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Trading Lessons Through Pictures
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Created: by mattz Attachments:3

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Trading Lessons Through Pictures

  #11 (permalink)
Trading Apprentice
Waverly, OH USA
 
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confirmations*

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  #12 (permalink)
Trading Apprentice
Waverly, OH USA
 
Futures Experience: Beginner
Platform: ninjatrader
Favorite Futures: Currency Futures
 
Posts: 2 since Mar 2013
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I'm new and can understand what information the first picture is trying to convey. I can't really form an opinion because of my experience but I understand what the graph represents.

The 2nd graph doesn't make much sense to me.

"Trading Method" axis cannot increase or decrease ie increasing trading method? Whats that mean.

The method doesn't change with more confirmations? The quality of the method or validity?

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  #13 (permalink)
Market Wizard
Boca Raton
 
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mattz's Avatar
 
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F0rTun3 View Post
I'm new and can understand what information the first picture is trying to convey. I can't really form an opinion because of my experience but I understand what the graph represents.

The 2nd graph doesn't make much sense to me.

"Trading Method" axis cannot increase or decrease ie increasing trading method? Whats that mean.

The method doesn't change with more confirmations? The quality of the method or validity?

The method is a constant. it does not change up or down.
However, a method that uses more and more confirmations would lead to increasing indecision.
What I really want to convey was the fact that when beginner traders build a method they seem to pile up a number of confirmations( technical, statistical, etc) on top. This not only leads to indecision but to increasing the risk to reward.

PM with any questions about optimusfutures (800) 771-6748 (561) 367 8686. THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES TRADING.
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  #14 (permalink)
Site Administrator
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  #15 (permalink)
Market Wizard
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  #16 (permalink)
Elite Member
Manchester, NH
 
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mattz View Post
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Fat Tails View Post
I agree, but high frequency trading generates a higher amount of commissions. Don't you love commissions?


Big Mike View Post
Agree completely, I've been preaching this for a couple years at least now

https://futures.io/traders-hideout/23792-who-makes-more-money-scalpers-point-traders.html

Mike

This graph is untrue, both for empirical and theoretical reasons.

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  #17 (permalink)
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artemiso View Post
This graph is untrue, both for empirical and theoretical reasons.

Almost anything can be argued, but surely you can do better than that... such as providing your own demonstration proving your point.

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
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  #18 (permalink)
Market Wizard
Boca Raton
 
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Big Mike View Post
Almost anything can be argued, but surely you can do better than that... such as providing your own demonstration proving your point.

Mike

I am particularly interested in the "empirical" part.
Let's see if he resorts this argument to some quant fund that has nanosecond execution while most of us still argue in the millisecond domain.

PM with any questions about optimusfutures (800) 771-6748 (561) 367 8686. THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES TRADING.
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  #19 (permalink)
Site Administrator
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mattz View Post
I am particularly interested in the "empirical" part.
Let's see if he resorts this argument to some quant fund that has nanosecond execution while most of us still argue in the millisecond domain.

Well he is a quant. Nothing wrong with that. But I would like to see how trading faster will make more money per trade than a longer duration trade.

I suspect that the argument is in your illustration and the interpretation of it. My interpretation is that the more trades you make, the less money you make per trade. So he would need to argue that he can make more money per trade by taking more trades.

But I suspect that his interpretation is for overall profit, and not per trade. So the real argument is perhaps on the interpretation of your illustration. Perhaps you can clarify what you intended.

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

Reply With Quote
 
  #20 (permalink)
Elite Member
Manchester, NH
 
Futures Experience: Beginner
Platform: thinkorswim
Broker/Data: TD Ameritrade
Favorite Futures: Stocks
 
Posts: 902 since Jul 2012
Thanks: 603 given, 1,785 received



Big Mike View Post
Almost anything can be argued, but surely you can do better than that... such as providing your own demonstration proving your point.

Mike

I thought it was fairly obvious. Let us assume "skilled trading" is simply recognizing when to choose to allocate to a risk-free asset with return Rf or the market portfolio with return Rm. Then, just using one-factor CAPM,

Rp - Rf = a + b*(Rm-Rf) + c*Max(0, Rm-Rf) + ep, Rf < Rm

I think most traders should recognize that Max(0, Rm-Rf) has the payoff of a free call option, and if I give you a free option, you want the volatility to increase because then it is priced higher. All else equal, if you want exposure to higher volatility, you want to trade more frequently.

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