padme的炒股笔记，请勿空顶

padme

新手上路 发表于 2009-11-16 15:39

你是谁呀？ 这首歌很好听，但是没有歌词的，你发现没有？

padme

yoohoo          11-19-09 02:02 PM

5 Simple Keys to becoming a great trader

You can be a better trader than you are now. Everyone can. If you are very successful you have much more to learn. If you are totally confused here is a way to succeed. These are the Simple Keys I used to develop a method that allows me to win every day…

1. READ THE BEST BOOK EVER WRITTEN ON THE PRACTICE OF TECHNICAL ANALYSIS
· The best book you will ever read is your own screen-shot journal with brief notes of every market move that interests you.
· Be careful of the market you choose to trade. Some are extremely volatile while others are easier to begin with.
· Experiment with a few markets until you find one that appeals to you
· Study each reversal, pause, continuation, trend, chop, spike and impulse for the signal that moved the market
· Draw S&R and Trend Lines by hand on paper. You will learn much better than on a computer.
· Compare line, candle and bar charts
· Google Bar Signals and Candle Signals, mark them on your charts. These are your entry and exit signals.
· When you can’t see how to enter or exit or why the move took off, look at different styles like Time, Volume, Range & Tick Charts.
· Match your Bar, Candle and Line signals with S&R levels and Trend Lines
· Study your journal every day before and after the market and at weekends
· Continually add to your journal and remove older pages that a have less important observations
· Use lots of different time frames: it allows more practice on one instrument to build a better understanding of market dynamics

2. CONSTRUCT A DREAM OF HOW YOU WANT TO TRADE
· It’s a lonely walk, a personal journey of discovery about yourself as much as the market behaviour
· Everyone has advice to give, the successful and even the perpetual failures. Ignore all and follow your own path.
· It’s your dream, your perception, how your eye perceives structure, movement, speed, time, size and colour. Trust yourself.
· As you study your journal by investigating price movements, you will begin to favour a time frame and a style.
· Do not allow anyone to tell you what you must, or must not do. What is impossible for one is the best way for another.
· As your dream begins to take form learn all you can to answer every question you ask of yourself
· INO TV.com can be a good resource. Cheaper than books and you can have it play as you watch the charts
· Know this: everything works! But mastering a few of the hundreds of tools requires extreme dedication
· Ignore all who want to argue to convince you they know best. Those who know are at peace.
· Use at least two monitors and three different time frames, but in time increase both of these
· There are no impossibilities, but reaching great heights require great investments of time and effort

3. USE THE RULE BOOK
· Now take your observations and begin to write trading rules based on what you see
· Test your rules in paper trading over and over until you have a high success rate
· Investigate every failure and find rules to help you avoid its weakness
· Do not back-test indicators: the results are appalling. Indicators work best in multiple time frames.
· If you want to learn how indicators work, it will require much more effort than learning price action
· Make sure you have rules for placing and moving stops
· Use a simulator to test your rules
· When you have completed your Book of Rules and are making a profit on the simulator, it is time for serious trading.

4. MAKE YOUR DREAM A REALITY
· Now it’s time to add emotional control into the mix
· Open an account with a broker who offers low commissions
· Deposit enough to cover your contract cost at least three times over.
· Do not trade on margin – you have not proven you can trade without doing yourself damage.
· Download the ORDER ENTRY SCREEN and paper trade it until you are familiar with how it works.
· You might want to use a better front end that you can customise than using the one your broker provides
· When you are familiar with how to place an order and always with a stop, you are ready to trade.
· Do not trade without a stop
· Place the minimum amount of money possible on your trade
· At the start you will make mistakes until your brain becomes accustomed to all the activities going on
· If you are not making a profit stop and go back to point 1. Go through the whole process again.
· If you are making a profit, when you are not trading go back to point 1 and repeat the process again.

5. GET A LIFE
· Trading is all consuming. For a long time it demands everything… now get a life
· Refreshing your soul is important to keep a keen edge
· Give to others. Hoarding money after meeting your future needs is symptomatic of a sick soul
· Be happy. You are winning at one of the most challenging ways to earn a living
· To be happy practice virtue for the love of money is the root of all evil
· Sometime live with the poor as one of them, even if only for 2 weeks. It will shape your values and give you balance
· Give some poor people a leg up in life, but select them wisely like you would an investment

Simple – Yes! Easy – No!

padme

Pivot Point Calculator

http://www.mypivots.com/calculators/pivot-point-calculator.aspx
nova 发表于 2009-11-20 12:55

hutong123

谢谢，太需要学习了

padme

Whisky  10-16-09 11:53 AM

This method is a losing method, but very small loser on average on the long term.

It trades ES only.

It makes only 1 trade per day.

It trades everyday.

It outperforms 95% of all traders.

It can be improved.

METHOD:

Everyday at 16:00 EST I go out of the office, give a coin to a beggar in the street with the condition that he has to toss it hard in the ground, and then he can pick it up and keep it.

If the coin comes out heads, method goes LONG ES at 16:15, if the coin comes out tails, method goes short at 16:15.

