Semi-random musings on industry jargon, etc

Have you noticed that seemingly well defined descriptive words we use can take on very different meaning in context of conversation? The use of a particular word, phrase, or term reflects our understanding of that expression. It may be useful to you as you progress to jot down your understanding of a concept or your perception of the trading related topics you value. It could be incorporated in your journal or posted on your daily blog so we can all read and poke fun � I mean follow your progress. (Yeah, the progress thing is what I meant.) It may be a useful tool.

You may find that journaling helps anchor your thinking, aids your focus, and allows you to build upon your base of understanding. You may think I�m full of crap. Feel free to add your observations for the benefit of all. (Except the observation that I’m full of it…)

I propose some guidelines for this thread:

The idea is to help yourself and others by committing your thoughts to paper and exploring topics and terms related to trading (not chap stick). Even if you never post your journal, make one on your own. Let others know if the technique is of value to you.

Please feel free to add any topic or term that you found useful or found confusing and post your rational for why you found it so. Then follow through as your understanding changes.

Each time you post a joke, you must also post something of value that relates to the thread topic. (Ahem!)

OK. I�ll go first.

What do you mean when you say you have a system?

A Vegas casino pit boss once lamented not having received �a nickel for every gambler that has a system.� Don�t cry for that guy. The house rakes 70% of the slot take� and I hear there are lots of slots in Vegas. So, you ask, do you actually have a point or is this just going to be another chap stick discussion? Well, be patient while I put on some lip gloss and try to describe this�in well defined terms. (pipgod � stop typing and finish reading this! You too, hobbit! :smiley: )

In viewing and contributing to several financial forums covering various asset classes, so far, every single one has a section dedicated to mechanical system trading. There also seem to be many threads dedicated to discretionary traders using only Candles, S/R, Fibbos, etc. My observations of those threads suggest that there are at least two distinct groups of participants. There are those who devise mechanical methods of assessing a market instrument and their �followers�, who attempt to implement the method. (I refer to them as mechanical minions.) There are also discretionary traders who seek to follow the markets path with less rigid guidelines. There are also a few who �just have to be me�, but for simplicity, let�s work with just those first two groups.

I noticed something interesting while reading babypips forum posts. There seem to be traders who speak of systems and traders who speak of systematic trading. Both approaches have their merits, but it�s important to know what type of trader you�re talking to and what his concept is, so that you can discuss a topic or answer a question [U]using the same language[/U]. What do I mean? Well, when a question is posed, everybody just says, �the way I trade, blibbity-blabbity�, or �with my system, blah, blah, blah.� Often it is abundantly clear that the participants have diametrically opposed views of market interpretation and the resulting thread becomes meaningless. Comprenez-vous ce que veux dire je? (Was sagtest du?)

Personally, when I think of a �system�, I am thinking in terms of having a clear reason for entering a trade and a clear guideline for exiting the trade before taking any action. That�s all. In my mind, I want to find clearly identifiable patterns in prices that have in the past led to reasonably predictable results. I also want to know the most effective time frame to use since not all set ups are reliable in all time frames. I do not want to enter a trade simply because one moving average crossed another or the MACD turned this way or that. The difficulty with this approach is that it can be time consuming and it is vulnerable to human error in interpretation.

I have used mechanical and �black box� systems in the past. They are generally devised with a complete set of rules for entry and exit. When the signal generation process is mechanized (not automated), the trader can cover more ground and possibly more instruments. Also, if the rules are followed verbatim, the responsibility for P/L can rest squarely on the shoulders of � of � some guy in Oregon who sold me that piece of � of � fine software!!! :mad: (You can see where I�m going with this.) In defense of mechanical system traders, there is value in measuring markets objectively and in using a generated signal to prompt an “action/no action” decision. For me, I feel I must take responsibility for each decision no matter how the signal was discovered.

slaps face Wake up! We�re almost done.

�System� just seems to be a popular catch-all term for many different approaches. The point of this ridiculously long winded post is that in order to discuss a question or term in a helpful way you need to know how the inquirer views the topic. When you post a question, post your rationale behind the question. How did you arrive at this point? What led you to ask in the first place? If you�re answering someone (and trying to be helpful), frame your answer within the bounds of the inquirer�s understanding. Seems simple. Your comments are welcome.

Anyone heard of something called �leverage�? Just wondering�

Ok I won’t lie I have a limited understanding of the post above:o. But, I will do my best to make a solid post here. Ok so here is the question:

Why do things need to be so complicated?
Hold on for a bit I just posted a really long one but it didn’t work so I’ll be back sometimeto re-do it when I edit this post.

I couldn’t edit the last post so I’ll do a new one!

Ok so I’m back. What do I think it takes to make a good method? Finding what works a little and working on that to make it work better. It seems that it is taken with the wrong approach tho. Instead of making it simplier it becomes more complicated. More indicators are added, more optimization, when really that only makes it work more, not better. When making it work better you want more profit and less risk. So automatically it is thought that you need to win more. This is not the case at all what if you won 10% of the time but made 30X what you lost. Now this may not be possible because I think that there is some maxiumum ratio of % vs. profit. But I think that it may be useless to try and find it since the market is “random sequential”. What does this mean well with much thought I realized that the market is randomly in sequence for instance: patterns occur randomly but in a sequence - contradictory but truthful. Also with trends retracements seem to occur the same way. Now it seems I’ve already gone on a complicated tangent! Anyways just an example, but it seems the simple methods tend to do better then the complicated ones. Had u just held onto a specific currency pair you would have made a bundle on it by going with the trend. Now of course it’s not that easy because emotions are at play, but you can see my point. Remember that “easy is not simple”(I don’t know who said that and I probably buthered the thing too). Breaking things down takes time but time seems to take patience and patience is not what many want to have. By taking various steps (simple ones) you can make it to your goal, whether it be 3 or 30 - notice I didn’t say 1,2. Even three is probably too small. Patience is more then waiting for a trade, it’s waiting to move on to something new. “Remember, practice makes…perfection(crowd). No it only makes improvment, perfection doesn’t exist it should be taken out of the dictionary” ~ Les Brown. Through practice and patience you will improve, this coupled with simple steps will make you unstoppable - I think that is a quote? anyways do I even have a point I’m not sure cuz this rant has taken me on another tangent (thanks alot toptick u make me do this every time!:smiley: ). What the point seems to be is that simple seems best, not that complicated won’t work, but rather it may be a more rigid road to the same place. Ok have a good one and feel free to comment too. Take it easy, and best eh!


Nice thread.

I promise, no jokes. :stuck_out_tongue:


Good post.

I understood your point(s) completely and share the view. :cool: