of the bar and enter as soon as the conditions are fulfilled. The second is, if doing scalping, you are unlikely to have conditions designed to occur at the end of a bar. In fact you're likely to have one tick bars.

It appeared to me that the author of that post may have had a lack of understanding of how NT works, and how C# works. That's why I referred him to the appropriate section of the NT manual. This thread is not about learning the inner workings of NT or how to write C# code.

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 mainstream 
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Xeno View Post
There are two answers to this. The first is you can calculate values on each tick of the bar and enter as soon as the conditions are fulfilled. The second is, if doing scalping, you are unlikely to have conditions designed to occur at the end of a bar. In fact you're likely to have one tick bars.


Great tip. Thanks. You can certainly have conditions that occour at the end of a bar if the bar type is designed for it. Renko bars implementation for example and range bars without gaps.

Secondly, the point is still valid, basic bots work great too, the mind is faster.

Why not put some specific code examples? everyone is commenting from their experience or the experience of their bots, code will speak more than a paragraph and may benefit everyone. Nes Pas.

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 Surly 
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liquidcci View Post
I have a rhetorical question.

If not trading a mechanical rules based system and trade in a discretionary manner how you have any expectancy at all?

From my perspective you can't fully measure anything if discretionary because everything is always changing. To me this really means you have nothing to hang your hat on for draw downs, expected profit, probabilities or really any kind of measure.

You could say well I base that on what I did last year. Okay but discretionary is always changing so last year carries no weight with this year.

Let the debate rage on.

I think this debate can be summed up in the question at the title of this post. The debate as I'm interpreting it is not whether mechanical trading CAN be profitable or whether discretionary trading CAN be profitable (although there does seem to be differences of opinion on these questions) - but whether one is inherently better than the other. One of the inputs into this question (one better than the other) is the opinion of whether a discretionary method can have a concept of expectancy - following from this is also the opinion of whether a discretionary method can be effectively scaled up in position sizing with any hope of knowing whether this is safe or not.

One of the opinions is that discretionary methods involve (by definition perhaps?) random or effectively random approaches to trading decisions. A consequence of this (if true) would be that the absolute return on discretionary methods can not be improved over time with sophisticated money management techniques because these (being derived from specific formulae) techniques require expectancy as an input and an effectively random method cannot have a fixed expectancy.

This brings me back to the question/title of this post. If a hard-coded set of instructions can carry out trading decisions then the ACT of picking winning trades is not a skill as I'm defining it. Yes, of course coding those instructions is a skill but the carrying out of those instructions is NOT what I'm calling a skill for the purpose of this debate. A skill as I'm using the word here is the successful performance of a task that requires VARYING responses to changing conditions. By this definition (and I realize that "skill" may not be the best word), if picking winning trades is a skill (in that one's ability to do it successfully can be improved with experience and training) then discretionary trading CAN be better than mechanical trading. Of course (as the title of this thread alludes to), if one cannot control the damaging effects of ones emotions, impulsiveness, etc on one's trading decisions then this question is mute.

My opinion is that picking winning trades is a skill that can be improved over time with experience and that traders who have an element of discretion in their trading can generate better results than mechanical systems. That said, I do think (agree) that many successful discretionary traders are actually making decisions that are much more grounded in rules than they would admit (or perhaps even know).

One question that bears on the title question is whether the most successful "traders" are computer programs or individuals. I would argue that if trading was not a skill (as I defined it) than the most successful traders would be programs and not people.

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 Surly 
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Here's another perhaps paradoxical question:

The conditions of the market change over time. Patterns that once worked no longer work and most in the industry would agree with the statement that making money at trading has gotten harder over time. One quote I've seen is something like "markets are just like they were 50 years ago - they changed all the time then and they do the same now".

If this is the case, wouldn't a discretionary approach that is adapting to the changing market in real time actually generate a more consistent expectancy than a static approach that doesn't adapt to the changing marketplace as quickly or as consistently?

In other words - if a discretionary trader can adapt their approach as the markets change due to their skill in reading markets, couldn't they, in fact, generate a more consistent expectancy than a static mechanical approach?

Please notice the sly look on my face as I post this question...

surly

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  #149 (permalink)
 liquidcci 
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Surly View Post
Here's another perhaps paradoxical question:

The conditions of the market change over time. Patterns that once worked no longer work and most in the industry would agree with the statement that making money at trading has gotten harder over time. One quote I've seen is something like "markets are just like they were 50 years ago - they changed all the time then and they do the same now".

If this is the case, wouldn't a discretionary approach that is adapting to the changing market in real time actually generate a more consistent expectancy than a static approach that doesn't adapt to the changing marketplace as quickly or as consistently?

In other words - if a discretionary trader can adapt their approach as the markets change due to their skill in reading markets, couldn't they, in fact, generate a more consistent expectancy than a static mechanical approach?

Please notice the sly look on my face as I post this question...

surly

Possible yes but probable no. Discretionary could perhaps make adjustment faster but with no stats or real data over time to back up those adjustments you are most likely dooming your account. In other words how do you know your quote skill or good guessing ability in reading market is still valid under the changing market conditions you mention.

I am not suggesting mechanical system traders should never change system. But those changes need to be based on stats that produce probabilities. I think a mechanical approach gives you ample time to make adjustments if you continue to collect stats and have good money management protocols in place. There are some constants in the structure of a market that don't change overnight. Markets can go flat etc quite quickly but the nature of something like CL will not just make a sudden change and then never come back to its true volatile nature. Structural change that would bust my system usually come quite gradually. For example if CL became a low volatility tight range market market like the ES my system would not earn much but would probably not lose much either so I would have to look for a new market. I think there will always be a market somewhere that is volatile, good range and has strong trends which is what my system needs. That along with good money management and I think I can adjust over time just fine.

I think one of the biggest mistake a trader can make is to constantly make adjustments. But there are times adjustments should be made.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
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sidney7g
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liquidcci View Post
I tried just about every mind trick I could to get my trading right. But found I was fatally flawed. Trading seemed to bring out my worst characteristics. I would read my trading plan and my rules out loud every day before market opened. I would type up contracts with myself that I had to sign but none of it worked.

One time I did over 100 emini trades in a day 1 contract at a time only ending when I blew up my account. I was not scalping but just out of control. I was in a cold sweat and I could not stop pushing that entry button. The trading ladder jumping up and down could just not be resisted. Like a carnival game that could not be won I went until all my money was gone. I ended that day in a fetal position in the corner with my thumb in my mouth. It was bad. Trading reduced me to a slot machine gambler with no discipline.

