Why Do People Engage in Self Destructive Behaviors?

[Why Do People Engage in Self Destructive Behaviors?]

Steve, there is a problem I see with your explanation - which i dont necessarily disagree with its ultimate result - which is about self responsibility for the consequences.

 

This problem is two fold -

Doesn't this assume that children cant accept responsibility and are self destructive.

The nature nurture debate then kicks in a bit whereby you touch on the rationalisation (which is a good point) - most behavior is learnt, and who is not to say certain 'cultural' behaviors some may see as self destructive are considered by others as perfectly normal.

 

You can also be seen as self destructive (and this is of course in the eyes of the beholder) and yet be totally aware of and accepting of the risks.

MM mentions this - I am always wary of those who declare that those fully functional people who have behaviours that we declare as destructive fit into the category of not being adults.

This reminds a little too much of the behaviour modification attempts seen in many 'we know best' societies.

 

Basically - often its completely rational and adult to adopt in some self destructive behaviour because we choose to.

 

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.

[Why Do People Engage in Self Destructive Behaviors?]

Seeker

 

Professionals status is obtained by A) taking (and passing) a professional course of studies and B) passing a licensing test. That's state law in California....it has nothing to do with getting paid or practicing...you may want to update your understanding...or if you want to insist on maintaining a childlike point of view, you may want to hold on to your current opinion...either way not my concern.....

 

And for the rest of the crowd....my comments are my opinion...I offer it because I am entitled to do so and secondly to "activate" the adult children in the audience....I know from experience that an adult with infantile (or adolescent) self esteem will feel that the image they represent to the rest of the world is compromised, for that reason alone, they will not be able to resist commenting and attacking anyone who "pulls back the curtain".....I leave it to others to evaluate the responses that follow(ed) my post for themselves.

 

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.

[Why Do People Engage in Self Destructive Behaviors?]

First of all I am not an amateur, having obtained an education in this area...

 

The idea that people "engage" in self destructive behaviors is (as with most things that people post here) is misleading....generally people simple LET events overtake them, OR they are unwilling to accept responsibility for behaviors that produce a negative result, because they are too lazy (pure and simple)..to do the hard work of correcting themselves...

 

The fact is that life in general is a struggle, and those of us who have made it to adulthood figure it out at the appropriate time (late teens, early 20's) and adopt an adult appropriate view of the world. The rest fall along a continuum where they may or may not possess a realistic adult view of the world, AND as a result of that immature world view, they believe (wholeheartedly) that the world "owes them" certain things.....then "when not if" the world doesn't cooperate" its NOT their fault....ITS EVERYONE ELSE.....

 

Although its not politically correct, I believe these folks should get a brisk kick in the ass (or perhaps join the military and have someone else apply a "brisk kick in the ass" to them) until they "get it"....

 

The subject is near and dear to my heart because sites like this one attract adult children like magnets (all asking the same questions over and over)...."why do so many traders (fill in the space) blah blah blah...

 

And for the person who suggests that "all animals" do this....ah no....you see in the animal kingdom, "engaging" in self destructive behavior results in their DESTRUCTION.....there is an Darwinian process that prevents that kind of behavior from continuing along a genetic line.

 

 

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,

[Why Do People Engage in Self Destructive Behaviors?]

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

[Quit Job to Watch DOM.]

Hi DionysusToast,

 

I have certainly seen pretty convincing evidence for scaling into positions, even the controversial practice of 'averaging down' . . . But I have never seen any objective system that benefits in terms of overall profitability from the scaling out of profitable positions. Can you put forward a mathematical argument for this?

 

Yes, you may know people who make money scaling out - the trader in my original example made money - just less than they would if they hadn't scaled out. Are the people you know who make money scaling out able to provide any hard evidence that their performance would have been poorer if they hadn't scaled out?

 

My challenge still stands - I defy anyone on this forum to provide hard evidence of any strategy that benefits from the scaling out of profitable positions.

 

 

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?

[Some of the Mistakes and Misconceptions Forex Traders Make]

Anyone read Bird-Watching in Lion Country?

