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NEVER LOSE AGAIN!! - TheRumpledOne
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NEVER LOSE AGAIN!! - TheRumpledOne

  #221 (permalink)
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THOUGHTS TO PONDER OVER THE WEEKEND

"The technique is so simple that just several lessons (or a few pages of explanations) cover it all. Now what? Now the student has to practice, practice and practice again to understand what he had been taught. The teacher DOES know much more than the student, but his understanding can't be "passed", "transferred" or taught in any way -- not even by reading books."

================================================

Although there are other 'regular' phenomena that can be observed on all time frames, I am using two of them in my personal approach - so I will incorporate their discussion in the thread - or better leave you with possible ideas behind constructing an edge for yourself.

If you find a specific repeating pattern in the market, you can assume that it will happen with higher frequency in lower time frames. Although you would gain more opportunities by looking at the lower time frame, each opportunity yields a smaller return on average compared to looking at the same pattern, one or more time frames up in the scale. That is a point worth considering in terms of your possible style of trading.

Now, 2 patterns of market behaviour happen on a regular basis:

1) the price breaks to new high's (or low's)

2) the price reverses from new high's (or low's)


They happen regardless of time frame (with the obvious limitations explained above)

They are phenomena that can be exploited without the fear if found out by others, that they might cease to exist.

H. Rearden

================================================

Choose You Advice Carefully

"Since your mind is your most valuable asset and your most valuable lever, you need to be careful what you put in it. Sometimes it is even more difficult to get rid of thoughts and ideas that are already in your mind than it is to learn something new"
- Pg 119 WHY WE WANT YOU TO BE RICH


F - Follow
O - One
C - Course
U - Until
S - Successful


- Pg 110 WHY WE WANT YOU TO BE RICH

================================================

"You can think of this like some branches caught up and obstructing a stream. The same volume of water moving faster might not be enough to dislodge the branches, but if you steadily increase the volume of the water as well, it will eventually sweep away the obstructions."


================================================

5000$ account * 2% = RISK = $100

25$ = POSITION SIZE

RISK = STOP LOSS * POSITION SIZE

RISK / POSITION SIZE = STOP LOSS

100$ / 25$ = STOP LOSS = 4

10$ = POSITION SIZE

100$ / 10$ = STOP LOSS = 10

A lower position size gives the trade more room and time to mature. You must control your pips.

================================================

Be not concerned with the past or the future. Be in the moment. The moment is all that there is. You flow with the pips or they flow against you.

================================================

 
  #222 (permalink)
Trade with the flow
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piersh View Post
however, it would seem to me that any strategy that one can write down and stick to rigidly should be automatable. conversely, if trading is an art as you say and no such profitable strategy exists, how can one possibly stick to it and avoid emotion/gambling?

the main reason i like backtesting (even if it is useless), is that it's free and easy (i, like you, have many years of coding experience), and it's something to do to help me build up confidence to start trading manually.

I used an example I think in this thread. Me and several other traders took the same trade. One got +7. I got +2. One got -20 something.

You can automate things but not 100%. That's like saying you can create a computer that can think like a human. Put 3 girls next to each other and in 1 nanosecond I can tell you which one is the hottest. Can a computer do that? Put 3 bars together and I can tell you if it's bullish or bearish. Can a computer do that? There are 1000 combinations and you can't code them all.

I spent 1.5 years trying to backtest everything. I learned a lot but in the end I consider it a waste of time cause everything my backtesting showed is completely opposite of how I trade now. In backtesting you'll find that a larger stop does better. No stop does best. Why? Cause the computer isn't smart enough to know when to cut a loss. This is the edge that humans have. This is determining that your date is a loser and ending it ASAP so that you can go out on the next one.

To be honest the "automate everything and backtest it" path is probably a path you'll have to take for yourself so you can see what's at the end. I've been there and seen it (so has Big Mike) and I can tell you the end but it's something you'll need to see for yourself.

I think non-programmers make better traders. They're not tempted to go down this path, and they're not thinking black and white.

My advice: Pick one setup, if you don't want to use the rat setup in this thread then get the brooks book it's full of setups. Pick 1 setup. Backtest it manually (papertrade) over the past 4 weeks. Then try it real time on sim. Forget EVERYTHING else. I am reasonably sure if you do the work (it's hard work trust me) then you'll be successful. If you use the rat setup post your results here. If you use a brooks setup post your results to the brooks thread.

