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<DIV><FONT color=#000000 size=2>I don't respond publicly to this forum often,
but here is my two-cents worth on this subject (although anyone who knows me
will tell you it is worth considerably less)</FONT></DIV>
<DIV><FONT color=#000000 size=2></FONT> </DIV>
<DIV><FONT size=2>YOU CANNOT HAVE ONE WITHOUT THE OTHER. It is not the
'system' (and I despise that word when it comes to trading) that makes the
trader, it is the trader that makes the 'system'. </FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT color=#000000 size=2>There are far too many aspiring traders that
believe they are just one indicator/oscillator/optimization/system away from
becoming a successful trader, and they are wasting far too much time on this
endeavor as they are completely "missing the boat". And then
there are the Neuronet folks with their mutli-syllabic words that sound oh so
impressive, but have nothing at all to do with trading. Whether you can
trade successfully or not depends upon your resolve/ability to conquer/control
the fears associated with trading, and be able to think clearly and manage your
position WHILE IN THE MARKET. Of equal importance is the ability to trade
WITHOUT a BIAS or OPINION as to market direction (NO EGO), and realize that
there is no such thing as overbought/oversold, and no price is too high to buy
or too low to sell. You also need to learn to like your losses as they
just put you one step closer to a winning Trade(s) and are nothing more than the
cost of doing business.</FONT></DIV>
<DIV><FONT color=#000000 size=2></FONT> </DIV>
<DIV><FONT size=2>I take the same trades each day, but how I manage each trade
is dependent upon my read of the environment (discretion). You cannot
trade the exact same size and exit the exact same way for every
trade/environment. For example, a trending market requires a different
approach than a range bound market. In the end it boils down to your
ability to read the PRICE action and adopt your game plan to the current
conditions - AND THEN EXECUTE. And all you 1-lot traders out there better
re-think your approach as trading 1-lots is a fool's game. You are far
better off trading 3 ES/NQ than you are trading 1 SP/ND. I'll make the
same challenge to the 1-lot traders that my mentor made to me when I was a 1-lot
trader - I'll trade 3 NQ/ES to your 1 ND/SP and we'll see who wins. I took
him up on that and he cleaned my clock..... I have not traded 1-lots since
and never will again.</FONT></DIV>
<DIV><FONT color=#000000 size=2></FONT> </DIV>
<DIV><FONT size=2>I realize there are subtle differences between daytrading and
position trading, and that there is more than one approach to trading
successfully - but you still CANNOT avoid going through the above mentioned
process. </FONT><FONT size=2>I have been through this personally, and
believe me it was not pleasant and required a lot of soul searching and a long
look in the mirror. And then I went through it again when I started to
trade OPM (although on a lesser scale). But I had the great fortune of
being taught by an outstanding trader who showed me what trading is really about
and enabled me to work through it. There are different "tools"
you can put in your toolbox, but you still have to learn how to use them under
fire.</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>Hope this helps at least one of you.</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>Bob Heisler</FONT></DIV>
<DIV><FONT size=2><A
href="http://www.rjhtrading.com";>www.rjhtrading.com</A></FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<BLOCKQUOTE
style="BORDER-LEFT: #000000 solid 2px; MARGIN-LEFT: 5px; PADDING-LEFT: 5px">
<DIV><FONT face=Arial size=2><B>-----Original Message-----</B><BR><B>From:
</B>Scot Billington <<A
href="mailto:scot.billington@xxxxxxxxxxxxx";>scot.billington@xxxxxxxxxxxxx</A>><BR><B>To:
</B><A
href="mailto:realtraders@xxxxxxxxxxxxxxx";>realtraders@xxxxxxxxxxxxxxx</A>
<<A
href="mailto:realtraders@xxxxxxxxxxxxxxx";>realtraders@xxxxxxxxxxxxxxx</A>><BR><B>Date:
</B>Monday, January 24, 2000 12:41 AM<BR><B>Subject: </B>[RT] Systematic vs.
Discretionary<BR><BR></DIV></FONT>
<DIV><FONT size=2>I think one of the critical decisions a trader makes, and
one of the true distinctions between trading styles is systematic vs.
discretionary.<FONT size=2> When I say systematic trading, I mean
mechanical trading, X closes under Z with A, B, C in line, I sell with a
stop at Y EVERY time.</FONT></FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>I will make the argument for systematic trading and invite
someone to do the same for discretionary.</FONT><FONT size=2> This is
my opinion derived from what I consider to be a fairly solid argument.
