Seeker

Yes agreed, much of it is relative and culture dependent. And things are used in hindsight. Consider a hypothetical man who doesn't take drugs/alcohol, exercises a lot, eats healthily, works hard, and dies early of a heart-attack, perhaps due to work stress. What was his self-destructive behaviour? Perhaps a glass of red wine every so often would have done his heart some good. Perhaps less exercise might have been better, or a different job would have helped. It is so individual it's hard to know for sure.

I hold to the research of countless experts in the field, which ally with my own observations. Though since you say you are qualified, you may want to look into why you often feel the need to suggest others are childlike just because they have a different opinion to you or demonstrate that you are wrong. It's not just me you've accused, I've seen you do it all over the forum. You seem to have an issue with that. Pot calling kettle black I think. What is the psychological term for someone who acts a certain way (e.g. childlike) and then insists on calling others that? From your initial post, aside from the snide comments directed towards me, you believe that people are self-destructive because they are lazy. Laziness is a self-destructive habit in itself. Therefore your answer essentially says people are self-destructive because they do self-destructive things. You've missed the entire point of 'why', and made a redundant point. You also believe that self-destructive behaviour doesn't exist in any other animals, and attempted to correct me because you believe you can 'pull back the curtain' and reveal truths. Well there are all kinds of self-destructive behaviours. What about an ant who when the nest is attacked throws itself into the mouth of the predator facing certain death so that the nest can survive? Or a man running into a burning building to save people, or a bee stinging someone and risking its own death, or spider cannibalism? What about animal suicide? The list could go on. Read here and educate yourself: Animal suicide - Wikipedia, the free encyclopedia Those damn lazy animals :rofl: they need to accept responsibility and take an adult view of the world. Again you fail to answer why these things are not all extinct if Darwinist evolution makes sure they don't carry on. The answer is obvious. But then you'd have to admit you were wrong. You have probably also heard of the flight or fight response, when adrenalin kicks in, heart pumps faster etc. Well this survival instinct can occur from actual dangerous situations, or ego-perceived dangerous situations, like a presentation to a group of people, or could even occur in trading. This could impair ones judgement - a survival instinct with a good reason for being there that has negative consequences in some situations. Why do such things remain in us, and can't simply be thought away by an adult view? Consider just how old a species you belong to, with development and evolution over such a long time and the effect that will have on us. Then consider the tiny amount (in comparison) of time that modern humans have been doing things like trading.

As I see it, and most dictionaries, you're either an amateur or a professional. A professional is paid for doing it. Are you paid for psychology? If not, you are an amateur. I assumed you were a professional trader, or at least a pro vendor. Your education on the issue is irrelevant to your statement. To 'correct oneself' requires that you are aware of the problem in the first place, and the majority are not. It's not about laziness. It's more likely to be in the first place down to a lack of self-awareness. There are endless research papers into the phenomenon of people being affected (due to survival instinct) in all manner of ways, including threats to just the ego, which the brain sometimes doesn't differentiate between a real life threat and just an ego threat. This research is by professionals, not amateurs. There is nothing 'misleading' about people engaging in self-destructive behaviour. They do. We all know plenty who do. Nothing misleading about it. The question is why. As for "the person who suggests that "all animals" do this", which person is that? If you want to refer to me, use the word Seeker, but I certainly didn't suggest ALL animals, so don't twist my words. I said it applies to other animals too, which it does. And where does this idea come from? Well applied to humans in finance it began with the research of Kahnemann, Tversky et al into Behavioural Finance, but there was also plenty of corresponding research into animal behaviour which demonstrates the same ideas - risk aversion/risky behaviour when needed/biases towards gains and losses. You see there are animal behaviours/instincts that are built in, because they are useful to our survival. You think that "Darwinian process that prevents that kind of behavior from continuing along a genetic line." You could not be more wrong, and the evidence of humans doing so clearly proves you wrong. You may wish to consider for a while, why a species that has demonstrated time after time, that it can be self-destructive has not been wiped out by the Darwinian process :rofl::rofl: Siuya was correct, in that short term gain is maximised, this is an animal instinct, it is related to the survival instinct that I posted, and results in a behaviour, not just in humans. It is there for a good reason. It has proven useful over millions of years for a multitude of animals, but you apparently want to disregard it, because you know better....sigh. I suggest you look into the Dunning_Kruger effect, because you suffer greatly from it,

It's a powerful and natural survival instinct that causes these things. It also applies to other animals too.

