Confessions and Questions

But I wish I knew a way to contribute intellectually or otherwise to its success...

Now, I need to go buy a new lawn mower...

May be you can make a thread and share your sense of the market rhythm?

If I asked how I could integrate my driving style to improve the performance of my car, no one would have any clue about that b/c I haven't provided any information about how I drive.

The above comment brings to mind the fact that nearly everyone thinks they are an above average driver.

I wonder if traders think similarly? The harsh reality of monetary loss should prove to them otherwise.

In fact, as the responses point out any rythm that I may sense is entirely subjective and not universalizable. And yet, I had a clear sense that I was making a bad choice last week. The problem, to my mind is simply this: from a long term, fundamental decision standpoint, the robot is an exceedingly logical choice-- provided its programmers can adapt it to the feedbacks that it itself may generate! However, from the immediacy of my experience and sense of self and the markets, the long-term choice seemed unreasonable. This contradiction must occur to trend traders frequently, I suppose.

Now I will confess my intution for fun and perhaps profit: I took a large position in TNA at the end of the day. I can give numerous fundamental and technical reasons for this position, but when I made the trade I asked myself: does it sit/feel right? And the answer was yes.

Now I hope very much I'm in alignment with the robot. If, however, the robot directs a sell...I will take note of the irony and...probably put on the trade. I would like it much more, of course, if my sensibilities and judgments aligned perfectly with the device. But alas the human race has not yet evolved into such a cyborg!

Looking for to tomorrow's robot direction and Pascal's comments,

In my "limited" experience, I found that the best way to retain my gains during the bull run is to sit out and wait for the market to correct and settle. The best way to loose my gains is to try to play the short side of the market, even if your predictions are "in sync" with market actions. Shorting is such a difficult game in that you have to have perfect timing for entry and exit in order to consistently be profitable. This has been proven to me, the hard way, across every major top in the past 3 years. I'm starting to get it but I found that being in cash might be one of the hardest thing to do as a trader. But that is often the best thing to do. As Billy pointed out through his decades of playing the market, the only thing that might be closed to being the "holy grail" in trading is patience. And to do that requires an uncommon discipline over your greed and fear emotions.

[quote]
The above comment brings to mind the fact that nearly everyone thinks they are an above average driver.

I wonder if traders think similarly? The harsh reality of monetary loss should prove to them otherwise.

[/quote]
That happens to new drivers, and new traders. Beginner's luck.

[QUOTE]1. Billy's link made much sense to me. thanks again.

2. I'm trained in social analysis, music and linguistics. Cultural, social, and economic analsys makes sense to me; mathematics and programming are not my strong suits.

3. I'm very sensitive to sound.[/QUOTE]

Here is an excellent article by Dr. Brett Steenbarger on the subject of [URL="http://traderfeed.blogspot.com/2007/07/medical-student-who-came-to-my-office.html"]dealing with different learning styles[/URL]. He also links to a brief test (called a [URL="http://www.vark-learn.com/english/results.asp"]VARK Questionnaire[/URL]) that I found quite helpful years ago. I had assumed I had a single dominant learning style, and it turned out I was nearly equal in all four. Knowing this gave me the confidence to trust intuition that emerged from processing disparate sources and forms of information.

Screen trading would seem to suit the visually learning dominant; however, I've read (no longer have the link) that auditory dominant people tend to have more patience sitting in front of a screen for long periods. Perhaps this has to do with the patience it takes to learn an instrument.

[QUOTE]4. I was also, at one time, a highly rated chess player-- no longer to be sure.[/QUOTE]

This would suggest you are able to memorize (chunk) the thousands of possible opens and evolutions of play. Good news, because this is a key skill with trading, but only comes with a lot of time and experience. What is a bit different in trading is the unfolding of moves over time is never exactly the same, rhyming more than repeating.

[QUOTE]I have tested my ideas in paper trading, and my performance is consistently superior to my real-world trading.[/QUOTE]

I would bet this is nearly universally experienced. Paper trading or trading on a simulator can be useful for getting the mechanics of trading down early on, but the results change dramatically (for the worse) once actual trading commences. It can be useful for gathering statistics on discretionary setups as you perceive them in real time.

[QUOTE]I should also note that my results with Think or Swim since last year are literally zero.[/QUOTE]

If that is your first year, you have done well. According to a recent NFA study, more than half of new futures traders have blown out at an account or had a margin call within the first six months. Of course, this is in the highly leveraged futures world, but I would bet first year results are not rosy for most in any market.

[Quote]On the other hand, with Vanguard's quiet grandpa technologically inferior interface, I reached over 40% in the first five and a half months of 2011.

