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Highly Unusual Suggestion
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Created: by mwtzzz Attachments:0

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View Poll Results: Deliberately entering a bad trade
I think this exercise is a good idea 11 31.43%
I think it's a horrible idea 24 68.57%
Voters: 35. You may not vote on this poll

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Highly Unusual Suggestion

  #31 (permalink)
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Good Traders...

fully recognize the worst case scenario and maintain normal operations so far away from that scenario that there are multiple and redundant near guarantees against it.

This is NOT what Nic Taleb was referring to in "Antifragile", but I do understand where the TS might think that the stress of disaster might forge a stronger something if the stress can be survived. This is completely incorrect in both form and function. Escaping disaster, even self imposed, builds a false sense of security especially when it generates a profit.

I used to have no choice but to fire guys when they made and recovered from an error that was outside of desk protocol....especially if they "recovered". This free form logic is absolutely displaced in the professional trading industry. The reason being... that it's supporters career in the market is so short lived that nobody even remembers their name.

To the TS...your threads are dangerous to the people that are new in the business and a disaster to those that are struggling and here to seek help. I understand the desire to engage and the edification need to have a following and feel superior but this is not the place. Many people here trade with real money, money they can't afford to light on fire based on some hair-brained notion that flirting with disaster is beneficial in any form other than a Molly Hatchet song.



Last edited by wldman; February 26th, 2013 at 02:18 PM. Reason: remove duplicate "that"
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  #32 (permalink)
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mwtzzz View Post
I'm glad you mentioned this. Did you know that the cure for anxiety attacks and phobias is to
place the person in the fearful situation and make them stay there (with no way out) for much
longer than even a normal person would feel comfortable with? For example, to cure
claustrophbia, cognitive behavior therapists will do things like nail the person into a
coffin for 90 minutes. They will repeat this process every two weeks for several sessions until
the person begins to realize that they aren't going to die from it, thereby making the "phobia" lose its power because
now they fully realize it for what it is.

After the movie Jaws I was really afraid of being eaten by Great White Shark. Should I have gone and swam with Great Whites?

Point being your idea underestimates the danger of the market. If someone purposely goes and swims with the sharks to try and overcome a fear of sharks they may just get eaten. Their worst fear may come true. Purposely creating a loss scenario designed to put you in a place of panic and you may lose it all. The market like a Great White is to be respected.

"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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  #33 (permalink)
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Right...


@liquidcci

Are you or where you a Wave 59 guy btw?

There is a significant disconnect there...one that makes me even question the motive or perhaps the cognitive ability behind the initial statement. When that happens usually subsequent statements clear things up a bit...not here.

I do question the claim stating that people afraid of closed in places are treated by being shut in nailed closed coffins...at least in the last, say, half century.

Many process or logic flaws prevail as well, so it is best to "take with a grain of salt". My concern is that people will be damaged here, especially the ones that suffer already and come here for answers.

Logic chart might be interesting.

https://yourlogicalfallacyis.com/

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  #34 (permalink)
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wldman View Post
@liquidcci

Are you or where you a Wave 59 guy btw?

There is a significant disconnect there...one that makes me even question the motive or perhaps the cognitive ability behind the initial statement. When that happens usually subsequent statements clear things up a bit...not here.

I do question the claim stating that people afraid of closed in places are treated by being shut in nailed closed coffins...at least in the last, say, half century.

Many process or logic flaws prevail as well, so it is best to "take with a grain of salt". My concern is that people will be damaged here, especially the ones that suffer already and come here for answers.

Logic chart might be interesting.

https://yourlogicalfallacyis.com/

@wldman nope never heard of wave59.

"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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  #35 (permalink)
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@mwtzzz


Quoting 
Experienced traders: do it with real money. Inexperienced traders: do it in simulation.

Because your argument is based on these statements, can you provide any evidence or reference that this is in fact true? All this exercise does is condition the mind into an area that is counterproductive to success.

