Please help me understand this!

Beginner Questions
1

Hi everyone (long time: no post from me)!!!

This is (probably) not a question directed at ‘new traders’ (but of course: any and all input is welcome).

I find myself, after more than two and half years of ‘blood, sweat, money, and tears’, sitting here IN AMAZEMENT at what is happening right now with equities and commodities (and don’t think that these movements do not affect YOU, the forex trader, because they do). As many of you know: so far I’m ‘down’ ALL my assets and probably (over) $200 000 in cash (a fair portion of this NOT my own money). I have spent the past three or four months demo trading again (only because I’ve no capital left to trade with) BUT THE SCARY THING is the fact that had I INDEED been trading LIVE again: I’d have lost MORE money!!! Why??? Read on.

HOW IS IT POSSIBLE that after ALL the DOOM AND GLOOM: the Dow and the S&P and the NASDAQ (as a matter of fact: every major stock index in the entire world) has rocketed to these levels in only a few days??? I don’t get it!!! Only a few months ago: ‘the end of the financial world as we knew it’ was (supposedly) GONE!!! OVER!!! FINISHED!!! And NOW??? Where to NOW??? Dow at 20 000??? This IN SPITE of the fact that people are STILL losing their jobs in RECORD numbers!!! This IN SPITE of the fact that those people that HAVE ALREADY lost their jobs are about to run out of benefits!!! Yet: retail sales are up, car sales are up, manufacturing output is up, construction is up, inventories are down, new home sales are up. This IN SPITE of the fact that credit card defaults are set to climb, mortgage defaults are expected to climb, defaults in leases of commercial property are expected to climb. And yet: the Dow continues to go up and up as if the events of the past two years or so simply never took place!!!

What does it take to understand this business??? What does it take to make a consistent living in this business???

In case you’re wondering WHY I would have lost MORE money: in light of the above my ‘logic’ tells me that shorting these indices would have been the ‘prudent’ thing to do. Obviously not so!!!

Then we come to ‘trading systems’. Again (as most of you will know): I’ve spent years studying and reading various books on the subject (a good portion of which have been dedicated to Wilder’s methods). Well: I SINCERELY hope that Wilder HIMSELF is not trading any of his own systems anymore (and that INCLUDES his Delta Phenomenon). Larry Williams and Alexander Elder and Bill Williams (the list goes on): I KNOW for SURE that ALL of their trading systems would have made a FORTUNE during this current rally but WHAT WHEN IT ENDS (it will EVENTUALLY)??? THEN what??? EMA trading systems: FALL FLAT when there is no trend. SWING SYSTEMS: FALL FLAT when there is no trend. PIVOT POINTS: WELL I’d be REAL KEEN to hear from somebody who has made money using pivot points since the start of this current rally. The belief: price will (‘on most days’) trade between S1 and R1. REALLY!!! ‘Always fade a move to R2 or S2’??? REALLY??? Had you faded moves to R2 or S2 for the past two weeks: you’d have lost money DAILY (well: JUST ABOUT but I think you’ll understand what I’m trying to say). MA Crossovers: by the time they’ve reversed you’ve MOST times given back all of your profit AND THEN SOME. Bollinger Bands: sell at the upper band and buy at the lower band. REALLY??? I hope nobody tried THAT in the past two weeks or so!!! Candlesticks: ‘THE ONLY WAY TO TRADE’. REALLY??? I’ve EVEN resorted to identifying certain formations and looked to see what would have happened had I acted on them. MORE WRONG THAN RIGHT. ALWAYS. Support and resistance: belive me that BY NOW I can identify support and resistance. MEANINGLESS of late. MONEY MANAGMENT: important but useless without a decent trading system (never think that good and sound money management will ‘save’ you i.e. without a trading system that works CONSISTENTLY it will just take you a little while longer to wipe out your account is all).

(OK: so I was getting carried away above).

But the point I’m trying to make is this:

I KNOW, as an example, that AT SOME point equities will fall (they will correct). I have no doubt that most of the trading systems / indicators mentioned above will catch the move and make money. And THEN???

