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After 4 months my first profitable month started the day after I made these 3 changes


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After 4 months my first profitable month started the day after I made these 3 changes

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  #11 (permalink)
 michaelroth 
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kevinkdog View Post
The trick here is knowing when the loss is actually a defect in your plan, and not just some random bad luck. Hard to make any kind of observation on a single trade.

I've seen people work for years trying to perfect their plan or backtest, but never find any real time success with the adjusted plan/strategy. They are constantly chasing a moving target. And since they are in effect trying to correct the defect that is random bad luck, they will never succeed.

Luck - good or bad - plays a much bigger role in trading than people believe.


I more or less agree to your point. Luck implies randomness, which I've observed in trading communities, is a taboo subject. Others say we make our own luck. When you get right down to it, the only certainty in trading is that the price will move and everything after that is chance, or a statistic probability if your afraid of using the word chance. Its true. All that said, I know for myself, and I would bet this is true for a lot of other traders, that if I were to eliminate those known defects in my plan, then those bad unlucky trades, wouldn't be enough to impact profitability.

Ah- time will tell. I wish you the best of luck with your trades.

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  #12 (permalink)
 kevinkdog   is a Vendor
 
 
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michaelroth View Post
I more or less agree to your point. Luck implies randomness, which I've observed in trading communities, is a taboo subject. Others say we make our own luck. When you get right down to it, the only certainty in trading is that the price will move and everything after that is chance, or a statistic probability if your afraid of using the word chance. Its true. All that said, I know for myself, and I would bet this is true for a lot of other traders, that if I were to eliminate those known defects in my plan, then those bad unlucky trades, wouldn't be enough to impact profitability.

Ah- time will tell. I wish you the best of luck with your trades.

I am curious, what don't you agree with? It might lead to an interesting discussion, if you want...

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  #13 (permalink)
 MNSTrading 
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Luck does play a big role, huge role really, but its out of our hands. There is stuff that is not luck or aids luck and constitutes edge.

Walking a dog for example, lets say every-time a dog sniffs a spot that you selected before hand, you make $5. You could say its totally luck because dogs just randomly sniff all over, but if you see a spot where another dog pooped, you will definitely pick that spot. Luck is a little stronger, more likely to happen given certain conditions.

Coming, they can't be denied. Going, they can't be detained.
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 kevinkdog   is a Vendor
 
 
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MNSTrading View Post
Luck does play a big role, huge role really, but its out of our hands. There is stuff that is not luck or aids luck and constitutes edge.

Walking a dog for example, lets say every-time a dog sniffs a spot that you selected before hand, you make $5. You could say its totally luck because dogs just randomly sniff all over, but if you see a spot where another dog pooped, you will definitely pick that spot. Luck is a little stronger, more likely to happen given certain conditions.

I think we are saying the same thing. Any strategy or approach you trade has two components: the actual edge, and random luck.

When you run a backtest that is good, or do some market replay or whatever - and determine an approach is historically good, there is likely good luck baked into the result.

How much? No one really knows. Could be 90% and 10% good luck, or 10% edge and 90% good luck.

But, when you then go live with it, chances are the good luck will disappear (eventually) and either turn to no luck or even bad luck. If you strategy survives that test, then you know your edge was probably not good luck, and possibly the edge is strong enough to even overcome bad luck.

Professional sports are a good example of this. In any given game, the "better" team does not always win - sometimes it is better to be lucky than good. But after enough trials (games), the final teams vying for the championship usually have a lot of "edge" in them.

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 MNSTrading 
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Well the edge has to incorporate the luck, from our viewpoint its luck, but from the market's viewpoint, if we humanize the market for a moment, it is randomness, or more accurately chaos, and we can say a few things about chaos;

1. it produces autopoietic stuff, birds, trees, rivers and corn futures
2. It is subject to strings, i.e. heads-heads-heads-heads-heads-tails
3. it is subject to turbulence, where past movements influence future movements to create swirls, eddies and waves, sometimes tsunamis

I believe any edge takes these elements into account in some form. Can you quantify an edge? A casino can because they make the rules. Their edge is 55%, but in a random or chaotic system do people have a specific numerical edge? or is it just a moving average of their expectancy?

I don't know what mine is.