What you should be doing is conditioning your mind into trading areas that will bring success. Practicing poor risk management is a recipe for disaster and will get you into bad habits. The mind is very powerful. What you should be doing is training your mind to focus on effective risk management techniques.

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  #36 (permalink)
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Thanks for the clarification


mwtzzz View Post
Yes I think should explain a little better. When I say work your way out of a 100 tick loss, I don't necessarily mean immediately. Flattenning is certainly a valid first step. What I'm really getting at it is: make sure your method capitalizes sufficiently on the odds of trading in general so that it can make up a larger-than-expected loss. In many cases this will be through a series of
subsequent trades rather than with one or two.

I suspected that is what you were alluding to and not suggesting that someone just double-down or widen their stops. At the back of the book Street Smarts by Larry Connors and Linda Bradford Raschke there is a great study done by Fernando Diz' where he does analysis on successful and unsuccessful CTAs over a period of 20 years of trading. It's a great read but to summarize he states:


Quoting 
If I had to explain success with only one variable, the one that predicted success or failure most accurately was the amount of time a program spent recovering from its worst drawdown as a percentage of its life.

I expect that's what you're getting at. And if so, it's certainly something to give every trader something to think about.

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  #37 (permalink)
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another way to help two people

Here's a different suggestion:

Find someone who believes they have a good system (A) but aren't sure if other factors (such as trading skill, nerve, psychology etc) are preventing success and let him pair with an experienced trader who believes they have good trading skills (B).

They could connect on a screen sharing program (teamviewer, skype etc) and then
A would describe the setup they see and their rules and why they are entering the trade,
A & B would enter each on their own sim account
A would watch B manage the trade seeing if B can "fix" it on times when it was a poor entry.

B would find out if he's a good trader and be able to see if he can spot weaknesses in A's setup and A would be able to see if it was trading or the setup that was the weakness.

Keep your mind in the future, in the now.
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  #38 (permalink)
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What I get from the initial post, or how I would go about it, is to enter a trade with a stop as wide as you can imagine, a profit target some x of that, do not allow yourself to change anything but force yourself to watch. Feel everything, and focus on the feeling.

The trade goes against you. Do you wish you could average in? Why, because it feels better to see -15 ticks o the screen than to see -30? "It has to turn", right?

Allow it to go in your favor 50 ticks, and not be allowed to take the profit or move your stop up to preserve profits. How does that feel, really? Scarier than when it moved against you?

Etc.

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  #39 (permalink)
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ron99 View Post
mwtzzz, are you going to answer Big Mike's question?



My thinking is that this thread is really about risk management and ensuring you are able to follow through with it. That is certainly a worthwhile discussion topic, however I do feel that perhaps the OP's suggestion is slightly dangerous and possibly even counter productive.

If you find yourself down a large amount, there should be no trading your way out of it. It's time to exit straight away and assess how you allowed yourself to get to that point in the first place. Risk management involves cutting your losers as per your predefined plan on every single trade. That is how you build confidence and remove the fear of losers. It's in knowing that you have defined and accepted your risk for every trade and will exit without hesitation. It is not in purposefully letting a loser get much larger than your plan dictates and then seeing if you can handle it.

Build confidence and remove fear by doing the right thing over and over again.

Diversification is the only free lunch
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  #40 (permalink)
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aquarian1 View Post
Here's a different suggestion:

Find someone who believes they have a good system (A) but aren't sure if other factors (such as trading skill, nerve, psychology etc) are preventing success and let him pair with an experienced trader who believes they have good trading skills (B).

They could connect on a screen sharing program (teamviewer, skype etc) and then
A would describe the setup they see and their rules and why they are entering the trade,
A & B would enter each on their own sim account
A would watch B manage the trade seeing if B can "fix" it on times when it was a poor entry.

B would find out if he's a good trader and be able to see if he can spot weaknesses in A's setup and A would be able to see if it was trading or the setup that was the weakness.

Good ideas should always feel exciting OR scary. This one definitely meets the scary criteria. It is also interesting that some of the more recent agile program development movements use pairs programming for similar goals. or

Travel Well
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