[ant]

Originally Posted by brownsfan019 »

You cannot in Blackjack or trading sometimes follow your rules and expect to make money. You simply cannot take one trade and then pass on the exact same setup the next time.

As a previous card counter, I agree with this statement for Blackjack, but I don't think this applies to all trade strategies. I agree totally with this for trend following systems where a handful of trades can make your quarter or year. However, for other setups that occur frequently, I don't think you have to take every setup because each trade taken independently is insignificant. However, I do believe a trader should strive for consistency and a systematic approach in decision-making, and take each trade the same way according to their trade plan.

Originally Posted by brownsfan019 »

we are all gamblers here.

Gamblers by definition are playing a game of chance and don't have an edge; therefore, they will lose in the long run. A profitable trader has an edge and should win in the long run, assuming the edge is sustained over time. If a trader does not have an edge, then I agree (s)he is a gambler.

[brownsfan019]

Originally Posted by ant »

. However, for other setups that occur frequently, I don't think you have to take every setup because each trade taken independently is insignificant. However, I do believe a trader should strive for consistency and a systematic approach in decision-making, and take each trade the same way according to their trade plan.

I guess we disagree there b/c I don't see how someone can randomly choose what setups they take and make money over the long haul. Unless your winning percentage is 100%, I don't see the numbers work in your favor.

Gamblers by definition are playing a game of chance and don't have an edge; therefore, they will lose in the long run. A profitable trader has an edge and should win in the long run, assuming the edge is sustained over time. If a trader does not have an edge, then I agree (s)he is a gambler.

Again, it's semantics. This was beaten to death over at elitetrader and in the end, we are all gamblers in our life. When you walk down the street, you are gambling that a bus will not hit you. When you place a trade, you are gambling that your analysis is correct.

[brownsfan019]

Originally Posted by cooter »

There is an opportunity cost to not taking a valid setup when, and if, you can. But is there a real, fixed dollar cost?

IMHO, if your setups are valid, then it shouldn't matter which one you take. You contend however that every such valid setup should be taken whenever you see it. This could lead to overtrading, in my book.

Discretionary trading implies that traders use some sort of discretion when choosing the setup to enter on, does it not? If not, why not just auto-trade your setups instead, and rely on the programming to do it for you?

How can it not matter? Unless you win 100% of the time, it matters big time. If your win % is 60% assuming you take everything, as soon as you eliminate a winning trade(s), your % changes drastically.

How can you possibly screen your valid patterns out then? Gut instinct? Just because?

And if you are screening out your valid patterns, perhaps it's the pattern that you are trading that is not good, not the fact that you randomly decide when to take your setups. If you have 100% confidence in your trading methodology, you should WANT to be in EVERY setup. If you are somewhat confident, very different story then obviously. There's no reason that a trader that knows their setups are solid and produce over the long haul that would WANT to pass on some trades.

I'd love to know why you would want to screen out valid setups. That's kind of contradictory though - if you are screening out your valid setups, are they even valid to begin with? :rolleyes:

I'd love to auto-trade all my setups if I found a programmer that could program how I trade. Easier said than done.

[Don4]

Originally Posted by brownsfan019 »

In the end, consistency is key to success.

I agree with u 100% brownsfan!!

[Don4]

In my opinion this is what makes the simple systems work,and most dont even realize it. Simple systems forces you to be more consistant in the way you trade.

[brownsfan019]

Originally Posted by Don4 »

In my opinion this is what makes the simple systems work,and most dont even realize it. Simple systems forces you to be more consistant in the way you trade.

Good point.

[torero]

I will have to agree with Brown here on the fact that if you cherry pick your trades (like most system traders who interfere with their own systems after testing long and hard enough to find that it has a chance of making money), you will lose because the system requires all the trades to come up with the stats you have. I learned this from system testing, not from discretionary trading. The market gives us a certain amount of right and wrong market conditions where a system will work and will not work. Missing one can be the one that would make up the losses if not more. You have to take the losses and the wins. This has happened to me where I decided to take one and sit out the ones I think the market was too strong to short and vice versa. Well, I was proven wrong time and again. This cherry picking is called Optimizing, basically trying to weed out the bad trades. But the performance results will give a totally different picture (usually worst than before the optimization).

I'm speaking from the experience of testing and trading auto systems. Overtrading happens when you trade in small timeframes, but if you trade a system that gets a 2-4 signals a day (I prefer less), your chances are better on NOT getting eaten up by commissions and slippage.

[brownsfan019]

Originally Posted by torero »

Overtrading happens when you trade in small timeframes, but if you trade a system that gets a 2-4 signals a day (I prefer less), your chances are better on NOT getting eaten up by commissions and slippage.

Good point tor. The fact that you take every signal your system produces does not mean that you are trading 100 times a day. It might, but there is no correlation between taking all your setups and overtrading.