I think some of my problem with TOS is that it overwhelms me sensually-- too much information and no real capacity, it appears, to reduce the static/noise. [/QUOTE]

Perhaps the less visually stimulating platform is the way is for you. Some traders trade with surprisingly little information in front of them. For instance, Al Brooks, a well-known eMini day trader, trades a 5 minute chart with a 20 period EMA. That's it. He builds an entire discretionary system around that one chart, and says anything more is too confusing to any person. I don't think he gives enough weight to what Steenbarger addresses above, but his methodology works for him. [As an aside, I also think that by monitoring the tick by tick development of each 5 minute bar, he has unwittingly internalized a form of tape reading.]

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A 747 pilot can monitor this entire instrument panel and fly the plane at the same time. Not every light or dial means something significant at every moment, but each is valuable at certain inflection points. Some traders thrive by monitoring many time series, and through experience are able to discern what is relevant.

So what is relevant? Beginning and intermediate traders spend a lot of time trying to answer that question, often getting suckered by gimmicks. In the end, you have to find what helps you see the market best, particularly being able to anticipate and sense supply and demand. Avoid grail searching.

[QUOTE]Of course there are many angles from which to ponder such problems. Knowing I'm at wit's end gives me good reason to turn to a robot. Unfortunately, the robot closed me out of a good trade and told me to sit tight at the low end of a market! [/QUOTE]

Many discretionary traders turn to systems trading, only to find the same problems they had as a discretionary trader pop up with systems trading. Tweaking after every drawdown, overriding signals etc. If you've mastered discretionary trading, you can probably override a system with success. If not, and you're not following the signals exactly, it's important to realize you are still trading discretionarily.

More good news, though (perhaps). If you're at your wit's end, you might be at the confusing stage that precipitates a breakthrough. I believe you can make that happen if you keep digging.

My last comment.

The reason to go with a mechanical system, is b/c a well tested mechanical system helps the traders to avoid the biggest plaque in trading, ie emotion.

To inject 'sense and feel' back into a well tested mechanical system, appears to defeat the original purpose.

Good luck to all.

[QUOTE=jt12;13623]this is my set of beliefs as far as the relationship between macro events and asset prices (stock prices):
2. Direction of asset prices can not be predicted.[/QUOTE]

I would say that the right way to look at how to work with the market is to consider trading or investing as an activity where you are estimating the distribution of future prices. How that is done can be any of a million different ways. As long as you (figurative "you") can estimate future price distributions better than most of your competitors (in time frame, in security types, etc.), then you can do well. No one method has an inherent advantage over any other -- simply because if it did, more people would do it, and it would lose effectiveness.

Future stock price distributions can be well estimated by Pascal and Billy's robots as we are seeing in real time. On the complete other side, they can also be very well estimated by deep fundamental analysis over long time periods without regard to technical analysis. Numerous of the world's richest people did exactly that.

The main thing is to find a method that matches one's own personality and that has an inherent edge using one's own skill set. The problem is that I believe it may take 10 or more years to find that combination. Warren Buffett would be completely lost with what we're doing here. And we would be completely lost with what he is doing. But we can all be successful if we find the correct combination for each of us.

-Mike

Bob is a single best valuable source for all kind of information. This is great.

I am grateful for the replies. They are all insightful and helpful.

I've looked over my trading record and there have been stretches like this past week previously. A series of green positive trades is interrupted by a string of red losers. The nightmare begins when one (in this case, me) tries to win back the losses in hurry and the losses compound. Every athlete or chess player or salesperson or, yes, trader, knows the feeling I believe. In baseball, hitters have slumps. Most of the time there is no single answer to free the performer from the quicksand. I would bet, however, that renewed patience and a trust in one's inner self (which Billy quickly pointed out) are probably most important to recovery.

Think or Swim is a very powerful trading platform. High Growth Stock software is similarly powerful. Often I feel overwhelmed with one or the other or both. I enjoy very much the metaphor of an airliner cockpit. I fantasize about constructing a high powered computer system with multiple monitors-- especially when I see photographs of traders who operate effectively and successfully in such an environment. But I also know that the graduate student who introduced me to trading conducts research and make trades with only a small lap top. She can't understand why one might need two screens and laughs at how hyper I appear on skype during the trading day. Somehow I need to turn down the noise.

If I have one strong suit from years of teaching, it is this: I'm able to spot people who do quality work and who have substantial potential to contribute. I'm here now because I see tremndous potential for me and for others in the group assembled here. This should be fun and profitable for all.

Most gratefully,