[Why Successful Traders Use Fibonacci Retracements]

That is a start but it is first base stuff (imo).You would expect a non trader to set about the task in the way you describe.And it is non traders whose papers are held up as "proof" that there is nothing to see here.Not suggesting anything regarding your trading ability Seeker,even your handle suggests an open mind.

 

I have sympathy with your 2nd paragraph,but ultimately it's a red herring in any case.Knowing how rabbits multiply isn't going to help me extract money from the market.

 

You mention higher timeframes which,as for other methods,tend to produce better results but what about context?

 

If a market is slowly grinding up with shallow pullbacks with an average daily range of 10 points then 0.618 isn't going to be touched;it is more likely 0.236.

A deeper pullback tomorrow may be seen as a result of change of context.So you don't need to trade fibs to make use of the information they can give..

 

DB places importance on reading the chart,that encompasses reading a market.Can a new trader investigating fibs read a chart/market? .Can most of the people writing papers and debunking fibs read a chart?

 

Retracements are only one part of fibonacci.What about extensions?

Analysis is one thing trading is another.Are you going to enter on a retracement (which you don't know for certain will be support) or exit,in which case you don't care if it holds there or not?

Do you place limit orders at fib levels or wait to see how a market reacts there before placing a trade?

 

We all know that what many are looking for is a method that will tell them exactly where to enter/exit and work 90% of the time,and if fibs don't give them that then fibs don't work as far as they are concerned.

 

Then there are those who say,well in hindsight i see a lot of fibonacci but hindsight isn't much use.Well,that's a problem for the trader,and is hardly "proof" that they don't work is it? In fact if they can be seen in hindsight....

 

I've never seen my car drive itself.I don't know about your car,but i suspect,like mine,it isn't much use unless you drive it yourself.

 

The level of debate here is akin to expecting the fibs to do the work for you.That is my real point,'cos obviously i'm not really concerned with some other guy's trading results.

 

Like many things,you reap what you sow,and as DB has made clear he requires someone else to do that work and prove it has merit otherwise fibonacci is "idiocy".Not exactly a scientific approach to drawing conclusions is it?

 

As Seeker suggests,do the work yourself,draw your own conclusions.It would just be useful (to some) and in keeping with the idea that a trading forum is there to give some pointers,if we didn't have to run the Groundhog Day paradigm every time someone writes an article as useless as this one.

 

It would also be nice if those who considered themselves experts in other areas didn't assume that automatically gives them the right to be taken seriously when they debunk something they know almost nothing about.

That way,maybe we could do something to stem the flow of quality posters leaving this place.Then maybe i wouldn't get pm's telling me people are"bored"

 

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

[Why Successful Traders Use Fibonacci Retracements]

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.

[Options Guru Here]

Just what I need, question:

 

If I think the S&P is going to fall, why would I want to use options instead of just shorting a Future?

 

I'd appreciate if you could explain the benefits of options, bearing in mind I know nothing about them.

 

Cheers

 

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.

[How I Trade As If Price Is Random]

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.

[How I Trade As If Price Is Random]

I'll agree that my maths don't make any sense to a non mathematician like yourself. And so will many logics because people like yourself lack knowledge of probability but think there are miracles out there that produce so much all the time yet fail to find them. That is called a dream... so you are good at dreaming I stick to the probabilities so my example of winning 5 consecutive trades was perfect.

 

With regards to people being ahead with 50% that is likely and so is being behind with less than 50% winners. I advise you go back and revise your mathematics because I made It clear that if the probability of winning a trade was more than 50% then in a population you will END up winning and I would advise you use 1000:1 leverage if this was the case, but keep dreaming. Will any broker allow such thing with large trade size? Or will they monitor every trade you take and have special stops and protections in place because you can send them broke?

 

They will take a chance with peanuts as long as they protect themselves but that's another story that you don't know about otherwise you wouldn't introduce the leverage path. If Hedge funds can use higher leverage to produce more they would, anyone would the fact they don't means something from the worlds best performers.