The standard exit is on the next trading day close at 16:15 (unless coin comes up in the same direction, which allows for saving some commissions by matching the exit with the next entry).

The METHOD embraces a 1 full day risk, which is, in theory, open ended on the short side, and very large on the long side.

The intention of this thread is to improve logically from this, by definition, 50-50 minus commissions LOSING METHOD.

Yesterday coin toss: TAILS. Short at 1090.

Please discuss, flame, whatever you like. All crap is allowed in this thread. No holds barred. Fire away!.

http://www.elitetrader.com/vb/sh ... amp;threadid=179402

padme

Whisky        10-18-09 12:01 PM

I'll clean up the thread later in the week.

I was waiting to see if anybody else contributed something useful and perfectly objective before picking up the pace.

I'm going to suggest a self-evident improvement over the original trading coin-tosser method and comment briefly.

First Modification to coin tosser and Proof:

1-Lets have two accounts, bull account always net long L contracts and bear account always net short S contracts. L and S can change everyday within a range from 0 to MAX.

2-Whatever the coin-tosser outcome is the bull account goes long L contracts at 16:15 and the bear account goes short S contracts at 16:15. The exits remain on next day close at 16:15.

Obviously we don't need the coin tosser services anymore, so we offer him a bath, shave, clothes and we promote him to bucketeer and position manager. At the end of the day he will match sell orders from the bull account with buy orders from the sell account, and also match the new entry orders for both accounts for the next day trade. He will bucket all these orders into a simple buy or sell NET order. He will keep the accounting of both accounts separate and monitor the net position.

So far we have:

1-Diminished overall risk over the original method. (In the case of L=S we arrive to the trivial solution, which we know outperforms the original method, as well as 95% of traders in the world).

2-We diminished somehow the impact of commissions and slippage by bucketing buy and sell orders. (In the case of L=S we have cut the costs to zero for that day).

3-If we force the L=S trivial solution, then we do not need the coin tosser anymore, and neither an entry algo.

Basically, in the case of 3-we have one account entering in the direction of the coin-toss and one in the opposite direction, effectively canceling each other and saving commissions. One could argue that this is exactly the same as the trivial solution, and yes it is...unless we start modifying the EXITS.

So, as food for thought we can start thinking about :

a-How can we increase our edge by exiting long positions and short positions better than at 16:15 on next day close?. Can we use any new information that becomes available DURING the day?.

b-How can we create a more intelligent position manager for the bull and bear accounts?. (Notice that as corollary, the difference between L and S becomes a market direction bias indicator, which could go from MAX long to MAX short in position).

I believe some people may see this better if they think about two games being played simultaneously: The LONG game, and the SHORT game. Like Football perhaps?. Both games can be won everyday in hindsight. Can we bring some of that hindsight to foresight?. Only a relatively small improvement can yield enormous results if it can be compounded over time.

padme

Whisky       10-19-09 12:35 PM


In Jack's defense, he has contributed at least one self-evident truth: If one has a repeatable positive edge, one must strive to increase the frequency of trading as much as possible, as the exponential effect of compounding is the main contributor to ultimate gains. (The effect of compounding becomes overwhelmed by liquidity issues at some point, and one must devise longer timeframe/ slower positive edge methods if one wishes to persist in compounding, or simply extort money from weak governments).

源济

风清扬

padme

资金管理(转彼岸随缘）(2009-03-12 23:53:34)
标签：股票          分类：缠博转载


一、一个资金管理的游戏

让我们先做一个胜率60％的游戏，你有1000元，有100次下注的机会，赔率1：1，那么，你如何进行下注，才能获得最大的收益呢？在看下文时，建议你先思考一下这个问题。据调查，一般人倾向于在不利的情况下下更多的赌注，而在有利的情况下下更少的赌注。实际上，反应到市场中，人们常常在连续的几次下跌之后，总是会预期有一次上涨。或连续的几次上涨后，预期有一次下跌。但这只是赌徒的谬论，因为盈利的机会仍然只有60％。此时，资金管理就极为重要了。
假定你以100元开始这个游戏，结果连输三次（从几率上讲在是很容易遇到的）现在你的金额只剩下700元。那么，多数人会认为，第四次会赢，于是把赌注增加到300元（想挽回损失的300元），尽管连续四次输的几率不大，但是仍有出现的可能。那么，你只剩下400元，要在这个游戏中挽回损失就必须盈利 150％，机会不大。假设你把赌注放大到250元，那么，很可能你四次游戏后就破产了。不管那一种情况，在这个简单的游戏中不能实现盈利，在于没有资金管理的概念，所冒的风险太大了，没有在风险和机会之间取得平衡。

二、资金管理与止损

好象有一种说法：学会止损是散户的悲哀。也许对某些人适用，但就普遍意义上说，不会止损是散户为什么一直是散户的主要原因之一。人们总是喜欢快速地获利，而给亏损留一点余地，结果是截断利润，扩大亏损。长期下来，如何实现资金的增殖呢？让我们记住这几个数字：20％的亏损需要25％的盈利来达到盈亏平衡，相对来说容易一些，40％的亏损需要66.7％的盈利，要达到很难，而亏损50％以上就需要100％的盈利，几乎是不可能扭亏了。就我个人的经验来说，20％的损失应该是亏损的极限度。但是，这种止损也不是资金管理，因为这种止损并不会告诉你该抛出多少，也就无法通过仓位和品种的调整来控制风险。资金管理是交易系统的重要组成部分，本质上说是系统中决定你头寸大小的那部分。它可以确定系统交易中你可以获取多少利润、承担多少风险。我们不能以简单的通过设置这类货币管理的止损来取代最重要的部分。

