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Hi Gary,
I certainly agree that there are tradeoffs between discretionary and
mechanical trading. The only thing I would add is that I believe a good
discretionary trader can handily outperform a mechanical system and with a
lower risk profile - but like you said he/she has to be at the screen to
produce which isn't the case with a 100% mechanical system.
I can't argue about the character of the market changing either or my
adaptation to those changes. I also believe I'm a better trader now than I
was then, but that's due to getting more proficient at the same methodology
I've been using for years. And yes, there are many subtle differences
between the market we had prior to the fall of 2000 and what we've had since
and are going to have for years to come. Some of those changes I could
easily explain while others would be very difficult. I found the "old"
market much more orderly and more enjoyable (less stressful) to trade. This
"new" market can be very ragged at times and frequently looks like a
bouncing ball heading down an up escalator. It also requires more patience.
And I've noticed that some tools that were very effective in the bull market
are not very effective in this bear, and vice versa (things like
Tiki/Tick/premium, etc.)
So in one sense I've confirmed what you said, at least to a degree.
However, I can tell you that I still use the same entries, the same
timeframes, the same methods to determine the market's S/R levels, and the
same techniques to manage a trade - which are all based on PRICE action (and
I still despise any and all indicators/oscillators). The underlying
foundation has not changed at all, and that is really the point I was trying
to make in my earlier post because there is a huge difference between
adapting to subtle changes in the market (consciously or subconsciously)
versus constantly being on a quest for New methodologies. If that's the
road someone is traveling down then they will never become proficient at any
of them.
Bob
----- Original Message -----
From: "Gary Fritz" <fritz@xxxxxxxx>
To: "Omega List" <omega-list@xxxxxxxxxx>
Sent: Saturday, July 13, 2002 8:55 PM
Subject: Re: Work 50-70 hours a week
> > I disagree completely on having to be on a constant quest for new
> > methods. The markets may change in terms of bear/bull and other
> > things like volatility but the Price action doesn't. I've been
> > trading the same methods for years and while I have added a wrinkle
> > here and there as I become more experienced, the underlying
> > methodology has remained and will remain constant.
>
> I suspect you have changed more than you realize. The markets DO
> change and they DO act in different ways, and a successful trader
> must adapt to those changes to continue to succeed. I'd guarantee
> your trading methods are not identical to those you used in early
> 2000. The broad-brush approach may be the same, but I'd bet a lot
> that your fine-detail implementation of those techniques has changed.
>
> A good discretionary trader is so "in tune" with the market that he
> may not even notice its character changing, and may not think about
> the changes he makes to his approach. It all happens subconsciously
> as the trader flows with the market. I doubt ANY successful trader,
> discretionary or no, can succeed for long without rolling with the
> market's punches.
>
> A mechanical trader's system is cast in stone, so he can't "fudge"
> his approach without being aware of it. A mechanical trader may be
> more susceptable to market changes, especially if his system does not
> adapt. I'd believe that mechanical traders have to spend more time
> refining and adjusting their approaches, especially since they then
> cast those approaches in stone and expect them to work without ANY
> changes.
>
> On the other hand, a mechanical trader doesn't have to spend his time
> staring at screens during the trading day, because the system does
> that for him. A mechanical trader doesn't have to spend time
> watching the pre-open, or trying to decipher news events, or doing
> many of the other activities that occupy a discretionary trader's
> time. Different approaches pay their dues in different ways, but
> they all pay their dues.
>
> Gary
>
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