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 kevinkdog   is a Vendor
 
 
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MNSTrading View Post
Well the edge has to incorporate the luck, from our viewpoint its luck, but from the market's viewpoint, if we humanize the market for a moment, it is randomness, or more accurately chaos, and we can say a few things about chaos;

1. it produces autopoietic stuff, birds, trees, rivers and corn futures
2. It is subject to strings, i.e. heads-heads-heads-heads-heads-tails
3. it is subject to turbulence, where past movements influence future movements to create swirls, eddies and waves, sometimes tsunamis

I believe any edge takes these elements into account in some form. Can you quantify an edge? A casino can because they make the rules. Their edge is 55%, but in a random or chaotic system do people have a specific numerical edge? or is it just a moving average of their expectancy?

I don't know what mine is.

I think you can quantify an edge.

The hard part about quantifying it is when you get a good historical backtest, some of it might be true edge and some might be good luck, and you do not necessarily how much of each you have.

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 michaelroth 
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kevinkdog View Post
I am curious, what don't you agree with? It might lead to an interesting discussion, if you want...

I personally agree that with your position that luck plays a factor in trading. The 'or less' part of my comment mostly regards those that shy away from the fact. That said, I think that if a person focuses on those factors that he or she is actually in control of, a person can mitigate the role that luck plays in trading. I also think that by better understanding what it is we actually control in our trading and correcting those defects in our plans and executions, 'make' our own good luck too. I also see your point that some people will 'chase their own tails' trying to correct things in their trading the they have no control of, but I think the solution to simply understand what it is you actually control.

This thread has me now considering on the possibility of tracking 'luck' in my trades. I can remember certain trades where I was both lucky and unlucky. If this idea makes the cut it will be in my journal.

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 kevinkdog   is a Vendor
 
 
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michaelroth View Post
I personally agree that with your position that luck plays a factor in trading. The 'or less' part of my comment mostly regards those that shy away from the fact. That said, I think that if a person focuses on those factors that he or she is actually in control of, a person can mitigate the role that luck plays in trading. I also think that by better understanding what it is we actually control in our trading and correcting those defects in our plans and executions, 'make' our own good luck too. I also see your point that some people will 'chase their own tails' trying to correct things in their trading the they have no control of, but I think the solution to simply understand what it is you actually control.

This thread has me now considering on the possibility of tracking 'luck' in my trades. I can remember certain trades where I was both lucky and unlucky. If this idea makes the cut it will be in my journal.

Thanks, I understand now.

I'll follow and see how you determine what is luck. I'd love to be able to quantify it for trading strategies...

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  #19 (permalink)
 Cutloss 
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Luck? Ahem...randomness is not luck or unlucky. This is saying that every good winning trade was just luck. This is saying markets are completely random. This is not really being debated here as a thread is it? I win trades over and over again because of skill.

When I lose I dont say I was unlucky? So buy and hold long term is just an incredibly long string of good luck?

I strongly disagree with this unless you agree that you can make your own luck.
If I'm fishing for a freshwater bass in saltwater and I catch a freshwater bass in salt water then I would say that was luck.

If I'm driving on ice. I spun out and miss 3 cars n recover I'd call that luck but then again was it my driving skill? Was it my tires my cars technology .

I personally believe that anyone who thinks good n bad luck play a part in trading edge or profits should actually maybe rethink trying to be a trader.

Yes there is randomness in the system but it's usually swallowed up by a slower larger non random entity getting work done.

If I woke up everyday saying maybe I'll get lucky...then I wouldnt trade period. After making a trade..its not luck if it wins or not...unless u just roll dice before every trade.
I could only let dice decide my long or short entry if I was practicing cutting losses but even then...nah. zero luck in edge.

I got lucky in amc though..I bought it at 2.55 and was lucky it ran..I had no idea and that was luck. However my friend called me when it was at 9 n said..hey amc is all over reddit. I think it's got lots of reasons to run to 50..he said buy a bunch..I bought small..again..n I'm out already..for him he says that's skill because he stated why it would move higher n it did..so maybe he has skill at seeing reddit trades who knows.

But what I do everyday has zero luck involved. If I'm in a trade and luck is playing a part then I shouldn't be in the trade.
Just my opinion

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 rahulgopi 
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Random and Chaos are two broad buckets humans use to classify anything we don't understand yet. Take the dog sniffing around example, for humans it may look completely random, but the dog has an acute sense of smell and it may not be a random activity at all.

The problem with classifying and concluding is that we completely eliminate the possibility of knowing. "I don't Know or I don't understand yet" is a tremendous possibility as there will be more seeking and learning and the possibility of knowing itself.

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