Trading System and Market Behaviour
Below is taken from the channelnewsasia forum written by jest1081.
This is one of the wisest word I have seen in years, a salute to you. (and i hope he won't mind I post it here :P)
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Every system is create to have an edge...ie increases the probability of winning, if not every entry would have been considered a profusely random entry.
With an increased probability of winning, its further coupled with position sizing so as to avoid the trader from being knocked out too early in the game and this is where the real problem lies...many got knocked out EARLY, even before they managed to learn anything from the market...the lose all witrh ZERO experience.
Also to add, the systems winning ratio, will have to depend on 1 big factor...MARKET BEHAVIOUR. If you have a system that follows trend....its normal to constantly show loser in a whippy market. and if your system thrives on swing reversals, more likely you will be trended to poverty by the market, on a trending period. I've you use both, i'd say that trader is one confused kid, coz he will never know when the market is really trending or whipping.
Going forward, it'll be foolish for a person to use a system that does not give winners, it shows a lack of understanding, backtesting and forward testing in the users part.
I will tend to agree that when a trader turns purely mechanical, they psychology will in turn fall into place, but thats not usually the case....esp with new traders, heck even some old timers fall into this trap at times.
The statement above needs factual proof. Like i mentioned before, when does a system carry an edge? It all depends on market behaviour and its alignment to the systems identity at that PERIOD. As an experience trader, i am sure you have seen the times when your system lose the edge, even up to a string of 10-20 in a row.
Personally i trade on nothing more than naked chart, well proly some trendlines an MA for SR reference but thats really just it, most of the time i track daily prices to get a 'feel' of the trend. Different people find different ways to win in the market, mine does not require an extensively rigid set of rules, i still win...and lose.
regards
jest
This is one of the wisest word I have seen in years, a salute to you. (and i hope he won't mind I post it here :P)
-------------
Every system is create to have an edge...ie increases the probability of winning, if not every entry would have been considered a profusely random entry.
With an increased probability of winning, its further coupled with position sizing so as to avoid the trader from being knocked out too early in the game and this is where the real problem lies...many got knocked out EARLY, even before they managed to learn anything from the market...the lose all witrh ZERO experience.
Also to add, the systems winning ratio, will have to depend on 1 big factor...MARKET BEHAVIOUR. If you have a system that follows trend....its normal to constantly show loser in a whippy market. and if your system thrives on swing reversals, more likely you will be trended to poverty by the market, on a trending period. I've you use both, i'd say that trader is one confused kid, coz he will never know when the market is really trending or whipping.
Going forward, it'll be foolish for a person to use a system that does not give winners, it shows a lack of understanding, backtesting and forward testing in the users part.
I will tend to agree that when a trader turns purely mechanical, they psychology will in turn fall into place, but thats not usually the case....esp with new traders, heck even some old timers fall into this trap at times.
The statement above needs factual proof. Like i mentioned before, when does a system carry an edge? It all depends on market behaviour and its alignment to the systems identity at that PERIOD. As an experience trader, i am sure you have seen the times when your system lose the edge, even up to a string of 10-20 in a row.
Personally i trade on nothing more than naked chart, well proly some trendlines an MA for SR reference but thats really just it, most of the time i track daily prices to get a 'feel' of the trend. Different people find different ways to win in the market, mine does not require an extensively rigid set of rules, i still win...and lose.
regards
jest
posted by Learn2win at
8:29 pm
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