 

To answer your reply of the chance of being ahead in many trades taken...The question is that winning a trade is it >50% chance or less? Since bias results will occur. If in one trade your chances of winning is low then in many more trades the chances will be even smaller is what mathematics tells you. So being ahead or behind is actually winning/losing, if you want to consider a basket of trades then do so as "one trade".

 

You vision is very limited because you believe in things rather than have the knowledge and record that you desire which is great in the non real world. The brokers will stand to lose to the small fish as long as the end result favours them.

 

I will tell you and any other person reading this what.. show me evidence of 2 years or more that you have made consistent money to replace your income not just a few dollars from trading and I will shut up and go and lick my wounds but guess what you are looking at a minority and very low minority (can this happen? YES but like I said a very low percentage) because just like the casino so many brag about winning but fail to see the big picture where they lost so much to gain so little over an extended period of time. So I believe the odds of making an income from trading is something like 2% (but still possible)... this is almost equivalent to being wealthy in society. Truth is if you have a winning system better than hedge funds the whole universe wants it and it would spiral out of control lol...You don't have to trade it just sell it and make billions lol

 

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?

[How I Trade As If Price Is Random]

I don't think it's random I know its random from a mathematical point of view, regardless what you think or I or anyone else thinks.

There will always be someone who outperforms the market at any instance in which I've already stated that like the example of a casino, the thing is it will not always be the same person or body.

 

Here's the trick Siuya, put yourself on the other side of the fence, if someone was trading with you as the broker and liquidator and was making money consistently what would it do to your bank account and fortune? What will you do to accommodate this?

What if this person was making lots and lots from you? What will you do? Sit there like a dummy and lose all your daddy's money? Or perhaps you have a counter to this person/body making so much from you?

I will let you on a little piece of info with no names mentioned... this was happening to a broker last year and the broker simply altered the MT4 lol, I'm not going into more/any details, this was the only way to ensure not much money is made from the trader. At the end of the month the balance of any broker needs to be positive otherwise they are losing money and declining and soon will go bankrupt.

 

However, if the broker is making hundreds of thousands a month and losing 10k a month for you or another that's ok to them because the NET worth of the broker is positive, cashflow is positive so no problem.

This is a business to the broker not a hobby and if they don't make money means they are losing money.

 

The issue with speculators on forums is they look at the point of view of a trader only and hardly ever look at the brokers point of view to understand the business sense of the whole picture.

 

I will leave you with a fact.... the best trader(system) in the world is hedge funds which only make about 30%p.a at best. That is your measuring stone. The rest are fiction... today some trader makes 5k and tomorrow or next month they blew a 20k account etc.

 

You do want consistency which will need incorporated a very good MM and a well supporting your trading habits. Now last thing is you seem to think many will outperform the market right? lol 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.

 

Now does anyone want to know how to make money from a casino to beat the odds? But if you get banned don't blame me lol (P.S it is legal and they will change the rules if they observe you doing it, how do I know this? They did it to me! . This will happen!)

If you want a similar system in trading do come and ask me.

I'm just a mathematician!

 

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

[Trading The Wyckoff Way]

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.

[Price Action Patterns Do Not Mean the Market Isn't Random]

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.

[Price Action Patterns Do Not Mean the Market Isn't Random]

Seeker, you're carrying disingenuity to an extreme. Asking whether or not something is a sales pitch is little different from implying that it is. Otherwise, there would be no point in asking the question. Perhaps if you had been less aggressive in your original question, Steve would not have responded in kind.

 

FWIW, I don't agree with Steve either, but since I've gone into this many times over the years to little effect, I can understand his impatience with questions like this. If you believe that volume does not lead price, then state your opinion and provide your evidence. If you have no evidence, then don't expect others to provide what you won't. Or can't.

 

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.

[Price Action Patterns Do Not Mean the Market Isn't Random]

Yes, infantile behavior is mildly irritating in the same way that a small child having a temper tantrum in public is irritating...you suggested that my words were a "sales pitch"....THATS called a personal attack....as people before you have found out its not smart to attack me....your assumptions were incorrect as shown in the attached chart example, the result was that you took a well deserved verbal whipping for it...

