Do you earn 300 pips in 1 month?

[comenow]

Hi Sundance,

Okay let me get a bit serious. All that childish stuff is a bit tiresom, I agree. I used to do it with MickMason before he disappeaed. I have to admit that you are gentle man.

The thing about playing chess while you trade is that you will lose a lot because of lack of concentration, but it is only a game so what the hell.

I genuinly believe that trading is intellectually easy. I used to be a lawyer before I became a trader full time and the intellectual challenge between the two is not remotely comparable. Trading currencies is easy because of the trends that happen a lot. The job of a trader is to get on those trends. You asked if someone can let you know of a system that works they can pick up from the net. The very effective 1-2-3 trend reversal pattern can be printed from Joe Ross's website. That system is amzingly good and foolproof. Where is the intellectual challenge in understanding this strategy? There are less effective systems like fibs that you can pick up on the net. An EMA cross over (5/10;10/30) on 30 minute charts are pretty good when the markets are trending, etc.

I think anyone with average intelligence can understand, adapt and follow these systems. The trick is to stick to the strategy, never jump the gun, don't get out of trades because of an adverse movement before SL is hit, cut losses, let profits run.

My feeling is that people do not really grasp that trading is a probability game. The trouble comes from failing to see that the outcome of any individual trade is purely a matter of chance, whereas the odds are in your favour over a large enough number of trades if you have a system that works, let us say, 52% of the time. It is hard to see this but a system that has a 52% chance of success has a 100% chance of success in the long run. In other words, with a 52% chance of winning, you can be certain that you will win in the long run.The emotional probelms in trading come from the failure to grasp this fact.

Have I just proved that trading is intellectually hard? No, because if you can control yourself so that you don't fall in the pitfalls I mentioned before, you then understand what I am saying without consciously thinking about it. Trading success is therefore a matter of having a simple system that works and the personal traits neccessary to follow the system.

Have a good weekend

[xenophon]

Originally posted by comenow


I used to be a lawyer before I became a trader

Yes of course you did, it is so obvious from the intellectual content of your posts! By the way we call them solicitors here in the UK, LOL

TheSundanceKid thank you for your posts, they are both informative and helpful, I just wish those who don't know what they are talking about would keep quiet and learn something instead of picking childish arguments with those who do.

Regards

xenophon

[JanaSergeevna]

Originally posted by TheSundanceKid she's a little too old for me...and probably way out of my league. Wasn't she like a beauty queen back in the day though?

I didn't know that - just knew that she had a lot more shoes than I do.

Originally posted by TheSundanceKid If you don't attribute discovering/developing a profitable system to intelligence, then to what do you attribute it to? Emotions? That just doesn't make sense to me.

No, not to emotion at all. That's just education. Many people (regardless of their "intelligence") trade systems with real money without understanding the basic fundamentals of statistics. They don't know how many trades they need to monitor to be able to prove statistically that the results aren't random but are actually directly attributable to the system. Barely relates to intelligence at all. This is simply an application of something that's taught in schools. It's also widely available in books (e.g. by Mason Malmuth, Van K. Tharp, Tushar S. Chande among others). But how many traders are willing to make the effort to read something and test their system appropriately before trading it? Now you can call that an "emotional problem" if you want, but I look at it simply as "deficient education".

Originally posted by TheSundanceKid I don't think that intellect should be discounted as much as I feel it is by many people, all the time.

To the extent that there's some correlation between intelligence and education, I can't really argue with you about that. All I'm saying is that you don't need to be Einstein to make money out of the Forex markets. You just need a system that works and the ability and _willingness_ to do the work necessary to prove that it works.

Originally posted by TheSundanceKid I may have a largely mechanical strategy - which relies very little, if at all, on emotions. On the other hand, you may use a largely discretionary strategy, in which your ability to control your emotions is a big factor.

Ability to control emotions doesn't really come into either of the two ways I trade. (One of them is second-hand, anyway, following a signal service, and I can't take any credit for that at all apart from what was involved in finding and verifying it.)

Originally posted by TheSundanceKid Well for example, let's say you had a profitable system, but you could not follow the rules properly because of your emotions.

In my opinion, lack of education usually underlies this. It's because people don't really understand the difference between following the rules and not following the rules.

Originally posted by TheSundanceKid You would close trades early because of fear, take bigger risks then you're supposed to because of greed, and not cut your losses early due to a lack of discipline. That's a good example of where a bad trader could ruin a good system.

Yes, can't argue there. Not sure to what extent it's "emotions" or "psychology", though. But I do see what you mean.

Originally posted by TheSundanceKid I also think it takes much more effort and self control to adhere to a system than it does not to. It's very easy to want to change things or deviate from the system - even though you know you should not.

I must say that that's not my experience. I would be terrified of changing the rules or doing something different from what I've proven works! (I'm not talking about following a signal service here, obviously, I refer to my own trading of 1-2-3-formations and Ross Hooks.) I have a very set way of trading these, and I've been making consistent profits with it every month for nearly 2 years now, and I know that if I try to change even the slightest detail of how I do it, my results will not be "vouched for". So what possible reason should I have to do that?