People have made money with all types of trading, so I do not begin to
suppose that what I believe is the only or even necessarily the best way to
profit. I do believe that my points are valid and do provide the path
of least resistance to successful trading. I will also (and I
encourage anyone arguing for discretionary to as well) constrain my points
to sys. vs. disc. only, not subsets of each class. I will try to stay
as objective as possible.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>The major advantage that systematic trading offers
is that</FONT> <FONT size=2>it removes as much human emotion as
possible from the trading decision. Human nature wires us to be losers in
the markets. Problems at home, traffic, surroundings etc. all affect our
emotional disposition, which in turn usually affects our market perceptions.
It is rare to be able to make clear, consistent, rational trading decisions
under the circumstances of life. It is very difficult to keep your 'mood',
good or bad, out of your thinking process. With a system the traders
reactions to the market environment are determined outside of market hours
allowing for the maximum amount of reflection and for the best judgment
of the trader. This has not even begun to consider how much affect our
recent trading results can have on our decision making process. Win a
lot, feel good, overly aggressive. OR Win a lot, afraid of
losing it, overly conservative. Lose a lot, want it back, double
down...etc. </FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>Second major advantage is that of consistency. Most
strategies work sometimes and don't work sometimes. One needs
consistent application of a theory over a large set in order to catch the
good and the bad. A system trader by definition will make the same
decisions to the same relevant information time after time, year after
year. He/she allows creativity to come out during research and
testing, but reacts the actual trading process like a robot. The
model of consistency. The burden of consistency on a discretionary
trader is enormous. When one is discussing a trading career that
may last into the decades, one can see how hard it is to use the same
thought process again and again. Weigh the same factors again and
again. Another note is the incredible pressure placed on the trader
and the wear it might have over a lifetime, particularly if decisions
are being made 'on the fly'. You have had a solid year as a
discretioary trader. Can you be sure that you can repeat that
performance again and again and again? There is much less day to day
pressure on the systematic trader.</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>A third advantage is in testing theories and delineating
between problems with the method or mistakes by the trader.
Discretionary trading can not be back tested, and it is very difficult to
judge the underlying theory, since the individual trader plays such a large
roll. The only way to judge a discretionary method is by real time
trading and even then one can not place the cause of losses. For
example let's say I am trading discretionary method X, and I am not making
money. Am I going through a normal down period? Am I bringing too much
emotion and inconsistency into my decisions? Are my problems or triumphs at
home influencing my trading? Or, does method X not give me a market edge?
How do you tell? Am I looking at the wrong fundamental factors/market
patterns, or am I nervous about my impending wedding, or does the entire
idea just not work? Systematic trading avoids these paradoxes. Systems
can be back tested and future performance, therefore, estimated. Emotions
are removed, and broken rules alert the trader to their re-appearance.
Discipline and consistency are much easier to have and to track when one
trades a system. If losses occur, one can say, "Have the rules
been followed?" If they have, you know the problem lies within
the method. If not, the problem lies with the trader.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>Last, discretionary trading attracts many weaknesses of
our psyche. With discretionary trading we might be able to sell the
high, buy the low, or be 'right'. Market prediction becomes
foremost. We can become too tied to each individual trade or decision
rather than seeing them in their proper context as one of a very large
set. Discretionary trading's siren song is the possibility
of all winners or to be all knowing or to have figured out some market order
to the nth degree. While these things may or may not be possible, they
are NOT necessary in order to make large trading profits.</FONT></DIV>
<DIV> </DIV>
<DIV> </DIV>
<DIV><FONT size=2>Scot Billington</FONT></DIV></BLOCKQUOTE></BODY></HTML>
</x-html>From ???@??? Mon Jan 24 06:43:17 2000
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Date: Mon, 24 Jan 2000 08:30:06 EST
Subject: [RT] Re: inflation/implication on bonds
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In a message dated 1/22/00 4:43:55 PM Eastern Standard Time, swp@xxxxxxxxxx
writes:
<< Ben -
1) It is Poser, not Posner.
2) I am a technical analyst who happens to have a degree in economics.
With that out of the way, I can give you lots of on the one hand and on
the other hand.
First of all, before I get into all of my equivocating, be aware that I
do believe that inflation is likely to pick up. I would not be at all
surprised to see US CPI inflation reach 3.5% (core could only reach 3.0%
or so). Currently total is at 2.7% and core is around 1.9%. I doubt that
we can get as high as 4.0% total and 3.5% core. Given that the long bond
is at a real rate of 4.0%, which is relatively high historically, I
suspect that we could see a pinch sooner or later.
>>
Good Morning
Sorry for MIS spelling your last name
thank you so much for you in depth implication for the bonds
we all need contributors like you
Best regards,
Ben
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