Welcome to NexusFi: the best trading community on the planet, with over 150,000 members Sign Up Now for Free
Genuine reviews from real traders, not fake reviews from stealth vendors
Quality education from leading professional traders
We are a friendly, helpful, and positive community
We do not tolerate rude behavior, trolling, or vendors advertising in posts
We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community. It's free for basic access, or support us by becoming an Elite Member -- see if you qualify for a discount below.
-- Big Mike, Site Administrator
(If you already have an account, login at the top of the page)
Trading: The one I'm creating in the present....Index Futures mini/micro, ZF
Posts: 2,311 since Nov 2011
Thanks Given: 7,341
Thanks Received: 4,518
Totally agree with this post.....
It's completely impossible to know the sequence of wins and losses ahead of time for ANY edge, period. That is why these traders sometimes have these losing months. But they don't stop and abandon their method and start looking for another, as most do. Or change it dramatically. They have done the research hard work and believe in their work that produced the edge and understand probabilities regarding the winning and losing streaks that can happen.
Anybody know what happen on Monday August 18, 1913? And the corresponding behavior of the masses (lacking probability training)?
Unfortunately I have spent way too much time researching Mark Minervini so the information below is drawn from several sources and I can not provide a specific link.
During 1997 he was taking part in the US Investing Championship and won it with a return of 155% p.a. Now, I am sure most would assume that those returns were achieved on a fairly consistent basis. However, after the third quarter he was only up 8% and was languishing pretty low in the standings. It was only in the final quarter of the year that he finally managed to gain some traction in his account.
I know he tracks several metrics, but he also tracks the typical expectancy numbers, i.e. average win, average loss and win%. The metrics have stayed pretty constant for him over the years, i.e. average win 10%, average loss 5% and win% of about 50%. Once you factor this into the account, even with a great win %, you can still have long periods of "sub-par" performance, i.e. slogging it out for 9 months to show a paltry 8% gain.
The point I am making here and perhaps @Blash and others will agree is that anyone hoping to achieve consistent returns may be in for a rude awakening. Most people enter this game thinking that they will be earning a "salary", i.e. nice consistent monthly returns. However, even if you consistently apply your method your profits will most likely come sporadically. It may seem like a small thing, but this probably is one of the main reasons most traders can't stick to their methods / systems. If you need to live off your account then low-return or losing periods could mean that the withdrawals just deplete capital to such a point that the account will never recover.
"But they don't stop and abandon their method and start looking for another, as most do. Or change it dramatically. They have done the research hard work and believe in their work that produced the edge and understand probabilities regarding the winning and losing streaks that can happen."
Riddle me this: If someone keeps abandoning their method and looks for another, shouldn't they eventually stumble on something that works? Eventually stumble into success?
Markets always change. Sometimes following the trend works well, other times market are range-bound, sometimes that are extremely volatile other times they are as calm as can be. What it means is that everything will work at some time, but nothing will work all of the time.
If you constantly change your method to adapt to the current environment the cycle usually looks as follows:
Suffer larger than expected losses due to trading a method that is not suited to the current environment.
After a while change the method to be more in line with the current environment.
Trade well until the market environment changes at which point you start can start again at point 1 above.
If you can minimize the losses when you are trading a method that is not suited to the current environment then changing up your style as needed could potentially work. I am not sure how well the traders on the scalping thread adapt -
Well, it's time to step into the light. I've lurked around BMT and futures.io for a couple of years now, wandering through the journals of others, sampling indicators, hearing stories of gains and losses and feeling quite at home. I came here …
- however, when looking at the traders I know / have studied, most of them stick to one style and know that style extremely well. Whenever markets are favourable to their approach they trade large and whenever markets are not favourable to their approach they trade tiny. While their methods are all very good, it seems that the aforementioned skill (know when to hold / know when to not play) is what really makes them great.
Edit: Should also add that as per the post of @Blash all of these traders have a researched edge / system and the proper amount of confidence in it. It is very unlikely that someone who "stumbles" on a winning system will have the required confidence / perseverance to stick with it.
