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Random Gyaan

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  #1  
Old 30th November 2015, 11:35 PM
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Default Random Gyaan

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  #2  
Old 30th November 2015, 11:40 PM
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Default Re: Random Gyaan

Source: http://www.tradingwithrayner.com/7-l...rs-of-trading/

Here’s what Peter Brandt, a forty year veteran trader, has to say…

In this portion of my trading, I will usually trade between 25 to 35 signals per month.

When I wrote this speech in April, I took a look at the previous 3 months. Out of 91 trades, there were 31 profits or 34%. That means that 66% of the trades were losers.

But further, the net bottom line profit for all 91 trades was represented by only 4 trades. Less than 5% of the trades put in the bottom line.

More importantly, I am sure I would not have been able to predict which 5% it would have been before the fact.

If you admit not knowing where the markets are headed, it’s a good thing.

Why?

You’ll have a stoploss in place because you know you can be wrong.
You’ll risk a fraction of your capital because you don’t want to suffer the risk of ruin.
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  #3  
Old 1st December 2015, 12:00 AM
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Default Re: Random Gyaan

Source: Way of the Turtle, Curtis Faith

A nice read, a large portion of the book deals with developing a trading system. As I'm still not into programming and algos, I largely skimmed those parts. However, one line stayed with me:

Note that there are 17 losing trades in a row in the cocoa market before a very sizable winning trade that started in November 1998.

Those 17 trades lost ~$17k over a period of 6 months, losing b'ween $700 to $1,300 in each trade. The 18th made ~25k.

Talk about trusting your system. More importantly about cutting losses short and letting winners run.

Last edited by mindgames; 1st December 2015 at 12:47 AM.
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  #4  
Old 2nd December 2015, 12:48 AM
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Default Re: Random Gyaan

Source: The Complete TurtleTrader, Michael Covel

Trading is a little bit like hitting a ball. If you are thinking what your batting average should be, you are not concentrating on the right thing when you bat the ball. Dollars are batting average of the trader.
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  #5  
Old 2nd December 2015, 10:06 PM
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Default Re: Random Gyaan

Source: The Complete TurtleTrader, Michael Covel

ALWAYS FOLLOW YOUR RULES

Quote:
One of Donchian’s students, Barbara Dixon, described trend followers as making no attempt to forecast the extent of a price move. The trend follower “disciplines his thoughts into a strict set of conditions for entering and exiting the market and acts on those rules or his system to the exclusion of all other market factors. This removes, hopefully, emotional judgmental influences from individual market decisions.
Quote:
You are not special. You are not smarter than the market. So follow the rules. Whoever you are and however much brains you have, it doesn’t make a hill of beans’ difference. Because if you’re facing the same issues and if you’ve got the same constraints, you must follow the rules.
Quote:
A trader who trades differentially because of swings in confidence is focusing on his or her own past rather than on current realities.

Last edited by mindgames; 2nd December 2015 at 11:02 PM. Reason: more stuff
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  #6  
Old 2nd December 2015, 11:10 PM
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Default Re: Random Gyaan

MONEY MANAGEMENT

Quote:
People go the wrong way all the time. Instead of trading as they should today, based on their money now and their rules, they trade based on the money they once had. They are clearly trying to recoup.Great traders adjust their trading to the money they have at any one time.
If you were supposed to risk 2 percent of your trading capital, then you must risk 2 percent of your current 90,000 and not of the original 100,000.
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  #7  
Old 2nd December 2015, 11:26 PM
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Default Re: Random Gyaan

Quote:
Originally Posted by mindgames View Post
Source: Way of the Turtle, Curtis Faith

Note that there are 17 losing trades in a row in the cocoa market before a very sizable winning trade that started in November 1998.
Something similar to the above. This one was apparently to do with Paul Tudor Jones. Reinforces the thought that losing streaks are normal and okay.

Quote:
In one of Jones’s best trades, he got an entry signal. He got in. The trade went against him and he lost 2 percent, forcing him to get out. All of a sudden, the entry signal came right back as the market moved in his favor again. He could not debate it. He had to get back in. Then it went against him again for another 2 percent loss, forcing him to get out again. He went through this process ten or so times in a row until he got a position that actually kept trending. That final big trend made enough money to pay for all those false starts and then some, but to get there in the first place he had to follow his rules religiously

The trader who is averse to losses is in the wrong business.

Last edited by mindgames; 2nd December 2015 at 11:30 PM. Reason: more stuff
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  #8  
Old 5th December 2015, 11:55 PM
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Default Re: Random Gyaan

Source: Trend Following, Michael Covel

MARKETS CAN NEVER BE PREDICTED

Quote:
Markets go up, down, and sideways. They trend. They flow. They surprise. No one can forecast a trend’s beginning or end until it becomes a matter of record, just like the weather.
John W Henry
Quote:
I knew I could not predict anything, and that is why we decided to follow trends, and that is why we’ve been so successful. We simply follow trends. No matter how ridiculous those trends appear to be at the beginning, and no matter how extended or how irrational they seem at the end, we follow trends.

If you take emotion out of it...you have a big advantage over most human beings.
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  #9  
Old 5th December 2015, 11:59 PM
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Default Re: Random Gyaan

Source: Trend Following, Michael Covel

LETTING THE WINNERS RUN
Quote:
...a $50,000 account may go to $80,000, back to $55,000, back up to $90,000, and from there, perhaps, all the way up to $200,000. The person who took profits at $80,000 is not around to take the ride up to $200,000.

Letting your profits run is tough psychologically. But understand that in trying to protect every penny of your profit, you actually prevent yourself from making the big profits.
BEING STOPPED OUT IS OKAY
Quote:
You can’t make money if you are not willing to lose. It’s like breathing in, but not being willing to breathe out. If you don’t have losses, you are not taking risks. If you don’t risk, you won’t ever win big. Losses aren’t the problem. It’s how you deal with them.
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  #10  
Old 8th December 2015, 12:10 AM
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Default Re: Random Gyaan

Source: Trend Following, Michael Covel

Richard Donchian:

Quote:
It doesn’t matter if you’re trading stocks or soybeans. Trading is trading, and the name of the game is increasing your wealth. A trader’s job description is stunningly simple: Don’t lose money. This is of utmost importance to new traders, who are often told do your research. This is good advice, but should be considered carefully. Research alone won’t ensure a profit, and at the end of the day, your main goal should be to make money, not to get an A in How to Read a Balance Sheet.

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