This is a simple recipe for success in trading. However 50% of the people here won't even try it. Of those that try 30% won't do it seriously (practice for weeks without any crutches (indicators)). Of the remaining 20%, 10% of those will do a half ass job and will probably change their mind and try another setup or add indicators to make up for their discomfort. The remaining 5% will be successful.

Which group will you be part of???

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  #223 (permalink)
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Two additional comments that came to me while working on my perfect trading logs:

1 - If one does manage to come up with an automated strategy:

a - if you use indicators it probably will stop working in the future and you won't know if it's drawdown or if it stopped. You can read more about that in this post:

https://futures.io/general-discussion/695-use-your-brain-mechanical-indicator-based-systems-dont-work.html?highlight=brain

b - if you don't use indicators - it's more likely to continue working in the future. However, it probably has a wider stop than necessary and would probably make more money traded manually.

as an example of b - I have a mecahnical stock strategy. I buy on open and exit on close. It's not efficient at all but it is profitable and I don't have to watch it. It does have bigger drawdowns than I like. I've studied it and if I were to trade it manually I'm confident I could make more money. If this was my only "system" then i'd do it manually. But as it is I prefer to accept the inefficiency sot that I'm free to trade other markets.

2 - If you notice in my charts I draw horizontal support & resistance lines. Someone asked me why I draw them and why I don't use the swing indicator which draws them automatically. I think this is a good example of what I wrote in a prior post. I do it manually because I do it better and because it keeps me in touch with the market, makes me more active instead of passive (indicators in general make you more passive and that's a bad thing). Also it leaves a trail of what I thought during the day cause I don't erase lines.

So that's a really simple example of something that could be automated but it's less efficient when automated. And S/R is pretty simple. Imagine something as complex as an exit.


Last edited by cunparis; September 19th, 2009 at 11:23 AM. Reason: Typo
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  #224 (permalink)
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It is possible to code an automated system that makes money. I have done it. Michal Kreslik has done it. Others have done it.

You have to take advantage of what the computer can do "better" than humans.

Using indicators, in an automated system, is pointless.

Small, quick profits are the key to success. You want to hit singles not home runs.

If you can take 3 - 5 pips, over and over and over again, that will make you rich.

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Pay close attention to question #2

Taking Charge of My Life: Choices, Changes and Me by Ed Harmon, Marge Jarmin, Larry Feign




This is a book that should be required reading from grades K - 12. If it were, then by the time students graduated from high school they would be mentally healthy adults without a trace of codependent dysfunctional behavior.

Please focus on QUESTION #2

In charge of your life?
1. Have you ever done something you didn't want to do, but had to do?
2. Is there anyone who has the power to make you angry or upset?
3. Have you ever done something you shouldn't have done?


Question #1
Have you ever done something that you didn't want to do, but had to do?
If you answered "YES!" to this question, you have a lot of company. We have asked many thousand of people this question and more than 90 out of 100 answer "YES!"
Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).
Common things teens say
I have to but I don't want to do:

"homework"
"chores"
"watch my little brother/sister"
"go to school today"
"be home early"
- Usual Respones -
Frustration
Resentment
Anger
Depression
FALSE HIDDEN MESSAGE TO YOURSELF:
"I am not my own authority and
I am not in charge of my own life."
This powerful and subtle false concept can be very deceptive and destructive. Thinking you are not your own authoritiy can cause lots of problems for people.
HOWEVER - TAKE CHARGE:

You choose. You are responsible for what you do and you get the rewards or pay the price for your choice.
THE REALITY:
You are your own authority! You never, in your entire life, have done anything that you didn't want to do, and you never have to...
As long as you are willing to pay the price for NOT doing it.

Question #2
Is there anyone who has the power to make you angry or upset?
If you answered "YES!" to this question, you are in the majority. Yes is the answer practically everyone gives to this question.
Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).
Common things teens say about others
that get them angry and upset:

"They bossed me around"
"They ripped me off"
"They put me down"
"They talk behind my back"
"They ignored me"
- Usual Respones -
Frustration
Resentment
Anger
Depression
FALSE HIDDEN MESSAGE TO YOURSELF:
"Others have the power to make me
angry or upset."
Most people agree that getting angry or upset is normal when they experience rude and thoughtless behavior. We have been taught most of our lives that others can make us angry by taking advantage of us or mistreating us.
HOWEVER - TAKE CHARGE:

The truth: It is an inside job!
Other people can't make us angry or upset. We do this ourselves by having a need to control people and situations that are out of our control.

THE REALITY:
The choice to feel good or bad,
emotionally, is always yours.