I’m fast starting to believe that the only people making CONSISTENT money in this business are the brokers (and I DO NOT mean by ‘taking the other side of your trade’ either i.e. pure comissions). EVERY SECOND DAY I get an email from some ‘new broker on the block’. EVERY WEEK there is at LEAST ONE ‘new broker on the block’ advertising on Bloomberg or CNBC. EVERY WEEK there is news about some or the other trader who has taken money from investors and lost it (and I’m not talking about the ‘pure Ponzi schemes’ here either). As far as I can tell (and, again, as most of you know, I KNOW what I’m talking about here from first hand and bitter experience): these traders have made money for a few months and, with every good intention, have taken money from others in an effort to bolster their gains even further and, obviously, pay a fee to the investors for their trouble, and then proceeded to lose not only their OWN money but their clients money as well. Again: this done with every good intention in the world.

The other day: I hear about a thing called ‘flash trades’ (Google the phrase). We’re not ‘trading’ anymore!!! ‘He who has the most powerful computer system wins’!!!

In addition: why are there SO MANY websites with SO MANY forums with SO MANY different trading systems and ‘attempts’??? SURELY by NOW WE ALL (‘the collective’) would have found SOMETHING that works CONSISTENTLY over a RANGE of instruments over a RANGE of time frames.

I never ever thought I’d be the one to agree with the notion that people write books on trading because they cannot make money BY trading. Well (and I dont’ give a ‘sh1t’ WHAT these authors say anymore UNLESS ONE of them is willing to PROVE to me that they ACTUALLY ARE making a VERY good living BY trading i.e. they all have a reason and an excuse as to WHY they write these books): I’m starting to wonder about this myself. I’m thinking: their ‘living’ comes from the sale of books and the giving of seminars. Any money made BY trading is a ‘bonus’ and NOT the other way around.

As I’m typing this: I’m actually not sure what the question was anymore!!!

Yes: I’m frustrated AS HELL at the moment!!! But I’m JUST NOT SEEING ‘the big picture’ here anymore (or am I)!!!

I guess I’m wanting someone, somewhere, to tell me I’m wrong. I guess I WANT to know that my ‘logic’ is ‘out of whack’ with what it should be (and to give reasons of course).

And again: I find myself saying to myself ‘well maybe you’ve just not tried hard enough’. ‘Maybe you’ve just not put in enough time’. HOW MUCH MORE!!! When is ‘the limit’??? When you’re LITERALLY ‘out on the street’???

Sorry for my negativity (but please belive me when I say that I did not start trading last week and then lose $500 and now I’m bitter)!!!

Someone, ANYONE, help me understand this!!!

Regards,

Dale.

2

Dale, from what you have written, I can see clearly that you are a very humble person.
This trait is your first powerful weapon in your arsenal of trading tools!! :slight_smile:

Also, I am amazed at how you can type so much and remain coherant.
You have a real editorial and journalist talent there!!
On the other hand, I, personally, am a man of few words.

What I see from a first reading of your post, is that you can see there is no holy grail.

Yes: I’m frustrated AS HELL at the moment!!! But I’m JUST NOT SEEING ‘the big picture’ here anymore (or am I)!!!

I think you are probably seeing the big picture clearer than most of us.

It appears that you have tried everything.

I never ever thought I’d be the one to agree with the notion that people write books on trading because they cannot make money BY trading.

My brother, who is a millionare, always said this was true.

But there is one thing I think you have not done (correct me if I am wrong) - posted charts of your trading - so that we can look on and give useful input.

This may help us to help you diagnose any characteristic flaws (if any) in your trading approach.

3

That was perfect Tymen for a response i am a newbie not to equities but to currency.Seeing your trading from a outside source or interacting in a small trading group not mentoring but getting a different perspective of trading can be valuable.Somebody said having two people discussing a plan is like having a third person in the room or something like that.:slight_smile:

4

Profits aren�t generated or maintained by adhering to logic or subscribing to a hatful of technical indicators.

The smart operators focus more on gauging & reacting to the heartbeat (pulse) of the market & constantly adapting to its rhythm, & less on forming opinions based around a bunch of lagging indictors.

Thankfully, & to a large degree, you�re (still) dealing with human emotion & human decision making when transacting these markets.
Most humans are creatures of habit are they not?
They feel comfortable when dealing with familiarity.
You think those old friends (habit & familiarity) get tossed aside when engaging with money?

