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Time to Give Up
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Time to Give Up

  #331 (permalink)
Swings a big hammer
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spideysteve View Post
Was that you @Bladesmith ?

No, I'm way too young and poor to retire. This was a guy I had gotten to know through a mutual friend in the industry, and whom I had actually hoped to work for before his and my circumstances both changed. I intentionally kept a few details vague in order to protect his anonymity, as he is practically a household name in certain circles.

All that said, I do have some personal experiences that, in one way or another, relate to his own.

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  #332 (permalink)
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Bladesmith View Post
...or if the roulette wheel simply just landed on red 26 times in a row?...

This is a question all big macro and swing traders must wrestle with from time to time. How will they know? How will you know?

That question, and situation, I cannot abide. The roulette wheel NEVER lands on red 26 times in a row, IF ALL THINGS ON THE WHEEL ARE EQUAL. The pure probability of a perfect wheel landing red 26 times in a row is beyond lotto jackpot odd numbers, requiring a Knuth up-arrow to calculate.

There are stories of wheels lending themselves to landing more often than not on certain colors/numbers, but that had to do with imperfections in the wheel. (Red box widths being wider than black, etc.)

Remember, a perfect wheel has the same odds on each and every spin. The market is not a darn roulette wheel, because it is played with by humans, and humans are not perfect. We're not cyborgs. Trading is not a darn wheel of roulette.

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  #333 (permalink)
Swings a big hammer
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Hoopy, I mentioned the roulette wheel because a few pages back in this thread someone posted a link to an article describing that exact phenomenon. It's called the Gamblers Fallacy, or Monte Carlo fallacy. It speaks to those moments when a trader - with a proven system - suddenly has numerous consecutive losing trades and asks himself if it's just an improbable streak, or if the odds have, in fact, suddenly changed.

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  #334 (permalink)
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Bladesmith View Post
Hoopy, I mentioned the roulette wheel because a few pages back in this thread someone posted a link to an article describing that exact phenomenon. It's called the Gamblers Fallacy, or Monte Carlo fallacy. It speaks to those moments when a trader - with a proven system - suddenly has numerous consecutive losing trades and asks himself if it's just an improbable streak, or if the odds have, in fact, suddenly changed.

Ahh. That is an interesting observation. I'll need to research the thread, because I have recently encountered something vaguely similar.

I never considered it "Gambler's Fallacy" though.

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  #335 (permalink)
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HoopyTrading View Post
Ahh. That is an interesting observation. I'll need to research the thread, because I have recently encountered something vaguely similar.

I never considered it "Gambler's Fallacy" though.

In trading, it usually isn't. Like you, I don't believe in randomness. Every trade that hits the tape has intent.

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  #336 (permalink)
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Bladesmith View Post
And suddenly he started to struggle.

Maybe the pace was different. Maybe his execution was suffering from decreased liquidity (trading over the counter interest rate derivatives in a post Dodd-Frank environment). Maybe his many years of insight were no longer enough to His confidence was gone. And he didn't have the time, energy, or inclination to start anew.

A lot of very successful traders eventually lose their edge. The financial markets and the entire world are constantly changing.

I am re-reading "Reminiscences of a Stock Operator" and have just got to the part where Jesse shows up in New York and tries and fails at first to adapt his trading style from bucket shop to brokerage. He was fantastically successful trading bucket shops but he soon blows up his account trying to trade the NYSE live from the brokerage and has to borrow some money on a personal loan to go back and trade bucket shops again.

Once he builds up some trading capital he comes back to New York and tries and eventually succeeds at learning this new environment.

I think as his career advances he continually re-trains himself to adapt as the market changes. Not without a lot of pain.

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  #337 (permalink)
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suko View Post
I am re-reading "Reminiscences of a Stock Operator" and have just got to the part where Jesse shows up in New York and tries and fails at first to adapt his trading style from bucket shop to brokerage. He was fantastically successful trading bucket shops but he soon blows up his account trying to trade the NYSE live from the brokerage and has to borrow some money on a personal loan to go back and trade bucket shops again.

Once he builds up some trading capital he comes back to New York and tries and eventually succeeds at learning this new environment.

I think as his career advances he continually re-trains himself to adapt as the market changes. Not without a lot of pain.

Wow, you are reading that book also? There is a trader in my school who is reading that book as well, and mentions a bit about how the author doesn't use stops? The trader is from the 1930s or something? Small world.

I guess I should read that book.

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  #338 (permalink)
Swings a big hammer
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Required reading. Two of my favorite quotes from that book, which certainly apply here:

“There is nothing like losing all you have in the world for teaching you what not to do. And when you know what not to do in order not to lose money, you begin to learn what to do in order to win. Did you get that? You begin to learn!”

“…fate does not let you fix the tuition fee. She delivers the educational wallop and presents her own bill, knowing you have to pay it, no matter what the amount may be.”

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  #339 (permalink)
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It's a book beloved of traders and one we should all go back and re-read every year or so. Because, as Jesse says, there is "nothing new under the sun."

They did not have stops in those days, and anyway there are traders these days who don't use them, either.

I think the striking thing about Jesse is that he was opposed to charts. They did not use charts when he started out, but later in his career when charting became widespread, he refused to go along. I think this is probably because he had always preferred to maintain price history in his head in his own way.

For that matter, there are traders that don't use charts today, too.

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suko View Post
It's a book beloved of traders and one we should all go back and re-read every year or so. Because, as Jesse says, there is "nothing new under the sun."

They did not have stops in those days, and anyway there are traders these days who don't use them, either.

I think the striking thing about Jesse is that he was opposed to charts. They did not use charts when he started out, but later in his career when charting became widespread, he refused to go along. I think this is probably because he had always preferred to maintain price history in his head in his own way.

For that matter, there are traders that don't use charts today, too.

Welp, now I have two books on my X-mas list..."Trading in the Zone", and now this "Reminiscences of a Stock Operator."


(Yes yes yes, I know I should have read "Trading in the Zone" a long time ago. No comments from the peanut gallery. I'm just backed-up on book reading, OK?)

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