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Simba, The Best Trader in the World
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Simba, The Best Trader in the World

  #1 (permalink)
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Simba, The Best Trader in the World

Who is Simba?!

Simba is my dog!
He's not a trader really, he's more of a benefit taker. He receives mostly! And what does he have to do in order to receive? Well, not much really! He has to repeat the same pattern, again and again, and again!

And you know what? He's getting rewarded about 90% of the time!

What in the whole world am I talking about?

Simba is not allowed to go into the kitchen, and that he knows. But he's allowed to stay outside the kitchen and put on a cute face. And by doing that, he receives every now and then a piece of "real" food (that is besides his own dog food).

So the action looks pretty much like this . I go into the kitchen, I open the fridge door and as soon as Simba hears that sound he always, always, always follows. He never ever misses an opportunity at all! Always there, always present.

You see for Simba that sound means an opportunity to get some food! And he just loves that!
So he puts himself outside the kitchen, and waits. It never fails! He's always there, always waiting!


Now, does he always receive something?
No!
Does that make him reconsider, and change his behavior?
No!
Is Simba smarter than us?
Now, that is the BIG question!


Maybe trading has nothing to do with being smart! Maybe trading is all about finding out what works, and repeat that even during those times when there's no reward (because we ought to know that in the long run, we will always be rewarded)!

We all struggle to make tomorrow look like yesterday!
Get rid of your past and let the future unfold from the now.
Past performance is not indicative of future results.
/George
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  #2 (permalink)
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  #3 (permalink)
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Hi George,


it is all about, who is on the other side of your trade.


Further, this does not seem to be a zero-sum-game, if you take into account the utility functions on both sides.


The dog does not trade, but simply waits to be fed, because that is what is most important for dogs.


If I adopt the same strategy, I do not think that I will get fed by the market.

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  #4 (permalink)
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a very nice picture / comparison george !


Fat Tails View Post
The dog does not trade, but simply waits to be fed, because that is what is most important for dogs.
If I adopt the same strategy, I do not think that I will get fed by the market.

i am shure you will ! - just trade the dammn patterns -- if you have some that work.
in my eys you dont have to be a "big-brainer" to get your goal.


if you say blind pattern-trading is no trading - the dog does not trade, thats true - but also me i wouldnt be a "trader"

but if you say just following the same pattern over + over again IS trading - so the dog does the same - he follows the plan he learned to get success.
and i am shure even the dog would stop it if its not worth it anymore one day.

max-td
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Thanks for your answer!

I just wanted to emphasis the basis of following a pattern. If we are to translate this into trading terms, I would say act as the dog on your entry's. Why?
Because that's the only way you CAN'T miss out!

And sure, it is true and agree with you that you're not going to get fed by the market. But then again, the market is not a place to get fed from. The market is a place of opportunities.

YOU and nobody else have to use that in order to get your rewards. So in order to get that you have to dive into it. The sound of the fridge is the sound of your EDGE.





Fat Tails View Post
Hi George,


it is all about, who is on the other side of your trade.


Further, this does not seem to be a zero-sum-game, if you take into account the utility functions on both sides.


The dog does not trade, but simply waits to be fed, because that is what is most important for dogs.


If I adopt the same strategy, I do not think that I will get fed by the market.


We all struggle to make tomorrow look like yesterday!
Get rid of your past and let the future unfold from the now.
Past performance is not indicative of future results.
/George
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  #6 (permalink)
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Thanks Max!

Belive me I've tried to make him stop! He won't

Imagine if our perception would be focused on the edge and on the reward! We would become trading vacuum cleaners!

We all struggle to make tomorrow look like yesterday!
Get rid of your past and let the future unfold from the now.
Past performance is not indicative of future results.
/George
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  #7 (permalink)
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It's a great example, George.

Too many traders can't handle rejection or disappointment (or whatever you want to call it) -- a losing trade. When it happens, they lose control.

It would be like Simba not getting his treat for being a good boy. When he doesn't get it, he starts running around the house crazy. Then, the next time you go to the fridge, Simba doesn't come to the kitchen threshold and stop, he instead goes to your bedroom and stops. (change of behavior, routine, to try to overcome the rejection). Then the next time, he stops at the bathroom. The next time, the garage. Simba is out of control.

No, that makes no sense. A dog would not do this! Because the dog knows his best chance of success is to latch on to the pattern. Simba is great at reading your body language and emotions. He knows that just because he doesn't get a treat every single time, he will still get them often.

Whereas, many times a trader will experience rejection/loss (whatever you want to call it) and then suddenly they start changing things. They try a different chart type. Hmm, maybe MedianRenko will save me. They try new indicators, hmm maybe this new XYZ will save me. They change stops. They make them bigger, then smaller. They change targets, smaller then bigger. They are all over the damn map! No consistency! They are acting without logic.

Is it because the trader should be in a mental hospital? No. It's because our minds, our psychology, our entire being from our upbringing and onward in life, it all occurs in such a way that makes us bad traders. Twenty books can be written on this, so I will just say "bad traders" and not provide details as to why. But, all it takes is a smart person to realize "hmm, this is against my nature" and then they can decide what is more important to them. Following their "nature", which means stop trading, or overcoming their "nature" and learning to re-wire their minds to become good traders.