Interesting debate regarding scaling out. I have a question...if scaling out of winning positions reduces profits, would you consider scaling out on a losing position to be beneficial?

Anyone read Bird-Watching in Lion Country?

I agree with most of your post and I agree it is first base stuff, I disagree that it isn't the first thing a trader should do. If one does it, and suppose one finds (for example) that there is no edge in fibs themselves as an entry alone, then that will dispel all sorts of myths around them, and it will be clear that they don't work in isolation and then one can get down to the nitty gritty of context and trade management and whether they're useful in combination or as some sort of guide to these. Just my 2 cents

It's not so hard to test the merit of these. Pick one retracement, say 61.8%. Choose a non-discretionary method of drawing the fib, i.e. take the high and low from the past n days or take last week's/month's high and low. Draw the fib and investigate the distribution around it when price hits the 61.8%. You may find something, may not. Never know for sure until you try. The only thing I would take issue with, is when people start rolling out comments about how the fib ratio is everywhere in nature and so applies to trading. This part is nonsense.

Not that I'm encouraging options, but if I own an option (which profits from a downward movement in the S&P) I pay a fee (the premium) up front and thereafter have no risk. With a short position, price could move against you and cause large losses. So one benefit is that your risk is limited and known in advance.

Also since you didn't answer zdo's question, here is the answer: Mathematically, when dealing with trials and outcomes, something is either deterministic or random. Random to a mathematician doesn't mean you can't say anything about it, it also doesn't mean the probability is 50-50. For example a biased coin that ends up heads 90% of the time is still random. it's not deterministic, because before we toss the coin, we can't determine with certainty what the outcome will be. On the other hand, we can say what is probable. This corresponds to trading, and so the outcome of any trade (or the market) is random (mathematically), even if you have a backtested-forwardtested massive edge and a high prob of winning, i.e. unless you can say exactly what will happen, it's considered random. However, the debate on these forums lately seems to be 'is the market random' and what seems to be meant there is, is it completely unpredictable and equally likely at all times to go up as go down.

Actually I have a PhD in maths, specifically in probability, lol. So funny you are. When you're in a hole, stop digging. You stated "mathematically here is something to think about I'm going to assume a 50% chance of winning a trade right? Which is extremely high and doesn't exist... if you traded 5 times in a row thats 0.5 x 0.5 x 0.5 x 0.5 x 0.5 = approx. 3% chance of winning for an UNBIAS SYSTEM, so imagine taking 100 trades. " This is plainly wrong. There is a 3% chance of winning all 5 trades, but a much higher % of winning over the 5 trades. And you also claim 50% chance is extremely high and doesn't exist. That again is silly. I'm not the only one who recognised that your calculation and statement didn't make sense. Like I said, stop digging. Your post has demonstrated a clear lack of understanding in both maths and trading. JP Morgan recently announced they made a profit on 63 out of the last 63 days trading. Perhaps they fudge the figures, who knows, but according to you they should leverage to 1000, lol, because if they have anything better than 50% why not leverage all the way? Don't be absurd. Your question is, is winning a trade higher than 50% or less? There is no way to even remotely answer that without stating stop and target and spread. Altering stop and target, I could make it 70%, 30% etc. win rate. What are you trying to say? That it's impossible to make money trading?

Yes some brokers will resort to cheating. Others don't need to or won't. Yes some of the best traders are at hedge funds, and 30% a year is spectacular gains if drawdown is low, but at what leverage is that? If they can make 30% on 1:1 leverage or 3:1, with the constraints associated with their size and the fact they can't get in or out of trades as easily, then what can a trader make on a leverage of 10:1 without such constraints? Your maths doesn't make sense at all. Are you sure you're a mathematician? You gave the probability of winning 5 trades in a row, not the probability of being ahead over those 5 trades. Win rates of over 50% do occur, which you think are impossible. Yes in the math sense, the market is definitely random. When most people say random though, they mean completely unpredictable. That's not what the math meaning is, so you may get into arguments over that

DB, great posts, thankyou. Can I ask about the 50%? You wrote about this maxim, but I'm wondering from where you consider the move to have started. It seems you have drawn the 50% from the steep demand line (parabolic move), but I thought the down move starts from higher than that - just below 2816. Of course it doesn't reach the 50% of that down move, so your logic still applies, but I'm just curious about this There's no rule about it. If you're trading real time, it's not difficult to determine where the swing begins. If it can't be done, no big deal. The 50% is just another factor to employ.