Something doesn't add up here....
I think your trying to hide or escape from the idea that you have an underlying gambling addiction. I think at some point in time your success in trading switched identities with gambling in your mind. Honestly if you have enough money to trade 100 times in one day by the time you blew your account I assume you've made quite a lot from trading. In another post you said you brought 5k - 100k 3 times, which I assume you've grew 5k to 100k a few times. Correct me if I read that wrong. If what you mean is you've made 300k or something equivalent, I assume you were doing well trading discretionary at some point right? To me it seemed like you were doing amazingly well to the point you had enough capitol to risk aimlessly. Almost as if your original system had broken down over time due to the fact that if you messed up you could alway fix the problem by entering in a few more trades or more contracts at a time with out significant risk if you didn't entirely go off track. Maybe after doing that a few times you got closer and closer to disaster. It seems like the long term exhilaration from gambling while trading got the best of you because you remember the times when you did exceptionally well trading by gut repeatedly. this reinforced bad behavior in a sense. However, It just seems hard believe that you only traded one contract at a time in the scenario you describe. If you truly did what you've said in the quote and are not exaggerating, I think you might possibly have some greater underlying psychological issues you should contact a psychologist about with a specialty in gambling addiction rather then forsake discretionary systems all together.

It's hard to imagine with the amount of knowledge you have that you weren't at one time an excellent trader without automation. Now if you let your system make the whole trade for you, the actual computer enters and exits the trade, I think perhaps you are putting a band aid on the original problem. This most likely will have you retreat to the same dilemma when you make your money back. I think perhaps it might make it worse since your automated system will make you money more slowly and thus summoning the dark side to inevitably intervene when you feel you've made a considerable amount. I mean its nice to hear Automated fans come in and pat you on the back, but I think the underlying issue was dismissed. It is possible that you've switched interests entirely more towards automation and programing. If not, I hate to see this type of stuff crush your ambition to trade manually like you use to. It's almost like the fall of Napoleon.

If this isn't the case, please describe your trading career up to this point, not Dday. Enlighten me. I'm not trying to call you out, but more identify the core root to this manic episode and get behind the eyes to the man who started this riveting discussion. I think more can be discussed about this issue to help discretionary traders avoid something like this from happening.



liquidcci View Post
Discretionary could perhaps make adjustment faster but with no stats or real data over time to back up those adjustments you are most likely dooming your account. In other words how do you know your quote skill or good guessing ability in reading market is still valid under the changing market conditions you mention.

on one hand you have these pro-automation ideals like Statistics and real data to support the automated system you use. You say your inevitably doomed by discretionary adjustment, but You fail to realize that its not that hard to do such a thing. It's actually easier to do with your own eye. If you doubt this, then you doubt all the money you originally made with your own eye. you lump together the psychological issues you had with trading and you lump together the actual system you used for discretionary trading. This completely negates the fact that you actually had a system that worked for discretion despite the psychological ailments to begin with!... If you said you read yourself rules I assume you had a profitable system, did you not?

I'll give an example of why a computer can't do the job as well as a human -

For instance on june 23rd between 8:30 and 10:30am each one minute candle moved about 30 cents, Then after 11:12am your lucky to get 20 cents per candle. If you think about it thats a 33% difference in volatility. Consequently, you might do well with your system at the end of the day with a 10 cent stop / 5 cent limit or when stuff is calm and then the next day try to use the same targets and get destroyed by the early increase of volatility. If you asked your computer to calculate limit and stop sizes for you it would be so skewed because of random intermittent calm periods between huge 30 cent volatility in the first few hours. Its only with your own eye can you judge stuff like this. the market is way to variable to just use a system with out constantly changing it. If you have your system Turn off during a volatile period or during a calm period your missing a HUGE window of trading opportunities. whose to say it won't turn off or on by false signals. You gotta manually program it every time to avoid news releases. Why bother obsessively coming up with the right ever changing recipe for profit through a program, Why not just overcome your demon. it just baffles me how much back work people are willing to do to avoid the actual discipline of trading itself. other people talk about all the potential extra time it gives you, what about the time it takes to program the damn thing? and reprogram it. if you think about it, it only takes a couple hours for most traders to make their daily quota, and thats a blessing in itself. I'm sure the amount of time programming outweighs the amount of money you make.

thats my two cents

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  #151 (permalink)
 Family Trader 
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liquidcci View Post
Another rhetorical question(s)

Could a few successful years trading at a persons own discretion be just a setup for a fall latter?

Kind of like a gambler on a lucky run. Is it possible the better you do the more risk you take which ultimately leads to your own demise? Can you become confident in your own genius as a trader but really just be in a streak?

Three separate times I took 5k to 100 k trading discretionary. No system, no stats just pure gut. Guess where that 300k eventually went?

And my best trade for 2011 will be that you changed your money management /trade allocation and that is why the 300k evaporated.

Collectively, you guys have made some very sound points to automate v discretionary and nobody is 'wrong"....they are all opinions based on experiences.

The "holy grail" cannot be created from 'automated' systems...thinking that the trader has overcome the psychological aspect....it simply does NOT exist.

For DT benefit...I am a trader who pretty well knows what I am doing ,but cannot code to save myself!!

Personally, I see some real advantages in'automating provided it is a simple strategy with a sound money management strategy.However, I had no luck getting it together; so I made the necessary adjustments and continue to trade manually...boring, profitable and a lot of hours.

The success in trading lies BETWEEN YOUR EARS regardless whether it be 'automated' that can be discretionary at will (shut off) =trouble; or purely discretionary where, again , the mind overrides the rules of the trade =trouble.



Good luck/trading to all.

Trader

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 Xeno 
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sidney7g View Post
If you have your system Turn off during a volatile period or during a calm period your missing a HUGE window of trading opportunities. whose to say it won't turn off or on by false signals. You gotta manually program it every time to avoid news releases.

Just because you can't code this doesn't mean that it can't be done. It's not so difficult coding to spot differing volatility or scheduled news.

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sidney7g
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It is indeed difficult because even if you do get the volatility analyzed you have no guidance as to when or where to exit trades (except on opposite signals) and there is no indication of how you should set your stops or what contract size to trade. It is just like having one piece of a 1000 piece jigsaw puzzle and trying to figure out the whole picture, it is very hard to get there.

Now what many people try at first is to setup a system with the entry signals and a fixed TP, SL and contract size. Try this and you will find that with ANY system you will NEVER achieve long term profitable results. This is because you are not looking at the big picture and you are just taking into account the most irrelevant aspect of trades, the entry. Knowing when to exit trades and how to trade is much more important and this is often a fact neglected by people new to automated system design. Especially for those who automate out of failure from discretionary trading.

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 Xeno 
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sidney7g View Post
It is indeed difficult because even if you do get the volatility analyzed you have no guidance as to when or where to exit trades (except on opposite signals) and there is no indication of how you should set your stops or what contract size to trade. It is just like having one piece of a 1000 piece jigsaw puzzle and trying to figure out the whole picture, it is very hard to get there.

Now what many people try at first is to setup a system with the entry signals and a fixed TP, SL and contract size. Try this and you will find that with ANY system you will NEVER achieve long term profitable results. This is because you are not looking at the big picture and you are just taking into account the most irrelevant aspect of trades, the entry. Knowing when to exit trades and how to trade is much more important and this is often a fact neglected by people new to automated system design. Especially for those who automate out of failure from discretionary trading.

Yeah, so there are pitfalls and stuff to watch out for, and probably many beginners get it all wrong. The thing is, you say things like you have to program manually every time to avoid news, and it's just not true.