三、资金管理与分析系统

再回到我们前面的游戏中，盈利的基础是胜率。也就是说，你的分析系统提示的买卖点从长期来讲，必须可以产生利润。关于分析系统，是另外一个体系。这里不做探讨。在具备有效分析系统的基础上，资金管理的作用就是通过合适的仓位调整和资金管理来使分析系统有效为自己服务。就上面的那个游戏来说，我们可以假设一个分析系统有60％的胜率，但仅此而已。如果使用不当，同样会出现巨大的亏损（如前述，由此我们也不难理解为什么在交易中使用同样的分析系统而投资绩效截然不同的现象了）。在本游戏中，假如我简单的每次下注10元，那么，最终我的资金将达到1200元。当然还有更优的下注方式。比较一下举例的几种下注方式，就很清楚看到不同的下注方式产生了完全不同的结果。可以说，理解了资金管理的重要性，也就开始理解交易的最大秘密之一。


四、几种资金管理的策略

资金管理的策略有无数种，专职赌徒长期以来宣称存在着两种基本的资金管理策略：等价鞅策略和反等价鞅策略。在一次亏损的交易中，等价鞅策略在资本减少时会增加赌本的大小；另一方面，反等价鞅则在一次盈利交易中或者当我们的资本增加时，增加赌本。如果在一连串的亏损中，你的风险不断增加，最后就会有一连串的非常大的亏损足够导致你破产，因为等价鞅策略是有巨大风险的。反等价鞅是在一连串的盈利后冒更大的风险。在投资领域，聪明的赌徒会在他们盈利的时候在一定限度内增加赌注。只要有多少种入市法则就有多少种资金管理策略。以下几种是反等价鞅的资金管理模式。
1.每固定金额一个单位。这个模型只允许你用一定数量的钱买一个头寸，它基本上对所有的投资都有均等对待并且总是允许你持有一个头寸。
2.等单元模型。这个模型对资产组合中的所有投资都根据它们的根本价值给予相同的权重。
3.风险百分比模式：其资金调整法则是建立在风险作为资本的一个百分比的基础上。给予所有的交易相同的风险水平并允许稳定的资产组合增长。这个模型适合于对长期走势跟踪者来说是最好的。
4.波动性的百分比模型：在风险和机会之间提供一个合理的平衡。这个模型适用于使用紧密止损的交易。

单一选股半仓操作避免资金管理中的散、乱

散户管理资金大多的情况可以用两个字来概述：散、乱。
先说“散”：大多的散户觉得不要把鸡蛋放在一个篮子里会比较安全，所以出现了一打开账户，里面股票一大堆。有时候他们都不知道什么时候买了该类的股票了。
再来说“乱”：乱指的是乱操作、乱补仓，最后他们看到的只不过是账户里的平均价格了，都不知道自己分别在什么价格各买了多少。
常见散户资金管理
第一类：某账户持有１０只股票：７只上涨（涨幅不一）、３只下跌（跌幅不一），能盈利多少？除非你七只持有的都是热点板块的股票，不然的话，后面三只下跌的股票只要一家仓位比较重，就可以把你的全面的盈利全吃光。所以这种资金运用，盈利的概率不高！
第二类：某账户持有１０只股票：１０个全下跌（跌幅不一），就算这账户没满仓，也够受的了，进行止损也好、补仓也好，都够这个人受的了。所以，盈利的概率也不高！
第三类：某账户持有１只股票：股票上涨和下跌的概率都是各占５０％。风险大收益也大。这种资金运用管理，盈利的概率高，亏损的概率也高。有时候一旦看错行情亏损会很严重，所以这也不是极佳的散户管理方式。那么，到底什么方式比较好呢？
怎样半仓操作
根据我个人观察，采取单一选股、半仓操作是最好的方式，但真正的半仓该怎么操作？
以下简单扼要地说一下：
补仓方式：股票下跌补了半仓，股价一拉高那就要出３／４的仓，这样的话才能加大资金力度，波段地补回亏损。具体为什么要出３／４，你算一下就知道了。但这个方法不能用于跳水大跌的庄股，庄股破位下跌你只能选择一种资金管理法：全线离场。
加仓方式：股票上涨已盈利，昨天持有了半仓，早盘看好加仓，盘中有盈利就套现出来，半仓观望。这样操作的话，加仓部分使你不会因为股价的上涨带来压力，避免了操作上的心理的不平衡（早知道我全买了多好啊？真后悔！或者早知道我不全仓买进，真后悔！）。而原来持有的部分就可以轻松地吃完上涨的利润。一旦加仓失败，又可以当天止损减少损失。
以上只不过是一些资金管理上的小技巧，你可以先模拟试看看。下次有机会我再详细地叙述该怎么半仓操作、减低风险、加大收益。