Question #3
Have you ever done something that you shouldn't have done?
If you answered "YES!" to this question, you are with the majority again. Almost everyone answers this question with a "Yes".
Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).
Common things teens say they should or shouldn't have done:
"I should have studied for the test."
"I should't have blown it."
"I shouldn't have said that."
"I should have been more careful."
"I should have tried harder."
- Usual Respones -
Guilt
Regret
Embarrassment
Shame
Depressed
Anger
FALSE HIDDEN MESSAGE TO YOURSELF:
"There's something wrong with me because I didn't do more,
better, and faster.
We were conditioned to feel "less than" every time we made a mistake or did something that our parents, teachers and others didn't like.
HOWEVER - TAKE CHARGE:

Should doesn't apply to the past. It only applies as advice for the future.
The REALITY:
You have always done the best you could have done with the awareness, motivation and resources that you had at the time.

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  #226 (permalink)
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If you wonder about how the previous posts relates to trading then you need to read it over. IT IS ABOUT YOU AND YOUR MIND. YOUR TRADING IS A REFLECTION OF YOU AND HOW YOU DEAL WITH SOMETHING THAT IS OUTSIDE OF YOUR CONTROL.

Remember the following?

ALL YOU NEED TO KNOW ABOUT TRADING
  • Price either goes up or down.
  • No one knows what will happen next.
  • Keep losses small and let winners run.
  • POSITION SIZE = RISK / STOP LOSS
  • The reason you entered has no bearing on the outcome of your trade.
  • You can control the size of your loss (skill) but you can't control the size of your win (luck).
  • You need to know when to pick up your chips and cash them in.
Expectancy = (Probability of Win * Average Win) - (Probability of Loss * Average Loss)

You can not control the probabilities of wining or losing.

You can not control your average win size.

The only part of the equation of the equation that you can control is your average loss size.

Let's change this:

In charge of your life?
1. Have you ever done something you didn't want to do, but had to do?
2. Is there anyone who has the power to make you angry or upset?
3. Have you ever done something you shouldn't have done?

To this:

In charge of your TRADING?
1. Have you ever done something you didn't want to do, but had to do?
2. Is there anyone who has the power to make you angry or upset?
3. Have you ever done something you shouldn't have done?

OK, let's take each question one by one:

1. Have you ever done something you didn't want to do, but had to do?

Ok, be honest. You had to stop out, right? I know I have.

2. Is there any trade that has the power to make you angry or upset?

Ok, be honest. You get mad when you lose, don't you?

3. Have you ever done something you shouldn't have done?

OK, you have entered a trade when you shouldn't have, haven't you?

If you control yourself, then you control your trading.


This also applies when you are reading a post by someone and you blame them for p***ing you off, making your mad, or upsetting you. TAKE CHARGE OF YOUR LIFE.




Last edited by TheRumpledOne; September 19th, 2009 at 04:44 PM.
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  #227 (permalink)
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Working on the RAT REVERSE trade.

RED - GREEN - GREEN

GREEN - RED - RED

 
  #228 (permalink)
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"making a mountain out of a molehill"

"Making a mountain out of a molehill"

It looks good...

It sounds good...

But what use it it?

 
  #229 (permalink)
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"Unless you experience the unpleasant symptoms of being wrong, your brain will never revise its models. Before your neurons can succeed, they must repeatedly fail. There are no shortcuts for this painstaking process." (Page 54) HOW WE DECIDE

Fascinating thread TRO . I have read through to # 35 so far and am working on the rest . Keep it up , I appreciate your sharing and straightforwardness even if it involves untangling your statements ( my handicap , not yours ).

 
  #230 (permalink)
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Eric j View Post
"Unless you experience the unpleasant symptoms of being wrong, your brain will never revise its models. Before your neurons can succeed, they must repeatedly fail. There are no shortcuts for this painstaking process." (Page 54) HOW WE DECIDE

Fascinating thread TRO . I have read through to # 35 so far and am working on the rest . Keep it up , I appreciate your sharing and straightforwardness even if it involves untangling your statements ( my handicap , not yours ).

I am happy to hear that I have captured your attention. Please tell your trading buddies about this thread.

Let me know if I can help with the "untangling". I do my best to be succinct, on topic, to the point and downright blunt. I am not known to be a diplomat. This is NOT the place to be if you are looking to be coddled, pampered and have your hand held every step of the way. On the other hand, if you are looking to make money, you're in the right place.

Every trader should take lessons from PAI MEI then I will seem like a pussycat in comparison...LOL!!

WATCH BEFORE TRADING: BE THE LEAF


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