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sidney7g
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Well If you don't program manually to avoid news then you have to account for a sudden loss at anytime you see the price randomly fly off the chart. Some systems use this to event to make profit. If that is your goal it's still a ridiculous amount of uncertainty at stake.

Let me clarify another point that has been circulating my head. If this guy traded 5k to 100k he obviously didn't do it one contract at a time. That is purely insensible. When you have more money you have the ability to risk proportionately more contracts. 1% gain on 10000 is 100, 1% gain on 50000 is 500. So why would he trade one contract at a time till he blew his account? or one contract at a time to make his account? Why would he veer off track and not pull himself away if he was trained enough to make 5k turn into 100k?

If he had one destructive day of compulsive trading that is in no way a means to discredit the art of discretionary trading. Thats like discouraging bus drivers because one randomly decides to go 100 mph to get the kids to school faster. Or a surgeon seeing that he cut one artery the wrong way, doesn't accept failure, so he keeps cutting and sewing different parts of the artery in a maddening lethal unorthodox way. This is a form of insanity "doing the same thing over and over again and expecting different results." And, It shouldn't be connected with trading. I feel bad for anyone who was discouraged by this discussion to question their own ability to continue trading with success.

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  #156 (permalink)
 Xeno 
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sidney7g View Post
Well If you don't program manually to avoid news then you have to account for a sudden loss at anytime you see the price randomly fly off the chart. Some systems use this to event to make profit. If that is your goal it's still a ridiculous amount of uncertainty at stake.

You're missing the point. You can program once, to download a calendar every week, and have your strategies delay entry or exit positions in a window around each scheduled economic news report. It was about three or four hours of coding. Doesn't require programming manually 'every time'.

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 liquidcci 
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sidney7g View Post
Well If you don't program manually to avoid news then you have to account for a sudden loss at anytime you see the price randomly fly off the chart. Some systems use this to event to make profit. If that is your goal it's still a ridiculous amount of uncertainty at stake.

Let me clarify another point that has been circulating my head. If this guy traded 5k to 100k he obviously didn't do it one contract at a time. That is purely insensible. When you have more money you have the ability to risk proportionately more contracts. 1% gain on 10000 is 100, 1% gain on 50000 is 500. So why would he trade one contract at a time till he blew his account? or one contract at a time to make his account? Why would he veer off track and not pull himself away if he was trained enough to make 5k turn into 100k?

If he had one destructive day of compulsive trading that is in no way a means to discredit the art of discretionary trading. Thats like discouraging bus drivers because one randomly decides to go 100 mph to get the kids to school faster. Or a surgeon seeing that he cut one artery the wrong way, doesn't accept failure, so he keeps cutting and sewing different parts of the artery in a maddening lethal unorthodox way. This is a form of insanity "doing the same thing over and over again and expecting different results." And, It shouldn't be connected with trading. I feel bad for anyone who was discouraged by this discussion to question their own ability to continue trading with success.


Dr. Phil (sidney7)since you are infatuated with me and can't get me out of your head let me clarify. I traded discretionary for around 7 years. Yes 3 different times I took my account from 5k to over 100k but ultimately gave it all back to the market. Why? Because discretionary is fatally flawed. I think what may offend you and is driving you to diatribes is thought you can be successful at it yet on your way to a plane crash. I realize it is hard to come to that realization but better now to stop and form a mechanical system before you blow your account out. I am not saying have to automate although automation has some great benefits. I am saying a rules based system that is based on solid probabilities with good money management is the only way to win in the market long term.

Let me also clarify that my original post in this thread was not in my discretionary days. That original post speaks of my transition from discretionary to mechanical. I was developing a system and would abandon it's rules because I had so much discretionary baggage that still need to be purged from system. I was like a recovering discretionaryaholic that would go on wild binges. It was dark it was ugly and it was automation that finally got me over the hump and allowed me to let my system run which has lead to a nice equity curve.

I hope this give you more information so you can diagnose my psychiatric health much better.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
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sidney7g
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Well next time you drive a car, are you not one slip of the wheel away from death? If you don't have the mental capacity to pull yourself away from the screen when you make a couple losses you need to reconsider what your doing for a career. How do you know you'll be able to program something that can't stop from trading after a couple losses. Also, tell me when you make 300k again from auto-trading, I'd like to know.

And, avoiding news is still only a small aspect of good automation trading.
Better yet, how do you adjust for volatility with automation?
How does your program know to change systems for fundamental impact on the market hours/days after
a news release? what about an unpredictable news release from Libya? what if Greek releases a news update spontaneously? can your program determine when something changed and stop trading based on a signal? can it turn back on based on another signal? does it turn off and miss a dozen great signals? Can it tell if price hit a previous high? Can it tie them in a knot? Can it tie them in a bow? Can it throw them o'er its shoulder like a continental soldier, can it produce as much dough?

@#$% Dr. phil

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  #159 (permalink)
 monpere 
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liquidcci View Post
Dr. Phil (sidney7)since you are infatuated with me and can't get me out of your head let me clarify. I traded discretionary for around 7 years. Yes 3 different times I took my account from 5k to over 100k but ultimately gave it all back to the market. Why? Because discretionary is fatally flawed. I think what may offend you and is driving you to diatribes is thought you can be successful at it yet on your way to a plane crash. I realize it is hard to come to that realization but better now to stop and form a mechanical system before you blow your account out. I am not saying have to automate although automation has some great benefits. I am saying a rules based system that is based on solid probabilities with good money management is the only way to win in the market long term.

Let me also clarify that my original post in this thread was not in my discretionary days. That original post speaks of my transition from discretionary to mechanical. I was developing a system and would abandon it's rules because I had so much discretionary baggage that still need to be purged from system. I was like a recovering discretionaryaholic that would go on wild binges. It was dark it was ugly and it was automation that finally got me over the hump and allowed me to let my system run which has lead to a nice equity curve.

I hope this give you more information so you can diagnose my psychiatric health much better.

Why are you guys entertaining the ramblings of this guy (sidney7) who clearly has no grasp of programming concepts, just spouts off nonsense in areas he has no expertise in, makes huge general assumptions about other people's systems which he has no first hand knowledge of, challenges people's claims with no reasonable cause, and makes ridiculous psychological assumptions and accusations about other people's mental state. Nothing this person has said so far has contributed anything positive or informative to this discussion. To the original thread starter, I have never advocated this, but you do have the option to just ban anyone you feel is not providing anything constructive to this thread.

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  #160 (permalink)
sidney7g
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monpere View Post
Why are you guys entertaining the ramblings of this guy (sidney7) who clearly has no grasp of programming concepts, just spouts off nonsense in areas he has no expertise in, makes huge general assumptions about other people's systems which he has no first hand knowledge of, challenges people's claims with not reasonable cause, and continuously makes ridiculous assumptions. Nothing this person has said so far has contributed anything positive or informative to this discussion. To the original thread starter, I have never advocated this, but you do have the option to just ban anyone you feel is not providing anything constructive to this thread.

They are entertaining it because I have valid points. I majored in computer science in college, But that shouldn't even matter. I don't need to know anything to challenge peoples ideas. just like you,
Monpere, have found it your way to negate all of my ideas in almost all of my posts.