资金安排长久生存之道


股票投机活动就是资金之间的较量，所以资金管理极其重要，我们应高度重视。
我们炒股的钱是自己的血汗钱，但我却发觉现在的股民１０个中有９个半都是不爱惜他们的血汗钱的。在这里，我要将这个问题提高到在股市生死存亡这样的重要地位！
股民的最终失败就是不重视资金安排。为何这样说呢？是否是耸人听闻？我就将我近年关于资金管理重要性的实战心得写出来。
在平时，我看到股民们一看到他们认为是好的股票就马上下单，将全部资金打进去了，结果是好运时就赚了，不好运时一买就套了，当天就大跌，这样做会产生当天买就当天套住你全部的资金的后果了，搞到心情极不好的，第二天亏了就不肯砍了，一直就守下去，结果是越守亏得越多。
那么，我们做好资金管理有什么好处呢——是保证安全获利！

第一笔资金：３０％左右

我们又如何在实战中做好资金管理呢？
办法如下：在市场背景好的情况下，当发现好股启动时，我们可以打进第一次资金。打进资金的总量要视市场背景、板块联动情况、个股强势度而定，一般是３０％左右；在绝大多数情况下，不可超过４０％的资金量。
个中道理是：当市场背景、板块联动情况、个股强势度都很好时，此时是很安全的，打的资金量可以多些。但由于市场是变化的，不能人为控制的，突发事件随时会影响到市场。为了安全赚钱，就要小心了，这是长久生存之道。
同时，由于各人的分析能力及当时的个人状态不同，我们还有可能会买错股。当买错股时，当天是不能卖出的，我们只能眼看着资金缩水了，完全没办法。如果你一次就打满仓的话，会造成很大的亏损，那时心态就会搞坏了。
但当第一次资金只打２０％，如果买错了股，我们的损失就少了，心态也不会变坏。也许会有人批评说，如果买对了，不就错过了赚大钱的好机会了？这样讲也许有一定道理，但我要讲的是，我们炒股是投机，而不是赌徒赌大小，一开不是大就是小。投机就是投资于赚钱的机会，要找安全的钱赚，否则你不可能在这个市场永久生存下去，迟早会以亏损出局的。

第二笔：没赚钱的操作危险

打了第一次资金后，接着应该如何办呢？我的经验是：
１．在打进后，如果发觉错了，就止损。
２．在打进后，如果发觉错了，后期又来不及止损时，如果市场能提供到好时机，板块也联动时，可以再打部份资金进去，但是绝对不能加倍打进！这很重要，是血的教训！那么打多少好呢？只能打进第一笔资金量的一半以下！
道理是什么呢？因为我们还没赚钱，而没赚钱的操作是很危险的！资金量太大，万一再错时造成的亏损就更大了。希望能高度重视，那些叫你再加倍资金进入是错误的观念，实战中绝对不能这样做，这是亏钱的朋友的通病！
３．打进后还不能确定是对是错，就持仓观望，当然观望时间是不能过长的。
４．在确定了第一笔资金已保证赚钱后，就持股守着，等待个股第二次出现机会时，马上再打进第二笔资金（也可以找不同的时机分几笔打入）。但此时还是应该不要将余下的资金全打进了，最好留２０％的资金不打，这样就灵活些了。

如果第二笔做错了

看到这里，有经验的人就会问：第二笔资金打进去后，发觉个股下跌了，如何办好？
提出这个问题很好，证明你是有心人。
我们总会有做错的时候，只有“大师”才不会做错，因为他们是事后画图的，这样也就不会考虑到这个问题了。而我们在股市中实战的人常常会碰到这个问题的。
如何解决第二笔资金入错市的问题呢？
办法就是：发觉第二笔可能是入错市时，我们应该马上将第一笔资金止赢。
因为第一笔资金是保证赚钱的，所以是止赢（知道分笔打入资金的好处了吧）！在第二日，如果个股表现很不好，就砍了第二笔资金，这样算来我们至少能打了平手了，因为第一笔是赚的。如果发觉没变化就观望，如果发觉重新转好了，就等到第二笔资金赚钱后，再次把第一笔资金中的一半重新打进去，不能全打了，个中道理有心人自己思考。

资金管理在股市操作中的重要性
　

众所周知，有很多著名的世界级基金管理人以及世界级著名分析大师，如果不重视正确的资金管理、合理的控制资金风险，同样会被无情的市场所吞没。前几年世界著名的日本大和银行、英国巴林银行新加坡分行的倒闭，以及由世界金融天才索罗丝发起的"量子基金"全军覆没，都充分证明了这一点。

　那末我们就要在这里问一句为什麽？其实答案很简单，就是没有充分考虑资金管理的重要性，未能有效的控制资金风险。其结果就是哪怕只有一次失误，都有可能被市场所淘汰。

　我们在股市操作中也是如此，理论、理念以及技术固然重要，但有效地资金管理显得更为重要。合理、正确地资金管理将使你在股市交易中事半功倍。我本人在多年的股海生涯中，在成功和失败中总结了一些经验，在此欲和大家共享。

