Quote:
Originally posted by autofx
TheSundanceKid,
Trading is hard because of emotion. Trading is not intellectually
hard.
Finding or constructing a strategy that'll give you 50% winners
is not hard at all. I'm not sure why you think it's hard.
But you're right if your point is that executing the system is the
hard part. It is. Most traders don't understand how much their
emotions impact their trading decisions and actions. It's this
that really trips them up.
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I agree that trading is very "emotionally hard" - as much or maybe even more so than it is intellectually - but I definitely would not say that trading is not intellectually hard at all, or even close to being easy.
If was so easy to develop a system that gives you a 50% win rate (with a risk:reward ratio better than 1:1), then why not just automate it and remove the emotion factor completely?
Quote:
Originally posted by autofx
On each individual trade, you can never know the answers to
most of the above questions. How much you should risk is an
exception.
I don't think you mean to imply you can put on a trade and know
how much it will go in your favor.
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You're correct in assuming that I don't mean on the individual trade, but overall, yes. You should alteast have some idea/theory on how your system's trades will perform on average, that way you can plan your risk/reward, position sizing, exit/profit taking, money management, etc, accordingly.
Quote:
Originally posted by autofx
One's lack of millions isn't related to whether there are simple
systems with 50% win rates. Such systems abound. What's
rare is people who can consistently execute the systems, day
after day, week after week, etc.
If you have the ability to execute such a system with iron
discipline, and live long enough, trading that way all the while,
the money will come.
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The statement "...why aren't we all millionaires..." was purely for effect/illustration purposes, nothing further. Again, I was just trying to make the point that I don't believe that such systems can be developed (as well as executed) very easily as a lot of people (including yourself) seem to believe.
It's not like
every trader has in their possession, a consistent winning/successful system, but that most can't follow it due to emotional/discipline problems. In my opinion, that is not the case.
Quote:
Originally posted by autofx
You don't know! Heck, a huge comet could strike the earth in
three years and it's all over. You could have a stroke and not
be able to trade any more.
If you need such assurances, trading isn't for you!
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LOL, freak accidents can happen, and it certainly doesn't make sense to plan on them!
The point I was trying to make there was that people often
assume that their system is profitable because they have backtested and/or forward tested/demo traded it. Then, if it fails when they trade it, they might attribute the failure to an inability to trade the system instead of also
considering the possibility that it could be the system itself which is the cause of the failure (of course it could be both
). Now usually it's more common the other way around, which is why you have people using different systems/methodologies every other trade, not realizing that their exection/management is the problem - but I just wanted to point out the uncertainty in this area. Is it's the system's fault? Or your fault? How can we know for sure? (Obviously I'm not talking about making blatant execution/management mistakes here, where it's very clear you're to blame because you deviated from your system/methodology due to lack of discipline, emotional problems, etc.)
Also, isn't the
way you trade the system based on/part of the system itself? These are great though provoking questions...
Quote:
Originally posted by autofx
However, IF you practice rules and tactics that mathematically
keep the odds in your favor, and IF a market keeps behaving
the way markets have tended to behave for centuries, and IF
you can render mostly mistake-free execution for a long stretch
of time, you WILL make money.
And if you don't, it's very likley not because you selected a bad
strategy, but far more likely because you never learned to keep
your emotions from controlling your trading actions.
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I agree with you that if you have an edge and can consistently exploit it, you will make money in the long run.
However, I don't think that if you fail to make money that it's unlikely your system is to blame, but rather only that you were unable to keep your emotions from controlling your trading decisions.
I don't think we should make "lack of emotional control" the sole possible scapegoat here. If it's clear this is the case, that's one thing - but we should also look to other aspects of the system and ourselves as well.
Good Trading,
Sundance
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