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What was your biggest misconception?
Started:October 9th, 2014 (06:08 PM) by tturner86 Views / Replies:6,113 / 69
Last Reply:October 15th, 2016 (05:23 PM) Attachments:0

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What was your biggest misconception?

Old April 28th, 2015, 12:41 PM   #51 (permalink)
Trading Apprentice
coimbatore, TN, India
 
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My misconceptions:

1) Hugely under estimated the amount of time and effort required to become consistently profitable (Still I am not a consistent trader). It's all buy low and sell high right? How hard it can be?!

2) Since I can code I believed, all I have to do is come up with an automated system and there after my laptop will turn into an ATM ! Turn on in the morning, count the money in the evening!

3) Options are so cool, YAY! I can control underlyings worth several thousands of dollars for much cheaper cost and this type of leverage is absolutely going to make me rich! All other vehicles (futures, delivery) looked like worthless things, which I am not even going to bother about! After all with naked options buying I am going to buy the moon some day!

4) Once spotting out a mistake, I won't repeat. This one really got myself baffled as I have always believed myself as rational, level headed decision maker! Just give me the facts m'am, I can come to accurate conclusions and act on them! Discipline is not a big deal because I am already too awesome! <-complete bummer

5) Trading at lower time frame is how money is made, bigger time frame won't help much. Bigger time frame will be less profitable as there are lots of trades in lower time frame. I completely ignored the idea of moving up to higher time frame to catch bigger trends.

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Old April 29th, 2015, 05:36 PM   #52 (permalink)
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western NY
 
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My biggest misconception was that market efficiency and equilibrium means I have a trading win rate of 0% and since I have had winning trades the market being trading can not be efficient.
When what that really means is with equal money bets we will have an edgeless rate of 50% winners 50% losers, just trading money back and forth with a -EV equal to transaction costs.

Related to that is the idea that I can beat the market by holding the S&P with 2x leverage or something.
"If the S&P is up 10% and I am using 2x leverage then I have beat the market so market efficiency is wrong."
That is not what is meant by market efficiency but also a good example that there is still tons of money to be made in efficient markets. Efficient markets is not such a terrible term completely at odds with the idea of trading.

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Old April 29th, 2015, 07:14 PM   #53 (permalink)
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Here is one that recently died once and for all "trading the news is easy because the instrument will go straight in one direction."

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Old April 30th, 2015, 12:07 AM   #54 (permalink)
Trading Apprentice
coimbatore, TN, India
 
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Apart from big misconceptions, I want to add I have had few BIG NO Conceptions at all !

Before losing a big chunk of money, it never occurred to me, position sizing is important.
My understanding and intuition for probability, small edges, geometric growth/decline, variance, drawdowns, streaks were all near ZERO ! Awful thing is I have had learned probability in my school and college but the insights never clicked with me and book knowledge of coin toss/redball black ball urn problems never transferred into insights about markets automatically.

Another big blank on my mind during the initial days was : Psychological Edge
Since I have done well in all other areas of life (school, college and first job) I thought I already had everything I needed!


Last edited by rocktrader; April 30th, 2015 at 12:40 AM.
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Old April 30th, 2015, 04:56 AM   #55 (permalink)
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Perhaps my biggest misconception was focussing on chart patterns based on individual bars or groups of bars.... as opposed to focussing on context.

To add one more: that there is a consistent way to make money in the market over time. Markets change and evolve. THERE IS NO HOLY GRAIL.... and anyone who pretends there is one, is either a charlatan or has absolutely no clue what he is dealing with.

"...the degree to which you think you know, assume you know, or in any way need to know what is going to happen next, is equal to the degree to which you will fail as a trader." - Mark Douglas

Last edited by Anagami; April 30th, 2015 at 05:05 AM.
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Old April 30th, 2015, 11:25 PM   #56 (permalink)
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Narcissus View Post
My biggest misconception....

MARKET IS RIGGED

...

You mean it's not?

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Old May 1st, 2015, 12:23 AM   #57 (permalink)
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GregLGTP View Post
You mean it's not?

No. I believe it's NOT rigged.

Trading environment is no different from the competitive real world 'big fish eat small fish' scenarios.

To me that's NOT rigging but Competition. That's people with more power/money trying to outsmart others.

A question to reflect upon - Did Nav Sarao rig the market?

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Old May 1st, 2015, 12:38 AM   #58 (permalink)
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rocktrader View Post
My misconceptions:

1) Hugely under estimated the amount of time and effort required to become consistently profitable (Still I am not a consistent trader). It's all buy low and sell high right? How hard it can be?!

....

you miss this half
It's all buy low and sell high around S/R levels.

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Old May 1st, 2015, 04:46 AM   #59 (permalink)
Trading for Fun
Los Angeles, CA
 
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How hard the market can hit you.

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Old May 1st, 2015, 04:53 AM   #60 (permalink)
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That it Takes a month to learn how trading the markets work and from thereon it's 37 month to make 10.000.000$ .
Let the others worry about losing.


Another good one: more trades = more profits. How naive I was ..


Last edited by Scalpingtrader; May 1st, 2015 at 05:03 AM.
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