　资金使用的三份法则：（就是把手中的的资金分成三份使用）

　1、第一个1/3资金的使用

　在大势低迷时，也就是说熊市末期，以短线操作为主快进快出、高抛低吸。操作一些明显有庄超跌个股（袭击受伤庄股），这类股票往往在大势见底后演绎成牛股。

　买入股票后，大势明朗可中线持有，否则短线获利了结。

　2、第二个1/3资金的使用

　当第一份资金在获利状态下，且已无风险可言时第二份方可使用。此时oamv的趋势应明显向上，且刚刚脱离底部区域。此时应选择明显底部放量，明显主力通吃套牢盘个股和高控盘庄股操作，中线持有。

　这次所持有股票应以获利为主，与庄共舞。密切监控主力底部筹码，如庄家有明显减仓迹象可获利了结。切记不可恋战，也就是庄家走我也走，我与庄家手拉手。

　3、第三个1/3资金的使用

　只有当前两份资金在获利状态下，且大势明显向好时这份资金才可投入战斗。严格遵循：趋势理论、顺势而为、高抛低吸、短线操作、快进快出。

　这种操作从理论上讲其风险最大值为1/3，而利润最大值为无穷。我们都知道股市永远不变的是变化，

　我们操作股票的依据使用统计学原理，是用历史数据的成功概率来判断未来，那末即便历史上是100％成功的，当你操作时也难免会失败，虽然是1％的失误，但对你来讲却是100％的失败。这就是世界级金融大亨们失败的根本所在。而三份法则的科学性就在于将风险控制在最小，让利润充分增长。

　这种操作还可以让你永远使你有一个良好的心态，只要有扎实的理论基础、正确的操作理念、过硬的技术以及科学的资金管理。相信朋友们一定会成为市场中的大赢家。

padme

看两个吓人的，关于ES交易的：

Emini Maestro


Registered: Oct 2009
Posts: 79


        11-21-09 11:00 PM

You can lose your whole account in a margin call. Depends on how long your broker waits to liquidate your positions after your margin has been exceeded. Legally, they can do it as soon as a margin call is triggered. Practically, they can wait until your account is in the red. I know of three traders who are making monthly payments to brokers from four years ago. They failed to use stop losses, and their brokers chose to ride them as far into the red as they were above it when they entered the trade.

All of them now use stops in their sim accounts. They haven't got the funds for cash trading again, yet. Lesson learned.

Vista


Registered: Mar 2001
Posts: 264


        11-22-09 12:00 AM

    Quote from Wolfgang1756:

    I am thinking of trading Futures, more specifically the ES - Mini S&P 500 and I have a question.

    The Initial Margin for this contract is $5625. Now suppose I have $7000 in my account I buy one contract at 1100.



I know you don't want to hear this, but the truth is you don't have a large enough account size to swing trade ES overnight. You'd be subjecting yourself to far too much risk.

Two other ideas for trading the S&P with your account size:

1) Trade 60 sh. of SPY. That way in your scenario, you'd lose 25% of the account. That hurts, but you can recover.

2) Daytrade 1 contract only and never hold overnight. Always using stops.

rsikit


Registered: Jan 2008
Posts: 655


        11-22-09 12:25 AM

I have been there losing more then I had in my futures account, so becareful. I can tell you its not fun, neither is spending years trying to rebuild. Albeit I did not do it no mini's but I did it on naked short options. So please use stops and the other poster was right dont hold overnight if you only have that much. I know it might be tough but its not worth the hurt if it happens to be some kind of event! Day trade for now, build up confidence then grow the account and go for it, you will be all the better! Good luck sir

shewinta

胡同就是逼良为娼，布控定咋办

padme

yoohoo

        New Post 11-20-09 05:43 AM

STOPS ARGUMENT

Good topic to use as an example of solving a problem. This falls mostly under the 2nd Key to great trading i.e. Don't listen to anyone else. By that I don't mean not to consider what they say at all. I simply mean the limitations imposed on them by their system is not related to your trading unless you trade exactly the same way they do. I am trying to teach you how to develop a fluid methodology that copes with anything you throw at it rather than a rigid rigid mechanical system like Connor's that dies a death trying to cope with percentage whipsaws.

So let's dig a little deeper into Connors trading style. Here are some of the system rules that led to his conclusions...

* Use 2 period RSI for entry
* Use the VIX to help time trades
* Don't use stops
* Trade at the end of the month
* Don't buy below the 200 MA

Here is what one user of the Connor System found...

“I have tested the 2 period RSI strategy by picking almost 50 stocks at random and found out that the strategy fails more than 50% giving sell signal during consolidation periods or when the stock is moving higher. I also noticed that failures are greater with weekly than daily charts. In this case most often the stock keeps moving higher even though the weekly 2 period RSI is overbought.”

Someone else takes a different approach to analyzing the Stops problem...

