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Wow Brian, what a sobering and heartfelt post. I can feel your sincerity in your words, and your words have motivated me. Thank you very much for writing this today.
We all love you Brian for all that you do and share. I have had my own health scares of late and can relate, as I am sure many can.
Trading is a great occupation, but living is the true gift and my favorite pass time. Too many people quite literally work themselves to death, never happy, never really enjoying the fruits of their labor. They may surround themselves with expensive toys, but still be miserable. I am speaking from experience.
I owe the act of actually becoming a good trader much more than just trading profits that come with it. In fact I can unequivocally say that the last 6 years or so of my life since I have been going full time on trading, I have learned more about myself than at any other time, and the best thing about that is that I learned what truly makes me happy. I am in my mid 30's so perhaps it is early, or perhaps late, to find this out. But having found it, I have a constant sense of calm now because like you, I am not afraid to die - because I am happy. That's not to say I that I welcome death naturally, but I am at peace with it. And for me it has nothing to do with religion because I am not a religious person. Instead it's just about being happy with myself for the first time in my life.
The act of becoming a trader is what allowed that, or forced that more aptly, to happen. I consider myself a different person these days and am much happier for it.
Thanks for sharing all that you do, I know that it benefits many because I know so many can relate and have faced similar struggles whether it is with trading, health, or just life in general. You are a good friend and a good member of the community, and I am thankful for you, and all the others like you, for making futures.io (formerly BMT) the special place that it has become.
Enjoy life, enjoy living, enjoy your family, and enjoy your weekend!
Becoming a successful trader doesn’t happen by accident. It is exceedingly difficult to derive a method that is consistently profitable, and it is even more difficult to successfully apply such a method in actual practice. Near randomness and efficiency in the market almost guarantees failure. And, of course, the principle of ever-changing cycles works to force quick and drastic changes of results sequences when the public happens to get wise to a winning idea. But, you've been able to identify 3 precise patterns and execute trades to position, that demonstrate a statistical tendency behind these patterns. Managing the risk in the trade appropriately, perhaps "adjusting" the position as the trade develops.
On the surface, this appears to be a very positive development, and it is. But it can also be very limiting. When you trade patterns in the market–you actually trade the underlying imbalances that create those patterns, i.e., more buying than selling and the market moves higher and the converse. Patterns reflect this reality but don't explain what is driving price. Without a broader knowledge of the market and an understanding of the bigger picture you cannot develop a dependable sense and feel for the market. And while these set-ups are dependable to a degree, they tend to make you focus on the few broad outcomes that appear the most probable and probably the most obvious, and ignore the low-probability scenarios. And, its usually the moves you don't expect, that are often the most profitable, and which coincidentally, are often found at the beginning of trends.
Compared to trends, range trading, is far more difficult due to the random nature of short term price action and the omnipresent HFTs. Unfortunately, it is exactly in this environment where you are trying to "grind" it out. And if you read Bacon and substitute the market for the track, the "grind" privileges are spoken for and taken. Of, course, any percentage can be overcome by enough winners at fat enough prices. However, you must first be able to identify when you have a "clean swing at a fat pitch." And this comes from developing an ability to interpret, and assimilate a much broader base of knowledge and information, than you are currently looking at. But it will be worth it, because you will be able to recognize "low-probability" trades, that have a high probability of being big winners. It will also give you the confidence you need to take trades, press trades, and add to your trades.
Your use of the phrases "low probability" and "dependable sense and feel for the market" is unclear to me.
I'm wondering if you're describing the difference between setups that "feel" comfortable or uncomfortable to trade (that one might think are low probability in real time because of the look/feel of them) and setups that have proven positive expectancy despite the fact they appear "scary" at the right edge.
If you run statistical analyses of setups (patterns) to determine their chances of hitting profit G before hitting stop L and identify contextual filters to know when to trade these setups and when to ignore them, you'll come up with high probability setups that still may look or feel very uncomfortable to trade in real time.
To me the phrases say 'infrequent and low risk' and 'where and why'.
Yes indeed, and the statistics always give the 'how' or more accurately the 'how much' and 'how often', but they will never give you the 'why'. An old adage says if you know the 'how' you get to be a good worker but if you know the 'why' you get to be the boss. I do know the 'why' but I'm still a worker, darn it.
An excellent post thank you! I am always amazed to listen when people say they don't care to know why market moves like that as long as they trade their lines, channels, averages and it works for them. I believe a thorough study of the markets, price discovery mechanism, different types of traders and their base strategies, and especially HFT approach and it heavy influence on market microstructure warrants deep understanding of market mechanics and will help to be able to stay in tune with the market and evolve as market does, and be able to keep discovering inefficiencies we call high probability trading opportunities.
That one trades have an unerring capacity to avoid giving one a profit. If you hold a position over nite, they move so much that you can't hold them without staying up the whole nite, for two days in a row, which for most people is impossible. Other markets only let you get out of a position when it's going to go in your original direction by a fast 1 or 2% like sp over nite today. If they won't let you out then they are ready to go down 150 bucks like gold yesterday. when you try to trade them in normal hours they go bak and forth so thata your vig on a small sized position taking account of the bak and forth is inordinaly large to be unprofitble. when I trade gold, I find that it likes to move a fast 10 bucks in 2 minutes everry now and then so you can't leave limit orders profitably to catch the reversal. If your position is too large, it will move so far against you thata you will be margined out, especially over nite when you don't have data to provide a buffer as to which way it's going. If you appen to have a position in the rite direction and it moves a fast 10 bucks in your favor, why then it's impossible to get out. Within 1 1/2 bucks because only 1 or two contracts is bid or offered within 30 cents, and by giving up that much of an edge to trade a reasonable number of contracts, you lose your expectncy. If you trade with a small size, then the hourly wage from doing all the work is less than a construction worker. worst of all are the markets where just a few hardended members on t he rules committee make the markets. Many of the options markets are like this. They will maneuver the prices and the rules against you so that it's impossible to make a profit at the settlement or hold the position thru it because of marks and margins against you. if you trade for small gains and losses, that's worst of all becuase the high frequency people are ahead of you on each tick, so by the time you pay the bid asked and take account of the fact that you never get your limits until it's way against you like in the old pit days, you're giving up infinitelly more vig than at vegas. The book on baseball betting says that you only pay 2 1/2 % vig on baseball betting, much less than any other market or our market. However, you have to live in vegas to speculate there, and they treat you like a persona non-grata there and the chances for being comped or otherwise ennobled are close to zero. vic