Trading: The one I'm creating in the present....Index Futures mini/micro, ZF
Posts: 2,311 since Nov 2011
Thanks Given: 7,341
Thanks Received: 4,518
Great question @thailerdurden. I like it. And I will attempt some sort of an answer in my next post.
But first, kindly, perhaps it would be best to quote another using the quote button, please. Feel free to remove text from said quote not needed or wanted in the point your making leaving the authors info so it makes clear who wrote what.
...My calamity is My providence, outwardly it is fire and vengeance, but inwardly it is light and mercy...
The steed of this Valley is pain; and if there be no pain this journey will never end.
Buy Low And Sell High (read left to right or right to left....lol)
Trading: The one I'm creating in the present....Index Futures mini/micro, ZF
Posts: 2,311 since Nov 2011
Thanks Given: 7,341
Thanks Received: 4,518
Abandoning one's method seems to me to be the trap most fall into. I have done it in the past but no longer (same approach since last half of 2012). The key thing to understand, the knowledge that one must obtain IMHO, is that the method is not so important. It's not the "thing" that produces consistent profit. To put it bluntly .....You are! You want to search for something, some way to remove millions from the market? Search for yourself! Keep changing yourself! Understanding that you ARE NOT what you see in the mirror. You are not a brain, liver, heart, quadriceps, kidneys, bones, feet, spleen, blood, hormones, cells etc etc etc..... Or the sum total of these and more. This is all but dust! In one's use as a tool for a relatively short, maybe 100 years, max 121? For most shorter. Do what increases your power but obsessive or overemphasizing with regard to this physical shell is a waste of time, energy, resources etc. Back in my 20's I used steroids. Trained eat and slept. Worked as a personal trainer, waiter and student. For what, in the big picture? Body will still be a pile of dust like everyone's, in the end. IMHO spend time creating the best you from a spiritual, emotional, mental and rational point of view. The rational self is the greatest of gifts who's other name is the "soul". Knowledge is true wealth.
Below are a few of my favorite quotes........
We must find what works for us, just understanding that the way we approach the market, i.e. the technical system, method or whatever the latest term is, is not the key. It's you. Don't keep looking in the wrong place you won't find what you are looking for.
Ron
...My calamity is My providence, outwardly it is fire and vengeance, but inwardly it is light and mercy...
The steed of this Valley is pain; and if there be no pain this journey will never end.
Buy Low And Sell High (read left to right or right to left....lol)
NEVER give up !!!
Except if you lost money trading and now are in debt and that you are putting your family or yourself in a dangerous position.
Because you are just stupid.
It's like borrowing money from banks and got to casino.
You did it once and most likely will repeat it.
Blowing your account with money you can lose is something different.
The logical process for my point of view and thanks to this forum is first get on simulator than if profitable
Get funded than if you want to add your own money a bit by a bit.
If you can't get funded than it's way too early for you to get trading with your own money.
It's less difficult psychologically to trade with somebody else money than your own but still bring an income.
On the brighter side,I think the 95/5 or 90/10 ratio is a old myth.
Everybody talks about it but I never seen any real data to prove it.
And even if there are data to back it up
What is considered as a trader?
A guy that trade once is a trader? Twice?
Somebody trusting a signal service or a hot tips or listening to CNBC?
Also somebody following some gurus that never trade ? And just ripping people off with their course?
I think anybody can trade but do you have the willingness and the patience to learn the skill of trading and money management and the psychology?
It's like any skills anybody can become what he desires but do you have the courage to do the work?
Stop procrastinate and do your homework and I believe any skills can be learned
Good trading
I had given up then came back after a few years but finally one thing did it which was learning to change my mindset about fear. The way I did it was to write being grateful and journal about it every morning and remember it throughout the day. This act changed my emotions of being fearful of my trades and made me emotionless. Absolutely agree that psychology is the most important thing in trading.
The single most powerful tool in my trading has been to keep a journal. I can't stress this enough!
--------------------------------------------------------
- Trade what you see. Invest in what you believe -
--------------------------------------------------------