“Another issue raised in the book is that stops hurt performance.
This is true because the market makers anticipate the location of the stops and can run through them. My experience has been that this situation can be avoided by placing stops in areas where most others traders are not likely to place them. I have done tests using almost 50 trades where stops are placed near support and in this case the authors are right in that the stops are run by the market makers creating further selling and when the stops are flushed the stock moves higher. On the other hand if stops are placed in areas not predictable by market makers, this situation does not occur.
Also note that on page 130 in the authors interview with the navy seal (MACH), the interviewee stresses on the necessity of using stops to help you reach your trading goals by avoiding destruction by a few bad trades. This seems contradictory to the authors earlier comments regarding stops.”

Here's my golden rule: find out how to break your trading limitations. First of all if a trader of mine was using this system to trade I'd be disappointed. Why?

1. Using mechanical percentage stops based on a system is not flowing with PA
2. Entering with a 2 period RSI is going to get you whipped
3. Only buying above the 200 MA means at times the energy of the climb above 200 is dissipated and the RSI will give a weak signal
4. Trade at the end of the month (I could add only buy when there is a full moon!)

Percentage stops are a way of saying I have not a clue where PA is telling me supply and demand is so give me am Excel spreadsheet and I will perform a back test to see what is the best distance away from entry to place my stop.

Guys, there are so many failings and limitations on this strategy, but if that's where you want to be then that's where you end up – in a box. My 5 Keys are to help you break out of the box.

Try trading a really volatile market without a stop and you will soon get your head handed to you or you allow wild draw downs that destroy emotions and limit increasing size. But if you don't know how to flow with PA then you will decide the problem is the stop and not with your trading.

We are told another 911 type even will happen but to expect even worse. There was nothing like today's level of algo trading on 911 and within a few seconds the liquidity will be gone. Try getting out of the market without a stop when there are no buyers, especially with size.

The issue is more than the question should you trade with or without a stop. The real issue is WHY the conclusion either way is reached. In this case Connors is correct. Trading with a stop doesn't work for him because of the design limitations of his system and using percentage stops.

If you understand PA, supply and demand, quality set ups, S&R and the tells of the market you will buy irrespective of where the 200MA is, disregard the time of the month, and qualify the RSI2 so you filter false signals.

padme

yoohoo

        New Post 11-22-09 01:09 PM

For those not suffering from tunnel vision let's dig a little deeper and see why those 5 keys work at making a better trader. To trade with any degree of success you need to have lots of confidence but at some point that confidence will be tested to the hilt. One of the things I get traders to question is, what is your confidence based on because over confidence can sure disappear like a vapor when a system hits a losing run. That's when the psychology books come out but really it all stems from flaws in technique. If you have confidence in someone else's stats from a book, well done! You're a real hero.

Let's say your stops keep getting blown so you conclude stops are for losers – who is the loser? Really you're saying you are. You're a loser at knowing where to place a stop. Digging deeper that means you are saying that you don't know where the quality reversal signal is so you prefer to place the trade and let it work relying on past stats to make a profit. That might work for years but all systems go through bad patches and that's why I have no interest in systems. Been there, done that and got the tee shirt.

The hedge funds are great examples of this. For years they were high fliers but then the markets changed and many of those that kept confidence with their system crashed and burned. So the stop issue raises more questions than are stops a good or bad. For me stops are a must but if you are a system player stops might kill you because you are looking to catch a ride on a trend and need swing room.

The question is not are stops for winners or losers because loses are losers with stops and without stops. Stops just prolong the losers death, that's all. The real question raised by the stop issue is, are high quality reversals with low probability of stopping out possible or are all “good” set-ups equal so just let the thing wiggle into a profit?

If you have the ability to distinguish high quality from poor quality signals then there is very little to lose with a tight stop as most often they don't get taken out. Quality signals, quality trades, quality results with confidence based on control and not stats. Then if the fur hits the fan and the security chiefs say that's a when and not if, the traders with the stops will be ready for the next trade with no regrets.

So my take is, stops are not the enemy. Here are some of my enemies...

*Not distinguishing quality from mediocre set-ups is my enemy
*Trusting past performance mechanical system stats is my enemy
*Believing I'm right when the trade is in the red is my enemy
*Not knowing where to place a stop so it seldom gets hit is my enemy
*Not being able to read the market is my enemy
*Mechanical entries are my enemy

Most traders won't put in the homework to discover the solutions but if you are an adamant no-stop preacher, please, please, keep preaching coz honestly, I love it. The rest of you will find the solutions in the 5 Keys.

padme

travis
        09-15-09 06:47 PM

Ok, regarding automated trading, discretionary trading and their relationship to psychology, I've finally found a way to put it all together.

1) Automated consists of univocal rules and in this sense psychology does not matter.

2) Discretionary by definition must have at least a part of "discretionary" decisions, which means choices made by intuition, instinct, improvisation. The importance of psychology will be proportional to how "discretionary" a discretionary method is. But no matter how important psychology will be in achieving profitability, a knowledge of the market will always be needed and therefore an unprofitable trader cannot only look for the psychological causes of unprofitability. In other words trading isn't "all about psychology", as some say.