Originally posted by TheSundanceKid Now, on the other hand, you could have a trader who executes an unprofitable system perfectly and follows all the rules religiously, but who fails because the system is not profitable. No matter how good a trader they are, they will not be profitable using that system, because the flaw lies within the system, not themselves.

. Yes indeed ... but it only happens all the time!

Originally posted by TheSundanceKid If you have different figures/statistics, please feel free to share them and/or correct me.

No, I don't at all. If I had to guess, I'd say that out of every 100 people coming into the Forex markets intending to make a living from it, only 2 or 3 will manage it long-term, but that's only my guess and I have no real evidence or proof of it at all.

Originally posted by TheSundanceKid actually participating in long-winded semantic debates with pedantic European girls is one of my favorite hobbies - especially when the markets are slow.

Why didn't you say so in the first place?

[JanaSergeevna]

Originally posted by comenow anyone with an IQ of 90 can get a system that works off the net. If they apply that with rigid disciplne, they will win.

I beg to differ. I suspect that the overwhelming majority of things available in this way _don't_ actually work, so they won't win. The difficult part of it is finding out which ones do and don't work. And although admittedly a very small number of people might get lucky, IMHO that's not going to be so easy for soemone with an IQ of 90.

[JanaSergeevna]

Originally posted by comenow Trading currencies is easy because of the trends that happen a lot.

I know what you mean, but to the majority of losing traders it's not quite as clear, and they don't know how to profit from it.

Originally posted by comenow You asked if someone can let you know of a system that works they can pick up from the net. The very effective 1-2-3 trend reversal pattern can be printed from Joe Ross's website. That system is amzingly good and foolproof.

I completely agree. But it's also a system that's alien to the majority of the people who would benefit from it because they like "indicators" and they associate trading without indicators as being somehow "more difficult" and "needing more experience". And some of them are so firmly hooked on indicators that they refuse even to concede the possibility that a system without indicators might actually be a lot better. So the reality is perhaps that it's not as simple as you're making out. Again, IMHO this has nothing to do with "emotions" or "psychology" in a strict sense ... it's simply an educational problem.

God, don't I sound patronising and condescending for someone my age?!

Originally posted by comenow I think anyone with average intelligence can understand, adapt and follow these systems.

Agreed. They _can_, but the reality is that they don't.

Originally posted by comenow My feeling is that people do not really grasp that trading is a probability game. The trouble comes from failing to see that the outcome of any individual trade is purely a matter of chance, whereas the odds are in your favour over a large enough number of trades if you have a system that works, let us say, 52% of the time. It is hard to see this but a system that has a 52% chance of success has a 100% chance of success in the long run. In other words, with a 52% chance of winning, you can be certain that you will win in the long run.

Absolutely! Couldn't agree more. But IMHO the problems that arise from the failure to understand these things are not in any way "emotional".

[tim_nn]

Originally posted by JanaSergeevna
God, don't I sound patronising and condescending for someone my age?!

That depends on your age. (You've done a first degree and an MBA and a PhD and traded for a couple of years full-time since then, so you must be getting on for 30 now, perhaps?) A little, maybe, but your awareness of it, the fact that you're not using your native language and the fact that everything you've said is so clearly and strikingly correct all mitigate.

[waxwing]

I quite enjoyed reading the last few pages .. well some of it

I agree with those of you who are saying that we need to strike a balance between focus on the emotional and the intellectual component of trading a system.
Both elements must be important. But (was this already mentioned?) maybe the key point is the connection between the two. If you have a system defined entirely quantitatively (and therefore fully mechanizable and completely objective - any trader or any computer will trade it the same way) then the only thing between you and success is full confidence in that system. If you can demonstrate success over a very large historical timeframe of testing and, more importantly, understand the reasons for that success, then you can build that confidence. The more such confidence you have, the less you will be troubled emotionally by your P/L.
So I'm trying to say there's an inverse relationship - the more you understand, the less you panic.
And that's why I don't think it's just a matter of buying a system or downloading it off the 'net. If you have no idea what the system is really doing, then you'll always be fighting your emotions because you'll never have confidence that the market's character hasn't changed today and turned the system into a loser - in a totally opaque way.
A person who understands their own system will see it breaking down early, pull out and redesign - in an ideal world

[comenow]

Originally posted by xenophon


Yes of course you did, it is so obvious from the intellectual content of your posts! By the way we call them solicitors here in the UK, LOL

TheSundanceKid thank you for your posts, they are both informative and helpful, I just wish those who don't know what they are talking about would keep quiet and learn something instead of picking childish arguments with those who do.

Regards

xenophon

Mate, what is your problem? Your are right. I am lying, I didn't use to be a 'lawyer' (we also call them barristers). I am a charlatan who pretends to know stuff I don't know. I am so upset that you don't believe be. What am I gonna do?