If you guys believe whole heartedly in automated trading being the savior or all saviors to discretion, why not leverage out every trade it wants since it's "statistics" back it up? If you guys are so great at programming why not work for a trading firm on a team of other programmers getting paid a stable wage?

If you sincerely have made a significant portion of money trading through automation I want to see proof in live form not simulation, I want to see code, I want to see the trades it made and why. If not, how can you really reject any criticism? If not, it's all just speculation.

Ban me if you want, But i'm sure a lot of other people are wondering the same thing, they just don't have the guts to come out and say it.

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  #161 (permalink)
sidney7g
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Seriously if you were a trader on wall street making it to millions trading with other people's money and then spontaneously one day, or even over the course of many days or months, lost it all through obsessive gambling you'd be fired. Kaput. Trading is risky, thats the job at hand, theres no way to get around it with programming or not. Anyone who entertains the idea there is an easy shortcut, be my guest. try to use it for the how many odd years you'll continue trading. I guarantee you'll end up changing it so much you might as well just trade like you once did. Any one person programming an automated system Is like any one avid gamer deciding to make a video game and launch it out to the public. You need many people to successfully beat the market with a computer over time. It requires skill sets that outmatch any one person. There are successful bots but not many among retail traders. Why aren't Forex bots any good at trading directionally? maybe because it's next to impossible and if it was possible they wouldn't need to sell it. How do you over come your dark-side when your system fails and your sitting there with a similar sense of grief?

Give me a break.

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  #162 (permalink)
sidney7g
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rpm123 View Post
But discretionary does not mean gambling from the gut. Show me a trader without rules, well, he won't be around long.

If this is how you truly feel rpm123 why are you giving thanks to liquidcci after he replied against my idea that 'discretionary trading shouldn't be discredited by compulsive gamblers'

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  #163 (permalink)
sidney7g
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liquidcci View Post
Dr. Phil (sidney7)since you are infatuated with me and can't get me out of your head let me clarify. I traded discretionary for around 7 years. Yes 3 different times I took my account from 5k to over 100k but ultimately gave it all back to the market. Why? Because discretionary is fatally flawed. I think what may offend you and is driving you to diatribes is thought you can be successful at it yet on your way to a plane crash.

What offends me is that you say discretionary trading is flawed but can't admit that it is your gambling tendency that flawed it.

The system that got you from 5k to 100k doesn't seem flawed. This is why its hard for me to give you credit as to losing your account based on that same system rather then your gambling.

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  #164 (permalink)
sidney7g
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monpere View Post

I will just say this, I only trade 2 setups, so I could not even possibly have level 3 and level 4 trades And, the moment I consider one of these setups 'risky', it will be dropped from my trading plan. My advice is, trade 1 setup, and know that setup inside and out, be able to recognize that setup in your sleep. I can look at a chart for 1.5 seconds, and tell you I see 6 of my setups on that chart, and I know I'll probably win at least 4 of them. No analysis, no trade rating, no pontification, no drawing lines, no calculations, no market theory, no debate, no fear. All that stuff was considered 5 years ago when I was developing the setups, so it is all built in.


And monpere offends me by claiming he has an automated system, not a discretionary system, when this is his reply to me asking him for the automated system he uses on another thread


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  #165 (permalink)
 monpere 
Bala, PA, USA
 
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sidney7g View Post
If this is how you truly feel rpm123 why are you giving thanks to liquidcci after he replied against my idea that 'discretionary trading shouldn't be discredited by compulsive gamblers'

Dude, instead of attacking everyone, being an antagonist, and PMS'ing all over the place, please provide some coherent, constructive points instead. This is the nature of this forum. No one is here to show their account statements, or prove to you they are successful, or prove to you their system works, or prove your system does not. Everyone is just presenting the ideas, thoughts and reasoning behind what their beliefs are. That is the nature of this forum, and thats' what is expected of each poster, otherwise they just become a nuisance.

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 liquidcci 
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sidney7g View Post
They are entertaining it because I have valid points. I majored in computer science in college, But that shouldn't even matter. I don't need to know anything to challenge peoples ideas. just like you,
Monpere, have found it your way to negate all of my ideas in almost all of my posts.

If you guys believe whole heartedly in automated trading being the savior or all saviors to discretion, why not leverage out every trade it wants since it's "statistics" back it up? If you guys are so great at programming why not work for a trading firm on a team of other programmers getting paid a stable wage?

If you sincerely have made a significant portion of money trading through automation I want to see proof in live form not simulation, I want to see code, I want to see the trades it made and why. If not, how can you really reject any criticism? If not, it's all just speculation.

Ban me if you want, But i'm sure a lot of other people are wondering the same thing, they just don't have the guts to come out and say it.


sidney I think it is obvious you don't understand what mechanical traders do our how auto trade systems work. I don't have a problem with your lack of understanding but you really should not come attacking what you do not understand. I would not show my code or even sell my code. No reason to show stats as that can all be fabricated and there is no real proof that can be offered in a forum like this. Even if there was a way to do it I am not here to prove anything just have a civil discussion.

Maybe this conversation could make some discretionary traders doubt their ability to beat the market. That was not the intent of this thread. But I don't consider it a bad thing as it is my sincere belief it will save them a lot of money and get them to look down the right path. Really should doubt because if not trading probabilities you are just hanging your hat on thin air. Likewise you can attack the viability of system trading all day long and I won't doubt myself one bit. Why? Because my executed trades are highly probable outcomes and the numbers do not lie.


I will quote your own signature line

"Every battle is won before it is ever fought" - Sun Tzu"

This is precisely the approach system traders take to the market. We calculate the odds and follow those odds giving us the highest probability of victory.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
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 liquidcci 
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sidney7g View Post
What offends me is that you say discretionary trading is flawed but can't admit that it is your gambling tendency that flawed it.

The system that got you from 5k to 100k doesn't seem flawed. This is why its hard for me to give you credit as to losing your account based on that same system rather then your gambling.

Please read below from a previous post I put up because it is clear you are not getting it. Also come on you attack rpm123 for giving me a "thanks" and reading into why he gave me the thanks. Get constructive and stop going off on everyone. These kind of temper tantrums do reflect emotional behaviors of someone who will eventually bust their trading account. I can play Dr. Phil to.

"Dr. Phil (sidney7)since you are infatuated with me and can't get me out of your head let me clarify. I traded discretionary for around 7 years. Yes 3 different times I took my account from 5k to over 100k but ultimately gave it all back to the market. Why? Because discretionary is fatally flawed. I think what may offend you and is driving you to diatribes is thought you can be successful at it yet on your way to a plane crash. I realize it is hard to come to that realization but better now to stop and form a mechanical system before you blow your account out. I am not saying have to automate although automation has some great benefits. I am saying a rules based system that is based on solid probabilities with good money management is the only way to win in the market long term.