For example, in many cases, he will mistakenly think that not using a stoploss and incurring in a loss is a psychological problem, whereas he will forget that in other instances he made money because of not using that same stoploss, and that is why this time he was skeptical about using it. So it is only a psychological problem in the sense that he doesn't realize that a rule that can have exceptions is not a rule, that the stoploss is not a rule for his method (and maybe that he doesn't even have a method). The problem centers around this: how many "univocal" rules do we really have in our discretionary system? A rule that can be broken is not a rule, a rule that can have exceptions is not a rule, and therefore we can't blame lack of discipline for a loss due to breaking that (non) rule. And a method that doesn't have at least one non-breakable rule is not a method. Then, if we have no univocal rules, and therefore no method (except "instinct"), our type trading is the most dependent on psychology - but still it is not entirely about psychology, because even if we don't state via rules our knowledge on the markets, it will influence our instinct, and it will be needed to be profitable.

Unfortunately, in discretionary trading there is no way to measure exactly how much your unprofitability is due to psychology and how much it is due to your lack of knowledge of the markets.

padme

travis
        09-06-09 02:37 AM

I know that repeating it each time could get me a lot of criticism and ridicule, but it's all true, so I am not going to lie about it - I was really this sick and stupid to keep on losing real money for 12 years. And I keep on writing it down, to remind myself of what I must never do again. Also, it could be useful to others, as it is a real experience - a bit extreme, but it might be close to what happens to others. I am an extreme case, not really because I didn't succeed (which is the case with the majority of traders), but more so because I kept trying and losing real money for 12 straight years. To be precise, I did take some time off, here and there, but always less than a year and due to lack of funds.

How could it happen? Profitability always seemed around the corner, from day one. Also, maybe I didn't care much about losing 350 euros a month (which totals the 50,000 euros I lost in 12 years). Also, I was bored and trading provided me with a lot of excitement. This is just my attempt to explain why I kept on losing real money and didn't consider paper trading. The reason why I didn't figure out a winning strategy in 12 years is a whole different (and much longer) story, which could have something to do with the fact that I am a lousy student and I don't like to read books or learn from others, and I want to learn everything by myself, by hands-on practice, and clearly this time it didn't work, so I guess I should have been more humble.

I must also add, once again, that with automated trading things have been conversely different and I've had two years of profits, ever since I started (I started developing trading systems in 2002, and started trading them in 2008). As usual, I developed my systems by hands-on practice (no books) and this time it did work. For better or for worse, during these 12 years I haven't read any books or manuals on technical analysis. I didn't want to make the effort because I always felt there was too many of them, and I thought that the majority of the authors were not profitable traders or else they wouldn't have written a book on it. I did read about 1000 pages of John Walkenbach's manuals on excel and vba though (to say that I am not lazy, but have a limited ability to read and learn).

padme

travis
        08-29-09 07:52 PM

Let's start the topic all over again. It could very well be that we all agree on everything, but get lost in semantics and terms.

Are we saying that we need a psychologist because we want to hurt ourselves and therefore make the wrong trades by self-sabotage? Because from my experience that is usually NOT the case. Self-sabotage is usually the wrong explanation for unprofitability, which is simply caused by not having a profitable method.

Psychology instead could be helpful in finding out WHY many of us are trading when we do not have a profitable method (and never had one).

My personal experience has been that I thought I needed to work on psychology because I thought I knew what was right and just didn't do it out of self-sabotage. But I was wrong. I was flattering myself by calling myself a "masochist" - I simply didn't have a profitable method.

I did not know what method was profitable, and therefore I lost simply because I was not sure about what worked (what entry, what stoploss, what takeprofit). Now that I know what works, the only psychology needed is in letting my automated trading system run. The same should apply to a discretionary trader who knows what method works - he should follow it, plain and simple. However with discretionary trading it does get more complicated because by definition it is "discretionary", and discretion means:
"the power or right to decide or act according to one's own judgment"

http://dictionary.reference.com/browse/discretion

And when our judgement changes also our trading could change and stop being profitable. We should differentiate between these 3 groups of traders:

1) discretionary traders that were never consistently profitable for long periods of time (months) but who somehow, erroneously, think that it's due to psychological problems - it's wrong, you don't need a psychologist, as you're not profitable because you did not come up with a profitable method. You need to work harder on finding a profitable method.

2) discretionary traders that have been consistently profitable for long periods of time (months) and have stopped being profitable for psychological reasons (obviously, since their method worked). In this case the cause may be psychological (unless your method stopped working).

3) automated traders who have a profitable automated system and are not letting it run or are interfering with it - then you do need a psychologist. However it is unlikely, because even for an unstable guy like me it's very hard to not let your system run once you find out that the system makes money, whereas you lose money every time you trade discretionary.

padme

Xspurt
        08-29-09 12:23 PM

As I'm well into my 3rd decade trading I don't mind chiming in with my experience. The 1st few years psychology was important because I didn't know how to trade. It was hell at times but Money Management kept me alive.

In time I learned what worked and how to continually improve everything I did, and the better I became the less important psychology and MM were.
Now everything is built into the trade entry and exit. There is zero psychology or MM. There is no scaling in or out.

Nothing was backtested ever. The only psychology was dreaming what-if's to improve my performance and jumping out of bed in the middle of the night to work on an idea. But most traders won't tighten things up to that degree so you better have MM in place or either you'll sit on your hands in a bad move or continually re-enter against the prevailing trend and rack up huge losses.

