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You don't know whether you are there yet without extensive backtesting using
realistic execution assumptions under a variety of market conditions. If
your system can't be back-tested then it needs to be extensively traded in
real life, again under a variety of market conditions. Without back-testing,
traders tend to have less confidence in their systems and start to ignore
entry signals and get out early or override exits and stops. It's one reason
why they fail.
If you want to trade in a discretionary fashion, then trading psychology is
critical. Elder is a start, Tharp is a very mixed bag - you could look at
Connie Brown, Aerodynamic Trading.
Andrew
-----Original Message-----
From: equismetastock@xxxxxxxxxxxxxxx [mailto:equismetastock@xxxxxxxxxxxxxxx]
On Behalf Of pumrysh
Sent: Tuesday, June 14, 2005 1:47 PM
To: equismetastock@xxxxxxxxxxxxxxx
Subject: [EquisMetaStock Group] Re: Why do traders FAIL?
1. False expectations
2. Probably not much more unless there is something really new
introduced.
3. Mismanagement and #1
4. This one is fine.
Preston
--- In equismetastock@xxxxxxxxxxxxxxx, "metastkuser"
<andysmith_999@xxxx> wrote:
> I have a question (unrelated to Metastock) for the experienced
traders
> on this forum.
>
> I have now read a dozen books on trading -- not the foo-foo books
that
> promise $10M in the next trade, but ones by Tharp (my favorite),
> Chande, Le Beau, Stridsman, Elder, Covel, Schwager (and O'Neil,
> Link,...) and a couple of Tharp's IITM publications on money
> management etc. Will get to Kaufman next. And of course every issue
of
> Roy's MSTT which are simply marvellous.
>
> I've put a couple of hopefully positive expectancy systems together
> (discretionary at this point so it's not easy to use the system
> tester). The systems have four stages: 1) setup (to identify market
> trend and stock trend but not entry), 2) entry (looks at timing), 3)
> exit and 4) money management. I have spent quite a bit of time on 3)
> and 4) because I believe they hold the key to being a successful
> trader. I use volatility as a significant determinant in all 4
stages.
>
> So I've done my homework. The odd thing is that none of this has
been
> difficult to understand -- not just for me but I'm sure for anyone
who
> takes the time and has some patience.... and now I am confused.
>
> 1) Why do so many traders fail? Have they not read these books?
> (Please don't reply that they are undercapitalized and/or they have
> the wrong psychology for trading).
>
> 2) What do reading the next 50 books buy me (besides the enjoyment
of
> reading them)? Surely the law of diminshing returns kicks in right
> about now.
>
> 3) At this point, what would the typical causes of failure be?
>
> 4) This is a Metastock forum. Can someone point me to a more
> appropriate forum for this type of discussion (I have not found
one).
>
> Thanks!!!
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