You want to get in synch with money flows? Start focusing more on that element & a whole lot less on what the media & talking heads are trying hard to get you to focus on.

On a sidenote: You ever thought that maybe you�re just not cut out for this gig?

5

Hey Tymen,

Thanks for the response. It’s appreciated (you and I have ‘been around’ here for a good while now and I know that YOU have ‘lived’ through my MANY ‘ups’ and MANY MORE ‘downs’)!!! LOL!!!

You have a real editorial and journalist talent there!!

LOL!!! Maybe I (ME) TOO should write a book!!! Problem: I’d not be able to live with myself BELIEVING what I believe now!!! Either that: or the book would have more questions than answers (and nobody would buy it)!!! And there would be MANY examples in this book about what happens when there IS NO trend and you’re trying to use an EMA!!! LOL!!!

Don’t get me wrong here (anyone): I’m NOT ‘knocking’ ANY ‘systems’ or ‘methodologies’ that WE (all of us here on babypips) have developed or worked on. But this is EXACTLY my point: while I believe I’m RELATIVELY intelligent I have NO DOUBT that on these VERY forums there are people whose intelligence WAY surpasses my own and yet the forums are FILLED with ‘systems’ or ‘methodologies’ that work NOW but what about the REST of the chart???

Let me say this: THE ONLY ‘sure fire way’ I’ve seen to date is to ‘slap on’ a 50 day MOVING AVERAGE (not an EMA) and a 200 day MOVING AVERAGE (not an EMA) on the DAILY charts and buy or sell on the crossing. Problem: THIS IS NOT TRADING!!! THIS IS INVESTING!!! There is a VAST difference between the two. In other words: ‘get a job’ and ‘trade’ (invest???) for your future (in which case you may as well go to a stock broker because WHO KNOWS if your current brokers is going to be around in twenty years time)!!!

Believe me also when I say this: I WANT more than ANYTHING ELSE IN THE WORLD (and I truly mean this) for this business to work for ME (and everyone else).

I heard the other day that ‘true genius’ is NOT BORN and a ‘breakthrough’ (in ANYTHING) ‘comes’ after about 10 000 hours (of tiime spent). Well: if that IS the case then I’ve only got about another 4 525 hours to go (and I’ll wager it’s a bit less than that actually)!!!

Anyway: point taken. I’ll put together some charts that I believe will show my ‘issues’.

And to be VERY honest: I HOPE I’M WRONG. I WANT to be wrong!!! For the FIRST TIME IN MY LIFE I WANT TO BE WRONG!!!

Regards,

Dale.

6

personally i think you need to start a fresh and forget everything you have done and tried before.
I can see you clearly spend enough time in front of the charts - and 2 word is all you need to focus on. TRENDING MOMENTUM.

i suggest just one thing: Check this thread please and then forget all the other stuff - dont listen to bloomberg, dont visit or right in threads - dont read fxstreet or anything on forex - just concentrate on trending momentum.
If you can just do that one thing over and over and over and over and over…then your book will have a happy ending.
My GBPJPY trade journal - Page 44 @ Forex Factory

7

Hey Andre,

Sorry: I only saw YOUR post after replying to Tymen.

On a sidenote: You ever thought that maybe you�re just not cut out for this gig?

Yep: of late (actually for a while longer) I’ve thought about this a lot. (Come to think about it: one of my CLIENTS actually said this to me a while back)!!! That being said: I have always believed (and for some INEXPLICABLE REASON STILL DO) that with ENOUGH time and effort and dedication and will that ANYTHING is possible. So far though: I’ll admit that this business is ‘stretching’ this belief to the ‘nth degree’!!!

