Some trading and assorted wisdom

DSM

Well-Known Member
#1
Some quotes, quips etc. that I have collected (including TJ) - None of this is original, but something that I read, liked and made a note, sharing here.

A responsible trader works more on himself than spending time on trading systems

Don't try to make a profit on a bad trade, just try to find the best place to get out - Linda Bradford Raschke

You don't have to be a great trader to do well in this business. You do have to have discipline. You do have to be selective. You do have to trade only at areas where you have a definable edge.

The largest percent moves typically happen during the last 75% of the trend. What does this mean? It means when you take your position against the trend trying to pick the dead top or bottom you are most likely going to get be caught on the wrong side of the market in a big way.

Your biggest enemy in trading is going to be a directional bias, an opinion about market direction ... whether yours, a broker's or a friend's. Shut it out! Learn to concentrate on the "right-hand side" of the chart-in other words, on the pattern at hand.

Identify nonrandom price behavior, while recognizing that markets are random most of the time.

There is a huge psychological appetite for robust solutions, whereas for trading, the idea should be to execute the strategy - ideas based on higher probability and edge providing a high RR ratio. One should be quick and flexible to accept when it is not working. Having that degree of flexibility to look at a slightly longer time frame to reap high RR.

Convince yourself that what you have found is statistically valid – has high degree of probability.

Learn to read the market and emotionally disengaged from it. This core skill will make you rich - Oilman.

The successful trader, like the chess grandmaster, sees things and thinks about things differently from the novice. The thought process is more dynamic and flexible; perception is more organized, thanks to rich mental maps. There are so many ways to lose money in the markets: the expert trader is highly attuned to those traps. Why? Simply because of basic talents and considerable experience building skills.

Perhaps the greatest change that sustained experience brings is resilience. The successful trader has a high degree of conviction in his or her ideas, simply because of the accumulated base of experience that show how those ideas work out.

You have to be willing to take what the market gives you. If it doesn't give you very much, you don't hesitate to get out with a small profit.

“Ordinary people believe only in the possible. Extraordinary people visualize not what is possible or probable, but rather what is impossible. And by visualizing the impossible, they begin to see it as possible”

A pattern that works 50 percent of the time can be quite profitable if you employ it with a good risk control plan.

It takes courage to be a pig.,,, and It takes courage to ride a profit - George Soros

Everything looks like a simple and look easy, after the fact.

"If you can't explain it simply, you don't understand it well enough."

"Some people say they haven't yet found themselves. But the self is not something one finds; it is something one creates." - Thomas Szasz

"The sole objective of trading is not to prove you’re right, but to hear the cash register ring" - Marty Schwartz - Market Wizard

The worst enemy in this business is within you, your hyde - Protect yourself from being Mr. Hyde.

We can only appreciate where we are if we can appreciate where we have been. The turning point for most successful traders is when they've finally accepted the harsh reality of trading and can then rise above to operate from a completely different mindset.

"All that we are is the result of what we have thought." ~ Buddha

The basic concept that applies to both poker and trading is that the primary objects is not winning the most hands, but rather maximizing your gains." - Jeff Y

Risk no more than you can afford to lose and also risk enough so that a win is meaningful.

“Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.” - sun tzu

I never try to predict or anticipate., I only try to react to what the market is telling me by its behavior - Jesse Livermore quotes

Trading is a tedious job. If you can overcome the boredom, you have advanced one step.

What I look when I scalp is where the big buyers are and where the big sellers are.

Look for the market to establish a short term range and scalp either side.

Enter a trade in a random direction and then try to ride the winners and cut short the losers.

Wait for momentum in one direction and try to ride it.

Use previous market turning points as the entire foundation of trading methodology

Find short entries where it would make no sense for someone to have a long entry very close to your short. That’s where the money is to be made.

There are many reasons to enter a trade, and many reasons to get out of a trade. The key is to analyse the data, and determine which one is statistically valid.