I think it's best I cut this short. Steve, I disagree with you on your statement, and am disappointed in your reaction to questions, but it is not worth getting into an argument about or getting into personal attacks. So I'll leave it there.

DB, I understand your point, and understand how it could be interpreted. However, I am one of those rare people who if they ask a question MEAN a question. I mean what I say, nothing more, nothing less, otherwise I wouldn't say it. If I meant something else, I would write somethign else, I would say more or say less. If you interpret something that isn't written, I think you need to look at yourself. Personally I don't really understand why others seems to say more or less than they mean...it seems slightly crazy to me, but the majority seem to do so. I am not following the majority or the standard rules of others. I take you at face value, and I must say, I deeply respect your posts DBPhoenix, and have found them very insightful. I also found many of Steve's posts interesting. If I didn't and thought he was a complete fraud, I wouldn't have even asked him anything. I'm disappointed in his reaction, but there you go. Is it a sales pitch? The line "volume leads price" comes across as something that sounds slightly witty and insightful, but on closer inspection, doesn't hold water. Therefore I asked if it was a sales pitch, and argued that it didn't make sense, and asked for clarification on what was meant. I even gave what I thought was meant at the end of the initial post (you can look). In response I get attacked and someone suggesting that I am childish. That is a playschool attack. Surely we're above such things. As for evidence, I stated an experiment, and I think a valid one. If volume leads price, trade only with volume. I was told to shove my experiment.

I didn't suggest your words were a sales pitch. I asked if they were a sales pitch. That's called a question Steve. Do you understand what a question is? A question is not an attack except when interpreted by the most insecure and nervous of people who can't understand that a question is being asked and not a statement. It's a question. Perhaps other people have attacked you before and so you may be defensive to questions, I can understand that, but that's not my fault, I am not other people. I haven't made any assumptions, so they can't, by definition, be incorrect, since they don't exist. However, what you call a 'verbal whipping' I interpret as you revealing your hand (or lack of) and you surrendering to my point, which is to say you needed price for your volume to have meaning, You cannot trade on volume alone can you? You need price to give it meaning, as I said, ergo volume does not lead price. You are wrong, and you need to attack those that point out that you are wrong. I haven't personally attacked you, and the burden of proof is on you, after all, you have made the claim that volume leads price. Prove it.

Hit a nerve did I? I think it a ridiculous comment, and nonsensical. But I attacked the comment and not you, and I explained why. In response you attack me, and accuse me of being infantile, etc. Why do you need to do that? In response to me suggesting it doesn't make sense to trade using volume without any price context, you post a picture with volume and price and some context. It seems then you're agreeing with me. You then make clear that you agree with me because you talk about divergence between volume and price. Divergence is a difference between two things that are happening at the same time, not one leading the other. There's no divergence without price there. Also in your chart it seems you are claiming what happened subsequently is due to the volume. Well you don't know that. What about the fact there's a double top in there. What about the fact it's rejected that price and then moved down? You think that had no effect? As I see it, the most important things are price and time and context. If volume helps you, then ok, but I still think you need to address the statement that volume 'leads' price. The two are interconnected. At times perhaps there is something occurring with volume before a significant price move, other times perhaps something occurs with price before any significant change in volume. I have seen people trade solely on price. I have seen people trade using price and volume. But I've never seen anyone just trade on volume alone, with no context - but that should be doable if volume did really indeed lead price. If you disagree, argue the case, but don't personally attack me again.