I think Simba made the right choice. At first, maybe he wanted in the kitchen real bad. He learned, he re-wired, he adapted, and now he knows the reward is far greater if he sits outside the kitchen instead of coming in.

Mike

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Dog or Rat?

Quoting our favourite former member TRO (The Rumpled One) it's so true your post about the dog getting his reward.

Here's a snippet I found on one of TRO's posts...

"Look, for example, at this elegant little experiment. A rat was put in a T-shaped maze with a few morsels of food placed on either the far right or left side of the enclosure. The placement of the food is randomly determined, but the dice is rigged: over the long run, the food was placed on the left side sixty per cent of the time. How did the rat respond? It quickly realized that the left side was more rewarding. As a result, it always went to the left, which resulted in a sixty percent success rate. The rat didn't strive for perfection. It didn't search for a Unified Theory of the T-shaped maze, or try to decipher the disorder. Instead, it accepted the inherent uncertainty of the reward and learned to settle for the best possible alternative.

"The experiment was then repeated with Yale undergraduates. Unlike the rat, their swollen brains stubbornly searched for the elusive pattern that determined the placement of the reward. They made predictions and then tried to learn from their prediction errors. The problem was that there was nothing to predict: the randomness was real. Because the students refused to settle for a 60 percent success rate, they ended up with a 52 percent success rate. Although most of the students were convinced they were making progress towards identifying the underlying algorithm, they were actually being outsmarted by a rat."


Rats or dogs.... It's our desire to 'be right' that get's us into all kinds of trouble.

So, for example, we will trade a system with a certain known win/loss expectancy and STILL try and improve it or trade WITHOUT following the rules, we try to PREDICT, we try to INCREASE POSITION SIZE, we MOVE OUR STOPS, and when we LOSE we blame the system.

Yet, there it is in front of us...60% win rate through consistency, yet we try and OUTDO ourselves and and up with 52%...

Makes you wonder if there is a certain personality or brain 'type' who, when presented with the problems trader's face, is naturally biased to succeed.


I was reading a book "The Paradox of Choice: Why More is Less" by Barry Schwartz. In it he brings up the phenomenon of what he terms "The Maximizer" and "The Satisficer"personality.

The Maximer analyzes things to death, to make the best possible choice (in trading the one often suffering from analysis paralysis, the one who says 'Look how far that trade COULD have went')

The Satisficer knows there are always better choices out there but he/she is happy with what they have.

Read more here....


The Paradox of Choice and the Dangers of Perfection



Jungian

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So what do you want to say? That we simply lack the aspiration to become successful traders?


George View Post
Thanks Max!

Belive me I've tried to make him stop! He won't

Imagine if our perception would be focused on the edge and on the reward! We would become trading vacuum cleaners!

The dog stays outside of the kitchen, because fear is a stronger feeling than greed, and believe me, you have a greedy dog. The only reason that the dog comes back again and again, is that it does not believe in deferred gratification, but it wants its share of your ice cream right now. If dogs had an economy, their savings rate would be negative all the time.

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Thanks for adding Mike.
Great post! I love that part of realizing that trading is against our nature!
Very, very true! And so unfortunately denied by most of us!

The most difficult things to learn in life are those that are easy to do and to execute! We're unfortunatelly led by fear! So instead of giving Mike's thought some space, and by being honest towards ourselves, we fear that IF we confess and that if we accept that we're not constructed in order to be traders, we'd have to give up trading or we're going to become even worse at trading.

When in fact, the opposite will happen! Fear looses its grip on us when we face it!



Big Mike View Post
It's a great example, George.

Too many traders can't handle rejection or disappointment (or whatever you want to call it) -- a losing trade. When it happens, they lose control.

It would be like Simba not getting his treat for being a good boy. When he doesn't get it, he starts running around the house crazy. Then, the next time you go to the fridge, Simba doesn't come to the kitchen threshold and stop, he instead goes to your bedroom and stops. (change of behavior, routine, to try to overcome the rejection). Then the next time, he stops at the bathroom. The next time, the garage. Simba is out of control.

No, that makes no sense. A dog would not do this! Because the dog knows his best chance of success is to latch on to the pattern. Simba is great at reading your body language and emotions. He knows that just because he doesn't get a treat every single time, he will still get them often.

Whereas, many times a trader will experience rejection/loss (whatever you want to call it) and then suddenly they start changing things. They try a different chart type. Hmm, maybe MedianRenko will save me. They try new indicators, hmm maybe this new XYZ will save me. They change stops. They make them bigger, then smaller. They change targets, smaller then bigger. They are all over the damn map! No consistency! They are acting without logic.

Is it because the trader should be in a mental hospital? No. It's because our minds, our psychology, our entire being from our upbringing and onward in life, it all occurs in such a way that makes us bad traders. Twenty books can be written on this, so I will just say "bad traders" and not provide details as to why. But, all it takes is a smart person to realize "hmm, this is against my nature" and then they can decide what is more important to them. Following their "nature", which means stop trading, or overcoming their "nature" and learning to re-wire their minds to become good traders.

I think Simba made the right choice. At first, maybe he wanted in the kitchen real bad. He learned, he re-wired, he adapted, and now he knows the reward is far greater if he sits outside the kitchen instead of coming in.

Mike


We all struggle to make tomorrow look like yesterday!
Get rid of your past and let the future unfold from the now.
Past performance is not indicative of future results.
/George
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