Let me also clarify that my original post in this thread was not in my discretionary days. That original post speaks of my transition from discretionary to mechanical. I was developing a system and would abandon it's rules because I had so much discretionary baggage that still need to be purged from system. I was like a recovering discretionaryaholic that would go on wild binges. It was dark it was ugly and it was automation that finally got me over the hump and allowed me to let my system run which has lead to a nice equity curve.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
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sidney7g
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Well liquidcci I am sorry I have upset this discussion, but my underlying belief that 'automation isn't profitable long term to the extent of discretionary trading' has yet to be resolved.

I guess If no one is really willing to show me proof that it works long term in retail then I'll be left questioning. Just like Hearing someone got abducted by aliens who can't show me pictures or proof.

All I know is I'd much rather take 5k to 100k, put 95k into the bank along the way and do it again a few times with out losing my whole bank account in one day. That seems like a lot better of a method.

I mean even you taking 5k to 100k is highly debatable but i'll leave that alone.

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 liquidcci 
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sidney7g View Post
Well liquidcci I am sorry I have upset this discussion, but my underlying belief that 'automation isn't profitable long term to the extent of discretionary trading' has yet to be resolved.

I guess If no one is really willing to show me proof that it works long term in retail then I'll be left questioning. Just like Hearing someone got abducted by aliens who can't show me pictures or proof.

All I know is I'd much rather take 5k to 100k, put 95k into the bank along the way and do it again a few times with out losing my whole bank account in one day. That seems like a lot better of a method.

I mean even you taking 5k to 100k is highly debatable but i'll leave that alone.

I am not asking you to leave the discussion but honestly you are getting a little out of hand. I don't mind debate and encourage it but no need to attack everyone. Trading discretionary is like gambling in a casino if you play long enough the house will take your money. Thus why that 95 k did not end up in the bank. Also it was 5k to over 100k 3 separate times in a 7 year period. Yes it is very possible but the house will take it back if you continue to trade that way.

Trading mechanical is determining what the odds are and essentially becoming the house thus geometric growth.

You won't get proof here. I could show you a picture of an alien and you would not believe it was a real alien. I think only way you get proof is to eventually blow your account discretionary then dazed and confused make your way towards mechanical.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
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sidney7g
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Look dude my whole point is simply -

Discretionary trading is not gambling if you follow the rules that make you profitable. It is only when you gamble do you lose your account.

If you can't agree with me on that simple idea then I have nothing else to say.

Discretionary trading has definitive rules, sometimes a lot depending on the person, sometimes different rules in different situations. I agree with the fact that gambling tenancies have the likelihood to arise at some points while trading, but you need to take the precautions against this. you can't just discredit discretionary trading all together because of gambling.

Saying that its impossible to overcome gambling while trading discretionary is ludicrous.

If your system is losing and your not gambling you need to find a better system. There should be no reason to lose your whole account in any scenario trading 1-2% per trade if you pull yourself out of it after a few bad trades and find a better system through sim. or see what you did wrong by rechecking your charts and journal.

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 liquidcci 
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sidney7g View Post
Look dude my whole point is simply -

Discretionary trading is not gambling if you follow the rules that make you profitable. It is only when you gamble do you lose your account.

If you can't agree with me on that simple idea then I have nothing else to say.

Discretionary trading has definitive rules, sometimes a lot depending on the person, sometimes different rules in different situations. I agree with the fact that gambling tenancies have the likelihood to arise at some points while trading, but you need to take the precautions against this. you can't just discredit discretionary trading all together because of gambling.

Saying that its impossible to overcome gambling while trading discretionary is ludicrous.

If your system is losing and your not gambling you need to find a better system. There should be no reason to lose your whole account in any scenario trading 1-2% per trade if you pull yourself out of it after a few bad trades and find a better system through sim. or see what you did wrong by rechecking your charts and journal.

A mechanical system has definitive rules. A discretionary system may have rules but they are discretionary not definitive. That discretion because cannot be measured with probabilities is what will eventually bust an account.
What you have described as discretionary sounds more like mechanical.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
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 rtrade 
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sidney7g View Post
If you can't agree with me on that simple idea then I have nothing else to say.

Dude, they have no intention of agree with you at all. You should have went HERE before you engaged in this thread. At least you would see how childish this argument is.

Now you have wasted your time and emotion.

Just follow the logic...Man is Flawed, Man design program, thus Program is Flawed.

Once again, CLICK HERE to see how this Chicken/Egg bar discussion, Man vs Women Oprah show talk, and Chevy or Ford type discussions always ends...or does it?

"Faith is the substance of things hoped for, the evidence of things not seen." --- "Therefore, I Believe it and I will see it. And every day and in every way, I am healthier, wealthier, and wiser."
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sidney7g
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liquidcci View Post
A mechanical system has definitive rules. A discretionary system may have rules but they are discretionary not definitive. That discretion because cannot be measured with probabilities is what will eventually bust an account.
What you have described as discretionary sounds more like mechanical.

I agree with you on this in a general sense, but most mechanical systems have some discretion. If you're a truly active trader and want to trade a variety of setups, it is at your discretion which system to use and how firmly to use it based on how the market is reacting and how much you have to risk. A lot of it comes circumstantially. If you make a significant surplus in one day trading mechanically and want to risk the extra surplus with a little discretion thats up to you. It is only when you don't stop at your daily limit and break your rule of how much to risk discretionary do you start to trading in a disastrous way. This is where you need psychological skill, when to stop and revert to strict mechanics.

also, it seems like you're doubting mechanical systems too because you've tried using rules and that didn't work either. However, I can understand why you doubt purely 'discretionary' systems from being successful longterm. But, you shouldn't discredit mechanical systems because of discretionary gambling tendencies or gambling tendencies in general with manual trading.

If you can't transition out of discretionary into mechanical when you've surpassed your limit of how much you loss, of course your going to lose more then you wanted. That's a very common problem, but it's not impossible to overcome.

I heard a long time ago from a trader on youtube, a test to see if you can make it in trading is go to a casino for a weekend with 5000 dollars, gamble 1000 and stop. Hold on to the rest while spectating other people gamble, and if you don't gamble the rest by the end of the weekend you have potential.

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sidney7g
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rtrade View Post
Dude, they have no intention of agree with you at all. You should have went HERE before you engaged in this thread. At least you would see how childish this argument is.

Now you have wasted your time and emotion.

Just follow the logic...Man is Flawed, Man design program, thus Program is Flawed.

Once again, CLICK HERE to see how this Chicken/Egg bar discussion, Man vs Women Oprah show talk, and Chevy or Ford type discussions always ends...or does it?


LOL I have a lot of time on my hands that's why I am a trader, But I enjoy debating otherwise I wouldn't find the answers I truly need. I can agree to disagree but I will challenge and defend any statements that aren't proven or verified. If someone's not willing to verify it then It cannot go any further.

I believe there are definitive answers to things based on verification and your view point like the chicken and the egg based on science is -
"The modern chicken was believed to have descended from another closely related species of birds, the red junglefowl, but recently discovered genetic evidence suggests that the modern domestic chicken is a hybrid descendant of both the red junglefowl and the grey junglefowl.[14] Assuming the evidence bears out, a hybrid is a compelling scenario that the chicken egg, based on the second definition, came before the chicken." - Chicken or the egg - Wikipedia, the free encyclopedia

I think all things should be challenged that way only the strongest survive. If authority and wild claims aren't challenged whose to say what type of corrupt shit you'd hear. If anything, I think I'm doing everyone a favor. If you think I'm annoying then just skip over my post. I am not holding a gun to your head to read it. I'm not making fun of people, but raising valid points I need clarity on. This is a learning process for me too. And, I'm truly sorry to anyone who wants to wack me over the head lol.