 

Next time act like an adult instead of small child...If you can't take responsibility for your words maybe you should ask your mother instead of a stranger when you have a question...I'm sure she'll be more indulgent...

 

and at the conclusion of my comment today...I will simply turn your words back upon you

 

If you disagree, argue the case without suggesting that my comments are a "sales pitch", but don't personally attack me again.....

 

NOW we are done...

 

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.

[Price Action Patterns Do Not Mean the Market Isn't Random]

Clearly my patience is limited when it comes to ignorant comments like these...

 

First, most of my generation of traders learned to "read the tape"....what we were learning to do was to read a combination of time, volume & price.... shortly after I left the business, "footprint" software became available to retail traders and now it is the latest fad....once again the focus on volume....secondarily on time (for those who really understood what they were doing) and finally "value" (price as seen through the prism of Market Profile).

 

In the last few years, as HFT has become more intrusive in equity and index futures markets.....because human beings cannot compete (and frankly cannot see most of the execution process), once again volume becomes critical.....in other threads I have posted multiple examples of what I call algorithmic patterns that seem to indicate ramping up of volume prior to price movement...this isn't earth shaking or unusual, it used to be called volume divergence or painting the tape....for the "long" version, price moves sideways while aggregate volume turns up....for the short version, just to opposite....For the first several days of my class I did in fact show people how to A)identify and read volume "triggers" and B) to trade without reference to price....by reading a volume based display and referring only to volume and time...

 

With regard to your insipid comment about "sales pitches", my classes are closed (as I have already stated about 10 days ago), and since I required folks to apply (and I didn't take every person who did apply), your infantile attitude doesn't seem to make sense does it?

 

For those who prefer visual rather than verbal descriptions...the attached chart shows tonight's Globex open. On top, price, below a simplified version of my volume display

As can be plainly seen, there is a divergence between volume and price...as suggested previously "volume leads price"

 

and finally with all due respect I suggest you take your experiment and shove it.

 

I hope my position is perfectly clear....

 

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.

[Price Action Patterns Do Not Mean the Market Isn't Random]

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.

[To Arm or to Disarm.]

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.

[How I Trade As If Price Is Random]

I'm not having a go at anyone but clarifying several things from a mathematical perspective but do correct me if you know Im incorrect at any stage.

 

"Still, even mathematically random principle says that over time can earn half the time and half the time you can lose - regardless of any strategy"

 

Hmmmm not true! if you were a mathematician you would know odds are against you!

In a Roulette wheel your best probability of winning is about 46%. Hence why casino's exist! You forgot that a ZEROOOOOO/GREENNNNNNN is placed there!

 

Mathematically that 1acb guy is purely correct that if a trade taken it is purely random and not mean reverted because to have a mean you are referring to having a sample and not a population. In trading you can't have a sample (unless it's in the past).

 

At any given time your probability of winning a trade in a POPULATION isn't 50/50 and can never be 50/50 because other variables/factors come into play and vary most times such as size of win, spread, slippage etc. If it were 50/50 I have a series to use to ensure you always win but that's unrealistic.

 

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.

[Puzzles for Traders]

Third from left?

 

BlueHorseshoe

 

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

[Price Action Patterns Do Not Mean the Market Isn't Random]

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?

[Price Action Patterns Do Not Mean the Market Isn't Random]

I wouldn't agree. Lots of people grind down accounts with stop-losses - death by a thousand cuts - and call it "risk management". Once the money is gone, it's gone, so it really doesn't matter whether you blew it all on one trade, or you got stopped out a thousand times.

 

Knowing the probabilities involved in each is the only thing of importance . . . Can anyone name an ETF that went to zero? Can anyone even show me a chart of an instrument (any one will do) that fell, let's say, more than 50% from it's highs without a pullback that would have provided a better than worst case exit?

 

Doubling up on a position is only dangerous if your starting position is heavily invested or heavily leveraged. Otherwise, it's just buying more of something at a cheaper price.

 

BlueHorseshoe

 

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?

[Price Action Patterns Do Not Mean the Market Isn't Random]

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?

[How Random is Randomness]

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.