Why you should not trade any of the ideas discussed here......
Every successful trader ultimately find a method which works for him or her. The day you stop trading like someone is when you become more successful. That is one of the reason why following a newsletter seldom makes money for most people. As I said yesterday, at a personal level, only self evident truth is truth.
Look at for example religion. Once you make a hypothesis that God exists, everything neatly falls in place and similarly if you make a hypothesis that God does not exist, you still have great clarity. Once you believe God exists, you are willing to do anything for it, as demonstrated by fanatics of all religion. Achieving Nirvana is easy once the central hypothesis is in place. Then various methods of achieving it work. Religion is the most skillfully marketed product in the world. It is all about changing followers mental model.
Your central beliefs determine whether you understand a concept and own it up and trade it successfully. Those set of beliefs pre date any methodology. That is why to merely look at the scans or entry, exit methods and risk management methods does not work.
It is also the reason why black box systems seldom work for their purchasers. When you buy a black box what conviction do you have in it. Now in marketing term black box makers try every trick in the book and I study with great interest marketing of several black boxes for stock trading and yet the marketers find high customer churn. Recently a marketer of black box trading system for traders asked my advise on how can they market it better, my advise was simple. Disclose what is in your black box to minutest detail. If people get convinced about the logic and if that truth is self evident to them, they will buy it.
The central point behind my argument boils down to
Once the mental models change, same systems and methods work very efficiently.
Look at for example religion. Once you make a hypothesis that God exists, everything neatly falls in place and similarly if you make a hypothesis that God does not exist, you still have great clarity. Once you believe God exists, you are willing to do anything for it, as demonstrated by fanatics of all religion. Achieving Nirvana is easy once the central hypothesis is in place. Then various methods of achieving it work. Religion is the most skillfully marketed product in the world. It is all about changing followers mental model.
Your central beliefs determine whether you understand a concept and own it up and trade it successfully. Those set of beliefs pre date any methodology. That is why to merely look at the scans or entry, exit methods and risk management methods does not work.
It is also the reason why black box systems seldom work for their purchasers. When you buy a black box what conviction do you have in it. Now in marketing term black box makers try every trick in the book and I study with great interest marketing of several black boxes for stock trading and yet the marketers find high customer churn. Recently a marketer of black box trading system for traders asked my advise on how can they market it better, my advise was simple. Disclose what is in your black box to minutest detail. If people get convinced about the logic and if that truth is self evident to them, they will buy it.
The central point behind my argument boils down to
mental models. Successful trading involves change in mental models, that step is more important than any other methodology. Once the mental models change, methods are easy. That is true of personal success also. Successful people have very different " Total World View" as opposed to those who struggle to be successful or those who get stuck in mediocrity.
Once the mental models change, same systems and methods work very efficiently.
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9 comments:
Successful traders develop those models through proper training. It is very easy to develop bad trading habits because the market tends to reinforce and even reward practically any methodology regardless of its merit.
Practice does not make perfect. Perfect practice makes perfect.
Pradeep:
Are you sure that you are in the right business? Truth, nirvana...God..change peoples' mental models.. The way you say it, you should be in evangelism. These folks make far more green stuff!!!!
...but it all starts with an idea. After that, some people will trade it more successfully than other. But the process starts somewhere.
booo....
Markatkar
I keep bumping in to evangicals even though I do not live in Bible belt!
Last year on a very cold winter morning someone rang the bell, so I opened the door and one of the evangical team was canvassing our area. Out of pity I spoke to them decently now since then, they visit my place everyweek!
Similarly couple of months ago some 7-8 year old kids nicely dressed in suits were distributing Bibles in our complex after Church service, so I spoke to them nicely and accepted their free Bible, since then the word has gone around, I get kids coming and ringing bell and dropping of free Bibles!
I can not escape them even on my runs, last summer I was finishing a long run in Princeton near the lake, which is popular with runners. At the end of the run I was tired and thirsty and guess what, a evangical couple and their kids were distributing ice cold water bottles to runners with invite for Bible study.
F
Implicit in your statement is the belief that training can create good traders.
Talk to people in the biggest banks, they have the resources to train anyone, still the success ratio of traders in their in house programmes is extremely low.
Second if training created successful traders and lots of practice created successful traders, traders who are around for many years would be more successful, which is not necessarily the case. Year after year fresh set of traders ( less experienced, with less practice) enter the market and outperform the established traders.
There is a undefinable "X" or "F" factor which makes a successful trader successful. If that factor is present, training, practice, tools, techniques works. So " F" trader is successful because of the F factor, practice might build on that factor.
IMHO
I have a stock scanning question for you, Pradeep, since you seem to be a virtuoso of scans. I look for certain patterns in monetary tables in my methodology and I just plow through published data from Morningstar and such. This is slow and laborious and I'm sure I'm missing a lot of good stuff this way. Are there software scans that allow you to tell them what you're looking for and then go through the 10000 or so stocks in a 15 or 20 year time frame and instantly give you list to check out? This would be a chart recognition type of program, I guess, similar to the technical analysis chart pattern products available. I would also like to look at some of these tech pattern programs that would focus on a 10 or 15 year time frame. Could you point me toward some stuff like this?
I have been a reader of this blog for more than an year now. Here's my simple take on why you should trade ideas discussed here: PROFITS :) Have profited from the earnings strategy (in hindsight looks how the heck was I missing something so basic) and the IBD thursday 200 list. am no way close to mastering these, but the very mention of earning season makes me see opportunities... every trader I am assuming would modify the theories to suit individual requirements and do own dd, but end of the day they are powerful ideas, powerful and profitable !
Spot on here. You have to go to school and learn how to take your own losses and develop your own strategies. I love the blogosphere as it allows me an online journal of my thoughts and ideas along with sharing with others my thoughts and challenges. This game can be awfully lonely and this output lets me put it out there right or wrong and also learn from others. Thanks for this post as I whole heartedly agree with it. Find your own niche and work it hard and keep working it as it will change!!
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