Put it THIS way: I WANT TO MASTER THIS!!! It HAS to be possible. The question is THIS though: IS THIS THE WAY TO DO IT??? Let me explain THIS statement: RETAIL TRADERS (like all of us) are NOT ACTUALLY TRADING (think carefully about this statement). In other words: all WE are doing is anticipating (trying to ‘second guess’???) what TRADERS on THE FLOOR are doing (OK: I know we’re going ‘electronic’ but you’ll know what I mean). WE are not holding a security (for example) and finding a buyer or seller and making our profits out of a transaction or trade. ACTUALLY WE are seeing the END RESULT of these TRADES AFTER THE FACT. FLOOR TRADERS (institutional traders???) ‘shoot’ for just a few points on the S&P for example. Why??? Because they CAN. LARGE volumes and small movements. Given OUR (retail traders) spreads and commissions: NOT POSSIBLE. You’d IN EFFECT be trying to ‘scalp the scalper’ if that makes any sense at all. If I could buy a Dow contract at 9 001 and sell it at 9 004 (to the highest bidder) in five minutes I’d have no problem and we’d probably not be having this ‘conversation’. BUT: we have SPREADS!!! (mine is 6 points on the Dow). The fact of the matter is this: we DO NOT control price no matter WHAT volume we trade. So are we TRADING??? I don’t believe so. Oil is a good example. During each and every single day there are people actually BUYING AND SELLING BARRELS OF OIL. THEY are TRADING oil. WE are just seeing the FINAL OUTCOME of those trades. In other words: the RETAIL TRADER will ALWAYS be a ‘Johnny Come Lately’. NOW this comes BACK to what I’m ‘on about’ here. If a TREND is developing then we have NO problem as a RETAIL TRADER. But AS WE KNOW: trends are ‘few and far between’. Who is making money when price is trading in a range??? FLOOR TRADERS (and who, ironically, BECAUSE they are actually TRADING, are THE REASON that price stays bound in a trading range for extended periods of time).

FEEL FREE to correct me on any and all of this.

(By the way: you’re NOT from South Africa by any chance i.e. just ‘taking a wild guess’ based on your name is all).

Regards,

Dale.

8

Hi Dale,

HOW IS IT POSSIBLE that after ALL the DOOM AND GLOOM: the Dow and the S&P and the NASDAQ (as a matter of fact: every major stock index in the entire world) has rocketed to these levels in only a few days???

G20 leaders have endorsed a strategy that will transfer loan losses from banks and creditors to taxpayers (via government debt guarantees) and savers (via money creation and inflation). In their summit communique, they committed themselves [B]to a strategy of reflation and moderate inflation in the medium term.[/B] While this is plausible and consistent, it has profound implications for asset allocation. It favors borrowers and owners of equities, commodities and other real assets, at the expense of savers and those holding cash balances and government debt.

The [B]reflation trade[/B] [as I call it] [U][B]is a bet[/B][/U] that a rebound in the global economy will reflate the value of all assets, and drive up interest rates, as well as commodity prices.

[I]What does a reflation trade mean?[/I]

[B]It means that equities and commodities are bought on the come of the reflation – [U]not[/U] on the reality of economic fundamentals. [/B]

This is all based on the idea that the planet’s central banks, treasuries and governments will be able to successfully reflate the planet’s economy through massive injections of cheap money and financial guarantees.

And you are right in you’re assumption that we could see a DOW at 20000+.and I’m convinced we will.

Why?

Because the massive injections of cheap money and financial guarantees will only continue to grow over time.

Rgds,

cas

9

No, I�m American.

Its not for me to correct your views or interpretations of what you preceive to be correct or not regards market behavior.

I�m going to stand by the comments in my post & leave it at that.
This business can be as simple or as complex as you choose to make it.

Not everything a trader actually requires is accessible through books or internet sites.
Unfortunately, most of the crap you don�t actually require makes up a large proportion of the content of books & internet sites! :wink:

The thread will quickly become engulfed in complicated fog, just like the majority of working templates out there, so I�ll wish you luck in your quest.

10

Hey trav72,

Thank you too!!! (I also only saw YOUR post after replying to Andre).

I shall take a look at your stuff. Thank you.

I think though: it’s more the ENTIRE CONCEPT I’m ‘on about’ here (I know: my message and my thoughts are probably quite ‘jumbled’ at the moment and I guess I’m looking for some type of clarity). I keep thinking that there is some ‘secret’ to this business that ‘for love nor money’ I’m JUST not being able to see (and again: I refer to the ‘fundamentals’ that I detailed in my first post here). I mean: does one have to take ALL REASON AND LOGIC and ‘turn it on its head’ and ONLY THEN will you have the ‘edge’ that is required.