Psychology can be useless to address events like this if there is a fundamental problem with technique. It can help discipline but I found the better I knew the set up worked, the less emotion was present until I knew that I knew that I knew and could reap the rewards.

So imho the weaker your ability the more you will need psychology. Like the OP said, you'll not find shrinks in successful trading rooms.

padme

Xspurt

        08-29-09 02:51 PM

  
Here's Steenbarger in full flow...

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

Solution Focused Trading
What is the one thing we see among successful traders, artists, athletes, executives, researchers, and companies?

They build upon their strengths and don't become bogged down trying to invent new ones or attempting to improve their weaknesses. In so doing, they become learning machines.

Consider a simple example. When I first began this blog not quite a year ago, I averaged about 7500 visits per month. This continued for the first few months.

I then began to study the daily statistics of how many people were accessing the site, which pages they went to, and where they were referred from. What I found was that certain topics interested readers and other bloggers quite a bit. Other topics fell flat and generated little interest.

Did I spend time trying to make the unpopular topics more palatable or trying to convince other bloggers to link to my less desired work? No, I took what brief therapists call a solution focus instead. The readership was telling me what their needs and interests were. I needed to do more of what was already working, not fiddle with topics that weren't relevant for readers.

With a shift in emphasis toward highly practical research findings and psychology themes, I found that readership had tripled by May. Feedback from reader comments and emails led me to build further on strengths, adding the morning market updates to help readers apply information from the blog in real time. With that, readership has undergone a doubling from May levels.

By gathering information every day on how the blog was performing and using the data to identify and build upon strengths, I've been able to make the site more useful for readers. Every post, popular and unpopular, became a learning experience. The trajectory of growth in readership, which had been flat prior to my studying the statistics, took a significant upward turn.

This is the process by which all elite levels of success are achieved: identify core competencies and build upon them, constantly assessing what is working and what is not. Figure out what you're doing right--and then become very intentional in doing it more often, more consistently. Don't invest your limited time and effort in areas that don't represent what you do best.

This is why it is vital to study your best trades, not just write in a journal about your worst ones. Find the trades where you had an excellent plan or read of the market and where you were able to execute the idea well. What patterns did you pick up on? How did you act upon the pattern? Were the patterns more apt to appear in certain stocks or at particular times of day? Such questions will lead you to what works best for you.

You may find that just one or two patterns in one or two markets at one or two time frames account for a large part of your success. Don't try to tweak what isn't working: figure out ways to capitalize on your core success in related markets, with steadily increased size. Build upon what you do well; don't try to remake yourself based on preconceived notions.

The solution focus is evolution in real time. We are selecting the strongest of our behavior patterns and allowing the weakest to become extinct. Over time, our own guided natural selection enables us to become learning machines, capable of superior adaptation.

Think about how a solution focus could guide your trading development, your career development, and your relationships. Think of yourself as an engine of continuous evolution. How far we could go if we provided every facet of life with an emotional P/L statement and just focused on doing more of what makes us happy, fulfilled, and successful!

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

This is such basic stuff it's a bit shocking. SO one again I am asking. specifically what can psychology do to improve a sharp trader. No catches here, I really want to know. What did the guys in your office learn?

padme

short&naked


Registered: Jul 2008
Posts: 1174


        08-27-09 04:04 PM

travis, indeed, the order of the factors up for discussion is paramount. As is the order of the general factors of trading that one should consider. Let me therefore propose a possible order that the three elements of trading might be grouped into (in order of consideration).

1. Money Management (risk profile and equity): I would submit that one's risk profile and approach to money management should come before all other considerations. The relation of equity to order size to stop size should be determined first. As we discussed, if order sizes are small relative to equity, psychology will play less of a role in trading. If, in addition, stops are placed further away from a position (while still keeping order size low), a trading edge could be quite dull and still be profitable in the long run. Traders with less capital can often compound nicely without the need for day-trading or taking large risks.
In short, the questions that should be answered here are: How much capital do you have to trade? And how much ROI do you wish to receive on that capital? Once these goals have been set, we can move on to the technical aspects of trading to fit the profile we have just specified,

2. Edge: This is where we determine whether to go with a discretionary or automated approach and whether short-term or long-term trading should be implemented. Again the sharpness of an edge depends on ROI goals and the risk profile specified above. The possibilities here are almost endless as there are many approaches that can be taken there. The goal should be to find an edge that lasts as long as possible given a particular risk profile. At this point paper trading and back testing might come into play and developing an edge.

3. Psychology: Once the risk has been set and we have determined to a profitable edge (either via automated or discretionary trading), we can determine how much time should be spent on psychological considerations. In many cases, this issue will be come almost mute. If the strategy chosen is rather aggressive and discretionary, some mental hardening might be necessary. However, in most cases, dealing with these issues in the beginning is a waist of time, since this issue usually ends of taking care of itself.

I therefore think that putting a percentage relevance on each factor is less useful than the order of their consideration. And in the end, it is only logical that psychology finds its place at the end of the list. Once the order of the above three has been fixed, then their relevance can be determined.