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 Surly 
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Gentlemen - clearly the biggest tragedy of this heated (and somewhat circular) (and somewhat ridiculous) debate is that you are all ignoring the incredible insights and clarity of argument that were all too evident in this post before it all started. wtf?


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sidney7g
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yeah yeah yeah, I still want more proof that a retail automated system outside of simulation works long term. I have yet to find it. Only person that came close was Silver dragon on page 5. Can someone direct me to a post with proof, or show me proof, so we can end it.

I am not an elite member and I know there was a contest of automated systems, What was the result?

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 liquidcci 
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sidney7g View Post
I agree with you on this in a general sense, but most mechanical systems have some discretion. If you're a truly active trader and want to trade a variety of setups, it is at your discretion which system to use and how firmly to use it based on how the market is reacting and how much you have to risk. A lot of it comes circumstantially. If you make a significant surplus in one day trading mechanically and want to risk the extra surplus with a little discretion thats up to you. It is only when you don't stop at your daily limit and break your rule of how much to risk discretionary do you start to trading in a disastrous way. This is where you need psychological skill, when to stop and revert to strict mechanics.
.

This is not true. Most mechanical systems don't leave room for discretion. Most mechanical traders would tell you once they move into discretion they have violated their rules. What you have described here is a recipe for absolute disaster. It is clear you do not understand mechanical systems or what it means to trade with probabilities.

Round and round we go where stop nobody knows.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
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  #178 (permalink)
sidney7g
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liquidcci View Post
This is not true. Most mechanical systems don't leave room for discretion. Most mechanical traders would tell you once they move into discretion they have violated their rules. What you have described here is a recipe for absolute disaster. It is clear you do not understand mechanical systems or what it means to trade with probabilities.

Round and round we go where stop nobody knows.

Well I am a mechanical trader and when I move into discretion and lose a certain amount of predetermined money I am not violating my rules. It is only when I cannot switch back to mechanical and continue with discretion do I violate my rules, and that hasn't happened. It is a balancing act. If what you mean by 'move into discretion', as pure gambling without the ability to stop, then sure you'll blow your account. Discretionary trading isn't just blindly placing a trade, Its intuition from watching the market for hundreds of hours and understanding what is going on. Patterns click sometimes outside your regular defined methods. Everything, in essence, is a pattern. It is only when you ignorantly go against your money management do you mess up with this.

It can't be a disaster if you stop. If you stopped discretion at 100k we wouldn't be having this discussion.

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 RM99 
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"It's better to be lucky than good."

If you're ever making trades by "gut feel", "intuition" "je ne sais quois" or any other "too complicated to put your finger on method" then my hat goes off to you. Good luck with that. I hope it turns out well for you. Like the opening line says....

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  #180 (permalink)
sidney7g
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RM99 View Post
"It's better to be lucky than good."

If you're ever making trades by "gut feel", "intuition" "je ne sais quois" or any other "too complicated to put your finger on method" then my hat goes off to you. Good luck with that. I hope it turns out well for you. Like the opening line says....

It's not luck, It's conditioning the brain to spot good opportunities through observing the market day in and day out. Like I said before as an example, Trade the chartgame.com from 10k to 100k without indicators or statistics. Learn to trade only promising patterns. When you get to 100k tell me if it was luck. Don't give up if you fail.

You will truly understand the difference between gambling and discretionary trading.

prt scrn your Trading log from chartgame.com when you get to 100k. after this, we'll talk.

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  #181 (permalink)
 RM99 
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sidney7g View Post
It's not luck, It's conditioning the brain to spot good opportunities through observing the market day in and day out. Like I said before as an example, Trade the chartgame.com from 10k to 100k without indicators or statistics. Learn to trade only promising patterns. When you get to 100k tell me if it was luck. Don't give up if you fail.

You will truly understand the difference between gambling and discretionary trading.

prt scrn your Trading log from chartgame.com when you get to 100k. after this, we'll talk.

I'm not trying to be contrarian, I'm really not. But are you SERIOUSLY validating your "fluid" trading methodology with performance reports from an online stock trading game?

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sidney7g
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RM99 View Post
I'm not trying to be contrarian, I'm really not. But are you SERIOUSLY validating your "fluid" trading methodology with performance reports from an online stock trading game?

HAHAHAHAHAHAHAHAHAHASDFADFASDFA.......

Look, Tonight try to get 20k. Maybe in a few days you might be able to break 100k. The act of trading 10k to 100k in one session shouldn't last more than an hour or two when you've broken the learning curve. The point is to teach your brain to identify good trading opportunities without indicators or statistics by repetition. You will fail over and over, but if you keep at it you'll get it after a couple hours like learning to ride a bike.

You will see how simple trading can be improved by waiting, time-lapsing, or switching charts till you get a good setup to execute. MIND CONTROL. If you do this time and time again you will understand this isn't gambling. You don't need rigid details about your setups other than they are significantly more predictable than other setups. I suggest you look for key resistance and support levels by using different time frames. You will see that price works up to bounce off of, or poises up to break through these levels in reoccurring patterns.

This isn't validation of my "fluid" trading methodology, It's simply a crash course on trading stocks without training wheels. Learn through experience.

When your done, try it on CL in simulation. Samething.

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  #183 (permalink)
 Xeno 
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sidney7g View Post
And, avoiding news is still only a small aspect of good automation trading.

Well then don't use it to make your point about automated trading. With all of your training and experience it doesn't look good when you make sweeping generalisations which are not correct.

I actually reckon you probably have some good points hidden in what you write, but when you say things like most mechanical trading has a discetionary element it's hard to see past that.

I know that you mean 'choosing which one to run based on market conditions' is discretionary, but there are a whole load of mechanical strategies that you know nothing about. My guess is that you had a big go at automated trading and couldn't get it to work consistently. You wouldn't be the only one. But now you want to say that all automated trading will turn out like this, and that if you don't have a team of people it won't work etc etc. But the facts are that people have made it work, and no they're can't be bothered to prove it to you (you wouldn't accept it anyway)

You see you assume that programs can't adapt to market conditions and must be switched on and off. Wrong. You assume that scheduled news must be avoided manually. Wrong. You assume that a program has to do worse than a human whne a price shock comes in. Wrong. I could go on.

The fact is, there is a whole load of ways and methods of automated trading that you never did or considered. And you don't need a team of people to do it. So your generalisations about automated trading are always going to get a reaction.

(For what it's worth, I don't think disc trading is fatally flawed, but I think it's very hard to say whether you are good at it, or just lucky, because it's very hard to calculate your performance against expectation. I asked twice on this forum for a disc trader to say how they tested their system, and how they have any sort of expectancy for their system. Complete silence. Hey, here's a flippant observation: The percentage of disc traders who have been successful for the last three years is probably the same as the percentage of traders you would statistically expect to be profitable for three years through luck alone.)