I suppose that MAYBE (my thoughts are becoming a bit clearer) what I’m REALLY trying to say is that my faith in technical analysis is waning somewhat. Perhaps this is what you are (all) saying and perhaps this is what is missing FOR ME i.e. CAN TECHNICAL ANALYSIS ON ITS OWN be CONSISTENTLY profitable??? I have to say: since I started out I believed it could be (wanted it to be???) but maybe I’ve been wrong here. IN WHICH CASE this is an even BIGGER problem for the simple reason that EVEN MY BROKER (in a presentation the other day) said that understanding and mastering fundamental analysis takes a LONG time (and I’m very sure: WAY longer than two years and seven months)!!!

(Sorry: I HAVE to watch Bloomberg i.e. it AT LEAST makes me feel ‘part of the game’ BUT I’ll tell you THIS much that I promise you I’ve never made a trading decision based on ANYTHING I’ve heard or seen on Bloomberg Radio or Bloomberg TV i.e. I learned THAT lesson, fortuanately, a very long, and very expensive, time ago with Gold)!!! LOL!!! THAT BEING SAID (and this is what TOTALLY AMAZES me at present and POSSBILY the reason that all of this has ‘come out into the open’ right now): DO YOURSELF a favour and watch Bloomberg TV!!! OF LATE: the headlines that scroll across the bottom are in the ratio of 5:1 (guessing) of BAD news to GOOD news AND YET the S&P hit 1 000 yesterday!!! Can you understand WHY this is driving me INSANE??? I UNDERSTAND that earnings for the second quarter have ‘smashed’ expectations (in most cases) BUT SO WHAT??? They are STILL DISMAL. They’re just ‘better than expected’ (a phrase which I’ve come to hate with a PASSION over the past years I’ll tell you)!!!

I suppose it’s only fair to disclose THIS: I did my Bachelor Of Commerce Degree with a major in Accounting. BELIEVE IT OR NOT: I only JUST SCRAPED through ECONOMICS!!! LOL!!! It NEVER made ANY sense to me WHATSOEVER!!! NOW I KNOW WHY!!!

Regards,

Dale.

11

Hey cas,

Thanks for the post.

Now THAT is the TYPE of thing I’m talking about. YOU obviously UNDERSTAND this. My question if HOW and WHY??? That’s where I want to be. I’ll wager this though: THE MOMENT I buy a Dow contract YOU CAN FORGET about Dow at 20 000!!! You could then SAFELY bet on the Dow at 6 500!!! LOL!!!

I have to say THIS though: this ‘conversation’ is so far enlightening. Let me explain: I SAY that I never act (trade) on anything I’ve heard or read BUT IS THIS TRUE??? It’s just dawned on me: the ‘DOOM AND GLOOM’ that I was talking about. WHERE did I GET that from??? NOT THE CHARTS!!! In other words: WITHOUT KNOWING what happened last year and the year before would I be doubting this CURRENT rally or would I simply be accepting it for WHAT IT IS AND BE LONG instead of trying to short it!!! If I were locked up in a room and the ONLY Internet access I had was to my broker: would I care WHY the Dow was rallying??? Just a thought.

Regards,

Dale.

12

The smart operators focus more on gauging & reacting to the heartbeat (pulse) of the market & constantly adapting to its rhythm, & less on forming opinions based around a bunch of lagging indictors.

The smart operators don’t follow noise a.k.a. rhythm anymore. Smart operators are following Hedge Funds, Index Funds and the Primary Dealers a.k.a. investment banks like UBS, JP Morgan, Goldman Sachs ect.
It has all become a game between the hedgies and index funds on the one side and the Primary Dealers on the other side.

Google the term “Black Pools” and “Black Boxes”.

Here is a little hint…google the term “Baikal & JPMorgan” without quote. :smiley:

Or google the term “USD Swaps” without quote. :smiley:

13

I believe that many people have problems changing from a bearish to a bullish bias and visa versa.