The point is to avoid that stuff on trading forums about “just watch the screen for 10,000 hours and you’ll get it”. Staring at a screen is dull, it is boring, it is hard to stay focused. On the other hand, exercises that get you involved with the market are fun and they are engaging. Having some structure to it as above is also useful as each exercise has you focused on different things and not just a random “punch buy or sell when you feel like it”.

Expectation/Expectancy of a trade = (PW * AW) - (PL * AL)
Expectation of profit factor = (PW * AW) / (PL * AL)

where

PW = probability of a winning trade
AW = average size of winning trade
PL = probability of a loss
AL = average size of a loss

Before entering any trade a strategic trader must know where their trade is relative to support and resistance levels. Support and resistance are typically defined by price zones rather than an absolute set value or price.

If you are taking a long trade you want to be above support and well below a resistance zone. There is no sense in entering a long trade that will quickly confront a price resistance level. Similarly, in taking a short entry, you would like to be below a resistance level that was not broken and well above the price support zone.

Complex goals are best achieved indirectly happiness is not achieved through the pursuit of happiness; the most profitable businesses are not the most profit-oriented; and the wealthiest people are not those most concerned with the pursuit of wealth.

The things you own end up owning you.

Let go of attachment to outcome.

Be better in the inside, the outside will follow.

Spend your money on the things money can buy. Spend your time on the things money can’t buy.

Once you discover your truth, you have to go full in.

Always do things outside your comfort zone. You will almost always be handsomely rewarded on a personal level.

Don’t let fate have the upper hand. YOU determine your destiny.
 

DSM

Well-Known Member
#2
Thanks Vinodthbabu for the kind words...

As I said just, it's just sharing with members what I have learnt from the fourm and elsewhere and made notes...

I realize no amount of learning will help if we do not practice new behavior and insights, as habits and routines are difficult to break. Going back to notes help to remind us of the learning everyday.

Good luck and God bless you too...


i am very proud of you...

DSM has made a wonderful work for traderji members...

congrats! keep sharing....

You will never faill.. God bless you...

Regards
Vinothbabu
 
#3
Nice thread . . . DSM . . .


  1. "All that we are is the result of what we have thought." ~ buddha

  2. “Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.” - sun tzu

  3. Always do things outside your comfort zone. You will almost always be handsomely rewarded on a personal level.

  4. The worst enemy in this business is within you, your hyde - protect yourself from being mr. Hyde.

  5. A responsible trader works more on himself than spending time on trading systems

  6. Learn to read the market and emotionally disengaged from it. This core skill will make you rich.

  7. You have to be willing to take what the market gives you. If it doesn't give you very much, you don't hesitate to get out with a small profit.

  8. Once you discover your truth, you have to go full in.

  9. "The sole objective of trading is not to prove you’re right, but to hear the cash register ring" - marty schwartz - market wizard

  10. Trading is a tedious job. If you can overcome the boredom, you have advanced one step.


My top 10 from your list


:) Happy
 

jahan

Well-Known Member
#4
Expectation/Expectancy of a trade = (PW * AW) - (PL * AL)
Expectation of profit factor = (PW * AW) / (PL * AL)

where

PW = probability of a winning trade
AW = average size of winning trade
PL = probability of a loss
AL = average size of a loss

Hello,

This formula for expectancy from Van.K.Tharp has changed in his later editions.

Regards,
 

DSM

Well-Known Member
#5
Thanks Jahan,

The formula makes sense as is, however if you have the changed/updated formula, will appreciate if you can post it.

Hello,

This formula for expectancy from Van.K.Tharp has changed in his later editions.

Regards,
 

jahan

Well-Known Member
#6
Thanks Jahan,

The formula makes sense as is, however if you have the changed/updated formula, will appreciate if you can post it.
Hello,

yes ur right it makes sense as is.......but u know it will work only when u have known sample and u simulated that sample over and over again then this formulae works great...bcoz we know our avgwin% and avgloss% in that sample.....so in multiple distributions of same sample its great formula... and u know real trading is not the different distribution of same sample.

will pm u the formula....bcoz its copyrighted Material.

Regards,
 

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