Steve, on more than one occasion, you made the comment "volume leads price" . IMO It's a ridiculous comment and the more I think about it the more ridiculous it becomes. If you don't have the price, the volume isn't going to help you. Lets try a simple experiment. Take a timeframe, 1min, 5 min 20 min 1 hour whatever you want. Delete price from the chart and just have volume plotting, you don't even get to see the bid-ask. Do you actually believe you can trade that profitably with no price? Is this what you're suggesting? Well according to your statement, you should be able to, because Volume leads price, so apparently tells you where it is going... Is it just a sales pitch? Because it's nonsensical as a statement. If on the other hand you mean that given a pre-existing context involving price, that certain patterns appear in the volume that often preclude a directional movement that is visible on the volume before it is directionally visible on the chart, then ok. Say that. Because the volume leads price comment is silly.

Please do not use tragic events to push the agenda against guns (I'm against gun ownership by the way) or to push some anti-God agenda. It's tragic, guns shouldn't be so easily available, but there's no need to 'gloat' after an event, even if you're correct.

It could be 50/50, it likely is less than that because of the spread, assuming just a random entry. As for if it were 50/50 you have a series to ensure that you always win, I'd suggest that's not correct. There is no such series unless you have infinite money.

lol, that's what I'd go for too.

Ok let me ask the following. Would you do the following exercise: Simulate a random market (a random walk), enter trades and apply your strategy, and each time you enter and exit subtract a small amount to represent spread and commission. This is a simulation so you can try this over as long a period as you want and you can get the end result of your strategy. If you wouldn't be willing to do it, why not? Do you expect that you will make money in this or lose money?

Depends on your reason for averaging in. If you're adding to your position, but it's not a loser, then you're establishing a line. If done according to your strategy, fair enough, but then why not also add to winners? Adding to a loser is a different thing, or at least I interpret that phrase to be. That implies a trade that you accept is a loser, but will hold on anyway, and add in to try to 'make up' for the earlier loss. The probabilities are never known for sure, so throwing around the statement "Knowing the probabilities involved in each is the only thing of importance" is no help imo. The probabilities are NEVER known for sure. We can have an idea about them, but if it gets to the case that you're currently down large, and you want to double up, then it is a fair bet that whatever you used to decide the probability that got you into the initial trade may just be wrong. Therefore how much trust do you continue to place in it? Risk the whole account? Or take the loss and move on? As for the statement that there is no difference between being willing to put it all on one trade that's currently losing, or taking lots of losses that eventually erode the account, I'd have to disagree. Taking losses that slowly erode your account gives you experience of trading, and gives you plenty of opportunities to stop before it's too late. Adding into a loser with all your account at stake gives you only two options, you get out of trouble or you blow your whole account. It's all quite simple. If you have no edge, you shouldn't be trading. Nothing else to be done there. If you do have an edge, the only thing that can stop you from making a success at it, is risking too much so that you blow your account. Go to a casino and try to convince them that they should let someone gamble the entire casinos wealth on a red or black. Do you think they'll think that's a good idea? Or do you think they'll have a limit on what can be bet?

I really don't see why people need to go on the attack. Just be polite and argue your case. The initial poster posted "I never became profitable until I started to treat the market as if it were random." Random can mean different things to different people, but as I posted before, if it is always 50-50 chance of going up as down at every moment in time, then you can never make any money, regardless of your money management, regardless of how you manage the trade. Some people can see this immediately, others will need to think a bit harder to realise this truth. Therefore, if it possible to make money, then at various points of price or time, it must be the case that one outcome is more likely than the other. Does treating the market as random help you find this? Depends on what you mean by random. If your strategy capitalises on this phenomena by how you manage the trade then good, you've found some non-random walk parts to the market. Treating entries as random may help you find this. But that doesn't mean that all entries SHOULD be random. The aim is to profit from situations where one outcome and payoff is greater than another and keeps risk small, is it not? Now suppose he treats the market as entirely random. He's already mentioned he adds to losers. So we get a trader that may keep adding to losers in the hope that the markets are completely random so I'll double up and my next trade has a 50% chance of making all my money back. This is dangerous thinking, wouldn't you agree theDude?

It's a little unclear what you're asking, but this is basic probability and you can estimate the expected consecutive losses or wins (there is a formula for this). Perhaps you could explain more clearly what you're asking.