A while ago I tried to short the S&P around 950 and 925 a couple of times, but due to strickt MM, not much harm was done. Normally downside moves are very fast, so when it doesn’t do what you expected, get out. There’s nothing wrong with trying to short an index and being wrong. But after a couple of times, maybe your market timing (bias) isn’t correct anymore.

Does it really matter why the markets are going up big time? To me it doesn’t, as long as you keep an eye on what’s going on.

To me money management is the key to success (together with good charting techniques). I’m afraid if you’re not convinced about that, you’re more a kind of a gambler, looking for the holy grail.

If there are things you should have remembered from Elder’s books, it’s trading (traders) psychology and MM.

14

hahahahaha
Whatever you say sweetheart :slight_smile:

15

As a retail trader trying to face up to the macroeconomic picture with a normative approach, you’re not fit for survival. Unfortunately, that describes a good number of very intelligent, eminently rational traders trying to get along in the current market. Their fundamental bias is outdated: CBs and fiscal policymakers have put program after program in place to combat exactly what was shouted from the rooftops (“Armageddon is upon us” or something like that) only a few months ago. So, put simply: the short rationale is being systematically flouted by the indomitable force of government stimulus. That has given rise to a massive “pain trade” that you’ve found yourself mixed up in.

But, with finite capital and death by a thousand cuts, those shorts are capitulating, putting through a “stop and reverse” (thought you’d like the Wilder reference) on their position. The covering there, “better than expected” earnings and apparent positive uptick (notice I said “apparent”) on a number of economic measures where improvement is vital to alleviating the recession is also bringing institutional cash and retail money market flows off the sidelines to take the long side. Not to say there won’t be a correction or that there won’t be a double-dip (W-shaped), but that isn’t where things are at now.

And that’s just it: there’s the long-term pessimism generated by drastic increase in the money supply, worry about hyper-inflation (or the deflationary spiral), the emphasis (rightly) placed on unemployment/jobless claims, etc. etc. Fine - that’s worthy of discussion and those things may be a real cause for concern. But, what kind of edge does that give you now? Because taking the short side on the basis of grand narrative dichotomies such as “inflation/deflation” or because there’s a divergence between perception of the state of the economy by the market crowd and the way the economy really is a serious, if rational mistake. [I]Unless you are building a position and are ready to dig in for months or years to see it through[/I].

That’s what it would take. There’s a mismatch of timeframe. Financial punditry probably has a lot to do with that, but as you know empty suits and skirts prattling incessantly on 24-hour news channels will have you spinning in circles. One can listen to them to hear the party line (no CNBC editor is going to allow anyone airtime who doesn’t agree with the prevailing thought of the day except to be refuted and/or mocked). But why bother? You can pick up the herd’s perspective just looking at a chart of $SPX. Some will disagree, but experience has taught me “over the years” aside from taking event risk into account, the more technical purity you have, the better.

So, do you think you’ve had a mismatch of timeframe and misapplication of perspective, where your fundamental bias (how you see the forest) has prompted you to take a side of the market that won’t allow you to trade productively day-to-day (the trees)? From my understanding and recall of your Wilder thread and previous posts, compared to sweeping economic generalities you trade at a much more granular level.

I write all of this because I’ve been out-of-sync before, trading a view rather than trading the chart. The more uncooperative the market becomes, the more I’ve dug in my heels relying indignantly on the assurance the view I espouse will eventually be correct. Certainly there are plenty of voices out there in the “alternative media” willing to support the contrarian market point-of-view, if you have ears to hear. But are you trading like them? And are they even trading? And is all of the outside noise really benefiting you? Shutting off the opinion and perspective of others always re-centers me.

Some food for thought.

16

Hey Me2995 (that feels ‘odd’ ‘saying’ that i.e. ‘hey ME’)!!! LOL!!!