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  #184 (permalink)
 Lornz 
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Xeno View Post
the percentage of disc traders who have been successful for the last three years is probably the same as the percentage of traders you would statistically expect to be profitable for three years through luck alone.

You know, of course, that the majority of "great" traders have been trading discretionary...

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 Xeno 
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Lornz View Post
You know, of course, that the majority of "great" traders have been trading discretionary...

Yes, sure. What's your point?

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  #186 (permalink)
 RM99 
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Lornz View Post
You know, of course, that the majority of "great" traders have been trading discretionary...

That's nearly akin to saying..."The number of lottery winners over the past few years have been unusually lucky."

For every George Soros, there's literally hundreds of thousands of Hedge Fund managers, retail traders and outright amateurs who either don't even beat the general market index return or lose money.

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  #187 (permalink)
 Lornz 
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Xeno View Post
Yes, sure. What's your point?

I have no point. I see your point. I think that it's more valid than most think, but it's not universally true. If one ever gets an inside look at how finance works, one will quickly see the power of "discretionary" thought...


RM99 View Post
That's nearly akin to saying..."The number of lottery winners over the past few years have been unusually lucky."

For every George Soros, there's literally hundreds of thousands of Hedge Fund managers, retail traders and outright amateurs who either don't even beat the general market index return or lose money.

But that does not prove that Soros is not talented...

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  #188 (permalink)
 RM99 
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I have no point. I see your point. I think that it's more valid than most think, but it's not universally true. If one ever gets an inside look at how finance works, one will quickly see the power of "discretionary" thought...



But that does not prove that Soros is not talented...

No, but to assume that you or I or anyone for that matter could simply educate/study/research/ etc our way to that sort of performance is a bit lofty.

I'm always a fan of stretch goals....."shoot for the stars, that way, even if you fall short, you still end up on the moon."

I'm not claiming discretionary trading is inherently flawed. I'm just saying that automation holds a lot of advantages for me personally.

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  #189 (permalink)
 Xeno 
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I have no point. I see your point. I think that it's more valid than most think, but it's not universally true. If one ever gets an inside look at how finance works, one will quickly see the power of "discretionary" thought...

That is my point - to not talk about universal truths (and is why my observation was flippant). The number of great discretionary traders tells us little about the merits of auto trading, esp given that auto trading is more of a recent thing.

I've seen how finance works. Indeed discretionary can be powerful. I've also seen it screw up loads of times. I've seen the profit bottom line be the most important measure of 'performance' until it all blows up and people realise risk-return wasn't so clever.

The bottom line for me is that people can have all the opinions they like about the merits, and I'll respect those opinions, but when the disc crowd start telling the automated crowd how useless their work is it gets really annoying. Especially, given the irony that the automated crowd are much better positioned to evaluate their performance in a statistically rigorous way.

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  #190 (permalink)
 monpere 
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sidney7g View Post
HAHAHAHAHAHAHAHAHAHASDFADFASDFA.......

Look, Tonight try to get 20k. Maybe in a few days you might be able to break 100k. The act of trading 10k to 100k in one session shouldn't last more than an hour or two when you've broken the learning curve. The point is to teach your brain to identify good trading opportunities without indicators or statistics by repetition. You will fail over and over, but if you keep at it you'll get it after a couple hours like learning to ride a bike.

You will see how simple trading can be improved by waiting, time-lapsing, or switching charts till you get a good setup to execute. MIND CONTROL. If you do this time and time again you will understand this isn't gambling. You don't need rigid details about your setups other than they are significantly more predictable than other setups. I suggest you look for key resistance and support levels by using different time frames. You will see that price works up to bounce off of, or poises up to break through these levels in reoccurring patterns.

This isn't validation of my "fluid" trading methodology, It's simply a crash course on trading stocks without training wheels. Learn through experience.

When your done, try it on CL in simulation. Samething.

OMG! Play the chartgame for 2 hours, then go trade the CL. That is outright delusional. People, this is the person you are debating with. 6 months from now, he will blow up his account, and won't even be on this forum anymore. It is a pointless and futile dialogue.

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  #191 (permalink)
 Lornz 
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RM99 View Post
No, but to assume that you or I or anyone for that matter could simply educate/study/research/ etc our way to that sort of performance is a bit lofty.

I'm always a fan of stretch goals....."shoot for the stars, that way, even if you fall short, you still end up on the moon."

I'm not claiming discretionary trading is inherently flawed. I'm just saying that automation holds a lot of advantages for me personally.

I agree. I tend to believe that successful discretionary trading is largely genetic.... I have automated systems, I am not against it in any way, shape or form...



Xeno View Post
That is my point - to not talk about universal truths (and is why my observation was flippant). The number of great discretionary traders tells us little about the merits of auto trading, esp given that auto trading is more of a recent thing.

I've seen how finance works. Indeed discretionary can be powerful. I've also seen it screw up loads of times. I've seen the profit bottom line be the most important measure of 'performance' until it all blows up and people realise risk-return wasn't so clever.

The bottom line for me is that people can have all the opinions they like about the merits, and I'll respect those opinions, but when the disc crowd start telling the automated crowd how useless their work is it gets really annoying. Especially, given the irony that the automated crowd are much better positioned to evaluate their performance in a statistically rigorous way.

I am not in that "crowd". I am a "believer" in automation, I automate as much as I can. Where automation fails, though, is with the rare occurrences that provide extremely lucrative opportunities.

I would argue that there still is a place for the good ol' Speculator...

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  #192 (permalink)
 liquidcci 
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sidney7g View Post
Well I am a mechanical trader and when I move into discretion and lose a certain amount of predetermined money I am not violating my rules. It is only when I cannot switch back to mechanical and continue with discretion do I violate my rules, and that hasn't happened. It is a balancing act. If what you mean by 'move into discretion', as pure gambling without the ability to stop, then sure you'll blow your account. Discretionary trading isn't just blindly placing a trade, Its intuition from watching the market for hundreds of hours and understanding what is going on. Patterns click sometimes outside your regular defined methods. Everything, in essence, is a pattern. It is only when you ignorantly go against your money management do you mess up with this.

It can't be a disaster if you stop. If you stopped discretion at 100k we wouldn't be having this discussion.

Here is the problem in moving back and forth between discretion and mechanical.

A good mechanical system is based on probabilities. Staying away from low probability trades and taking high probability trades over and over again.

Lets say you know 6 out of 10 times probabilities show a trade works and you have both backtesting and live testing results that prove that out. The problem is this the moment you use your discretion and do not enter a trade your system said you should have or enter a trade that your system did not signal your probabilities have now changed. This may work in your favor at times but over the long haul making random decisions about what you think the market will do invalidates your system because you no longer can measure it. The difference between being profitable and unprofitable is a fine edge. When you change your probabilities through trying to feel the market eventually the house will take your money.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
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 liquidcci 
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Xeno View Post

(For what it's worth, I don't think disc trading is fatally flawed, but I think it's very hard to say whether you are good at it, or just lucky, because it's very hard to calculate your performance against expectation. I asked twice on this forum for a disc trader to say how they tested their system, and how they have any sort of expectancy for their system. Complete silence. Hey, here's a flippant observation: The percentage of disc traders who have been successful for the last three years is probably the same as the percentage of traders you would statistically expect to be profitable for three years through luck alone.)