To me money management is the key to success

I agree ONE THOUSAND (and then some percent) with that statement. It took me a LONG time to realise it (and I could have saved myself a LOT of pain had I understood and then IMPLEMENTED sound money management)!!! What I AM saying though is this: JUST BECAUSE you have good and sound money managment DOES NOT ensure that you’re not going to ‘wipe out’. ALL it means WITHOUT a methodology that works is that it will take you a lot longer!!! That was my point. There is NO question that without money management: you MAY AS WELL just GIVE UP NOW IF YOU HAVE ANY MONEY LEFT!!! LOL!!!

cas:

Again THANK YOU!!! THAT SAID: the mere MENTION of these investment firms has just ‘rekindled’ ANOTHER issue!!! THE RATINGS AGENCIES!!! Were these not THE VERY SAME INSTITUTIONS that CAUSED this debacle (or were, at VERY least, ONE of the causes)??? TODAY: they downgrade a stock from AAA to AAA- and the price plummets!!! Were these not THE SAME INSTITUTIONS who were rating mortgage backed securities as AAA rated investments just a few months ago???

I THINK I THINK TOO MUCH!!!

Regards,

Dale.

17

There’s more than one kind of “smart operator”, and so there’s more than one thing to follow. The big guy/little guy talk is a fascinating (true) tale, but more-or-less a distraction. I think those of us who’ve been around the block a bit can agree there are any number of ways to approaching taking money out of the market. Whatever works, works: “smart” means pragmatic.

18

Hey Andrewunknown,

Thank you very much for that MOST insightful post. SOMEHOW in that post you are making ME see the ‘error of my ways’. IN PARTICULAR:

I write all of this because I’ve been out-of-sync before, trading a view rather than trading the chart. The more uncooperative the market becomes, the more I’ve dug in my heels relying indignantly on the assurance the view I espouse will eventually be correct.

(And yes: I understood and appreciated the Wilder reference WHICH I MIGHT ADD I am CURRENTLY NOT SURE of the MERITS of STOPPING AND REVERSING WITH ANY SYSTEM LET ALONE WILDER’S but that’s material for ANOTHER ENTIRE thread)!!! LOL!!!

I’ll tell you what’s REALLY worrying. This thread (even in this very short space of time) has highlighted something to me: two years ago I lost a lost of money (and entire account of about $5 000) shorting Gold BECAUSE I’d heard (at least three) analysts saying that Gold was going to go up to $980 or so. This is an OLD story of mine. To cut it short: IN SPITE of what my WILDER indicators were SHOUTING at me on the chart: I started to long Gold (and I’m sure I don’t have to detail what happened next i.e. $650 an ounce)!!! THE WORRYING PART: ONLY NOW TODAY THIS MORNING do I realise that I would be doing EXACTLY THE SAME THING with the S&P RIGHT NOW!!! RIGHT NOW (I’ve been working on a very simple EMA system): that SAME SYSTEM has been telling me FOR TWO WEEKS to be LONG the indices but what have I been doing??? TRYING TO SHORT THEM!!! Trying to ‘call the top’. One would THINK that BY NOW I’d have learned my lesson. BUT: it’s this ‘bias’ that you started out with is it not!!! ALL I’VE SEEN is ‘GLOOM AND DOOM’ and my mindset has to ‘catch up with reality’. This has become a ‘strangely profound’ thread for me.

Regards.

Dale.

Regards,

Dale.

19

I think I’ve found the problem:

I’ve changed my Avatar!!! LOL!!!

‘There is a new bull on the block’!!!

On a more SERIOUS note though:

All this ‘soul searching’ and ‘self mutilation’ DOES NOT detract from the fact that I have coded MANY trading systems by ‘the best known of the best known’ authors on the subject and IN SPITE of their ‘cherry picked’ examples: NONE of them perform as well as they would have you believe IN THE LONG RUN. This is still a MAJOR cause of concern for me.

(No input required here i.e. just ‘thinking aloud’ is all. On the other hand: feel free to comment)!!!

Regards,

Dale.

20

Hi Dale,

Yes I have a strange name. LOL

Well I don’t really agree with that. MM is not only cut losses, but also stop trading when you’re in a loosing streak.

As you mentioned in a post after this one, indeed your bias had been wrong lately, but with sound MM, nothing would have caused serious damage. Specially with shorting the markets, thight stops are crusial.

Do you actually trade intraday on the indexes? I believe one should have a real good track record on the daily’s before even start thinking about going day trading.

Another thing I seem to read between the lines in your posts, is that you’re surprised the thing went against you and are having bad feelings about missing out. Never trade when fear or greed is in the mind. Take some time off and clear your head.

Me (euhm, Gert)