The above comment is one of the best thoughts in this thread. Thanks for the thought Xeno.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
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  #194 (permalink)
 monpere 
Bala, PA, USA
 
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liquidcci View Post
Here is the problem in moving back and forth between discretion and mechanical.

A good mechanical system is based on probabilities. Staying away from low probability trades and taking high probability trades over and over again.

Lets say you know 6 out of 10 times probabilities show a trade works and you have both backtesting and live testing results that prove that out. The problem is this the moment you use your discretion and do not enter a trade your system said you should have or enter a trade that your system did not signal your probabilities have now changed. This may work in your favor at times but over the long haul making random decisions about what you think the market will do invalidates your system because you no longer can measure it. The difference between being profitable and unprofitable is a fine edge. When you change your probabilities through trying to feel the market eventually the house will take your money.

The problem with that statement is, if the person you are talking to does not have a grasp of the concepts of statistical analysis, probability, and expectancy, then you are wasting your breath.

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  #195 (permalink)
 monpere 
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sidney7g View Post
HAHAHAHAHAHAHAHAHAHASDFADFASDFA.......

Look, Tonight try to get 20k. Maybe in a few days you might be able to break 100k. The act of trading 10k to 100k in one session shouldn't last more than an hour or two when you've broken the learning curve. The point is to teach your brain to identify good trading opportunities without indicators or statistics by repetition. You will fail over and over, but if you keep at it you'll get it after a couple hours like learning to ride a bike.

You will see how simple trading can be improved by waiting, time-lapsing, or switching charts till you get a good setup to execute. MIND CONTROL. If you do this time and time again you will understand this isn't gambling. You don't need rigid details about your setups other than they are significantly more predictable than other setups. I suggest you look for key resistance and support levels by using different time frames. You will see that price works up to bounce off of, or poises up to break through these levels in reoccurring patterns.

This isn't validation of my "fluid" trading methodology, It's simply a crash course on trading stocks without training wheels. Learn through experience.

When your done, try it on CL in simulation. Samething.

OMG! Play the chartgame for 2 hours, then go trade the CL... Totally delusional... just plain laughable

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  #196 (permalink)
sidney7g
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OMG! Play the chartgame for 2 hours, then go trade the CL... Totally delusional... just plain laughable


Monpere you are totally twisting my words around, yet again. I said to play the chartgame.com till you get to 100k with no indicators or statistics, then use the same tactics on CL in SIMULATION because it is in essence the same thing. Never just jump into trading a system that you barely know. Damn monpere do you even know how to trade?
DO IT ON ANY INSTRUMENT IF YOU SO CHOOSE. IT DOESN'T MATTER. the only reason I said to use the chartgame is because it allows you to speed up time, which makes it somewhat easier to come to the conclusion faster.

AND AGAIN, MONPERE HAVE YOU GOTTEN TO 100K? NO? then shut up. Don't post on my methods until you can back up your statements.

AND AGAIN, I still want proof automated systems work. no one has given me any or directed me to any proof. How do you expect me to even believe any of this. I know what works for me, but how are you going to make me believe something that is theoretically possible but not provable. You guys believe in Statistics, well I want statistics on a successful longterm automated program. Is that too much to ask for?

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  #197 (permalink)
sidney7g
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monpere View Post
The problem with that statement is, if the person you are talking to does not have a grasp of the concepts of statistical analysis, probability, and expectancy, then you are wasting your breath.


post the system, the statistics, probability, and expectancy. I'd like to see this. You haven't been able to do this for me before. Is this too much to ask for?

PROVE YOURSELF
-.-

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  #198 (permalink)
sidney7g
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There comes a point in time when I just stop caring what others believe, I try to help them understand, but they will just keep making the same mistake till they learn it on their own. Those I can teach, who appreciate it, were already on the path to figuring it out.

It seems like you guys who use automated systems want to believe it's possible, you might get some statistics that seem promising, but overall you can't come to terms with the fact that it doesn't work. Its like the slow grips of fate tearing into your trading career. Can't trade discretionary, can't trade mechanically, and automation barely works either.

I'd love to be proven a fool that automation works on a retail level. And, that automation works on a more or less consistent level longterm basis. This would probably encourage me to pull out some programming books and get back into it. But, like I said, I have yet to see any Evidence that stands on its own two feet.

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  #199 (permalink)
 liquidcci 
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sidney7g View Post
post the system, the statistics, probability, and expectancy. I'd like to see this. You haven't been able to do this for me before. Is this too much to ask for?

PROVE YOURSELF
-.-

sidney this thread is for grownups. Please stop making it personal and asking for data that you are not going to get. Nothing anyone put up could be validated so it is pointless for you to keep pulling that card out every time your ideas are challenged.

This has been a good thread with much good discussion pro and con. But quite honestly your comments have been all over the place and quite confused. We are not asking anyone to backup comments with broker statements. But we are asking for logical well thought out comments that are not swinging all over the place.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
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  #200 (permalink)
 monpere 
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sidney7g View Post
Monpere you are totally twisting my words around, yet again. I said to play the chartgame.com till you get to 100k with no indicators or statistics, then use the same tactics on CL in SIMULATION because it is in essence the same thing. Never just jump into trading a system that you barely know. Damn monpere do you even know how to trade?
DO IT ON ANY INSTRUMENT IF YOU SO CHOOSE. IT DOESN'T MATTER. the only reason I said to use the chartgame is because it allows you to speed up time, which makes it somewhat easier to come to the conclusion faster.

AND AGAIN, MONPERE HAVE YOU GOTTEN TO 100K? NO? then shut up. Don't post on my methods until you can back up your statements.

AND AGAIN, I still want proof automated systems work. no one has given me any or directed me to any proof. How do you expect me to even believe any of this. I know what works for me, but how are you going to make me believe something that is theoretically possible but not provable. You guys believe in Statistics, well I want statistics on a successful longterm automated program. Is that too much to ask for?

And, how exactly do you know I have not gotten to 100K? That is quite presumptuous. If you start with more then 100K, getting to 100K has no meaning. Have you given any proof that your system works? What kind of proof do you want? Why would anyone care to give you proof? What is that worth to them? Do you think satisfying your satisfaction, would validate them? Would that make them feel proud? Thank about your request, and ask yourself why would anyone entertain that request. Unless someone gives you their account information for you to login to their account and examine their trade history and account balance, then asking for proof is futile. Any 5 year old can bring up Microsoft paint, type in some numbers, and show you what ever it is you want to see.

In a medium like this, all you can do is present the arguments that you believe in, with the theories and experience that support that belief. That may convince some people, influence others, or just cause them ponder. Others will be outright unmovable, because they are too well entrenched in their own belief. No amount of proof will convince them, and no amount of proof will guarantee that system will work for them.

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