Question to the more experienced long term profitable traders

[Tradertrician]

Let's look at this another way.

If a novice trader entered a liquid market on a favourite with 3 mins to post and then handed the controls over to Peter to manage and exit the rest of the trade. My bet is Peter would be easily profitable over many markets.

He would maximise the profits from the entry's that were ok or moved in a positive direction and would cut losses very short on the entries that were bad or moved in a negative overall trend.

Yes he would obviously be much more profitable if he entered the markets himself but that wasn't the point of this post.

Maybe Peter could take up the challenge and make a video one day. Perhaps get a newbie trader to enter him into a good number of markets and see what results he can squeeze out of them.

[to75ne]

what would that prove? that bad traders are bad traders?

[Tradertrician]

It would prove bad traders need to work much harder on their trade management and exit points don't you think?

[to75ne]

you need a video to prove the bleeding obvious?

[Tradertrician]

Not me but maybe a good few newbies do who are obsessed with entry points

[Nero Tulip]

Peter would close the positions that offered negative expectancy in his opinion and manage the ones that were good at that moment.

The proposition though only has a fraction of the relevance you might be expecting. That's because the positions Peter closes immediately would *most likely be down to poor entry*... and so generally it's meaningless.

The point of interest remaining could be the way Peter would update his inference given the information in front of him... has he seen the market unfold or not? or has he been blindfolded.. this is more nuanced and maybe of interest to better traders.

........But mostly, it wouldn't be an exercise that would reveal much. If anything, it could prove the importance of decent entry, particularly on the processes that would follow. Management of a position is (dependent on type of strategy) harder without having executed the entry. Discretionary / game logic / behavioral traders will have no point of reference from which to update their assessments if you're simply handing a position to someone, they might even make a case for closing all positions!

[Tradertrician]

Thanks Nero

[ruthlessimon]

The point is, the skill new traders should be concentrating learning is actually trading and reading markets after they have entered and not necessarily spend so much time trying to crack the case of getting entry points perfect as a pro trader could easily prove no matter what entry point (within reason) a complete novice dumped them in, over the course of time they would still work a profit from them.

Let's take an example. Let's say a guy is down with Peter for the day - & the newbie has complete access to Peter's trading desk - Peter sits behind.

The newbie opens a position for Peter. He says to Peter the following for justifying his trade: "7mins out, £230k total vol, uncompetitive mdn, spike on the fav, but fav is inside the range, overround 98.9%."

Peter dives for the mouse & exits immediately.

The nightmare question for the newbie, is that the trade was taken with many many variables in mind, & he didn't know which were the major factors in causing Peter's exit. 7 in my example. But if he shifts 1, it could be an amazing entry, maybe all 7 need to be shifted, maybe he needs 20 variables. But he doesn't know this & imagine doing a backtest to find out which variables have an edge - then combining various variables requires another backtest, etc etc etc - utter utter nightmare.

For the sake of not making a googol long post, I've only changed a couple of variables to highlight the problem:

1. "7mins out, £230k total vol, uncompetitive hcap, spike on the fav, but fav is inside the range, overround 98.9%."
2. "2mins out, £230k total vol, uncompetitive mdn, spike on the fav, but fav is inside the range, overround 98.9%."
3. "7mins out, £230k total vol, uncompetitive mdn, spike on the fav, but fav is inside the range, overround 100%."
...

[Derek27]

Having thought about it, I think the best answer to the question, can a pro trader recover from a novice's poor opening trade, is, it depends how bad the opening trade was.

If the pro trader would lay a horse at 7.4 and the novice opens with a lay of 8.4, it may not make much difference in a volitile market but in a tight market it may be beyond profit making. But in any market, if the novice laid the horse at 17.0 (and I'm sure we've all laid horses that have been backed to a third of its price at some stage), it may be beyond recovery.

It's all well and good thinking the pro trader can cut his losses on the bad trades, but what if they're all bad ?

This thread has made me realise that it is actually the opening point of a trade that's most important.

Landing an aircraft may seem to require more skill than take-off, but if I took off in an aircraft with the intention of handing over controls to a professional pilot once in the air, I think in all probabilities, we would crash at the end of the runway!

[Emmson]

Check out this very old thread Tradertrician it might help you

viewtopic.php?f=2&t=196&hilit=your+prod ... +to+others

[OnGoldWires]

I am neither "experienced" or "long term profitable", so I am not really qualified to answer.

However I can see that the entry is critical to trading success.

I believe when the experienced trader sees the market turn unexpectedly against them, they forget profit and they minimise losses. You can't make a silk purse out of a sow's ear.

So the literal answer to question is the "non profitable trader" would have a bigger balance after 100 trades if the expert trader made the exit decisions, but it wouldn't necessarily be bigger than when they started.

I think the question perhaps should be, would the "non profitable trader" trader exit the market earlier than an expert when making a profit looks unlikely? - possibly.

However going back to the question and the phrase "non profitable trader who blows bank after bank", A "trader" buys and sells or lays and backs, in otherwords a trader has to exit the market to qualify as a trader rather than a bettor and I don't think you can "blow bank after bank" trading.

So in conclusion, the error non-profitable traders are more likely to make is not exiting early enough or at all.

[dt888]

Peter would close the positions that offered negative expectancy in his opinion and manage the ones that were good at that moment.

Agree

[Trader Pat]

I believe when the experienced trader sees the market turn unexpectedly against them, they forget profit and they minimise losses. You can't make a silk purse out of a sow's ear.

I think that sentence pretty much nails it. Most new traders spend too much time thinking about the profit and not enough time concentrating on reducing losses. When you start to understand the market a bit better you realise it should be the other way around.

As for 'blown banks' I think I must be in the running for a world record for number of banks blown! Thankfully thats all behind me now but one of the difficultes about trading is that in the short term you can make money and not really have a clue what you're doing, I carried on like that for about 2 years! . This can then make you 'think' you're a good trader even when you're really just gambling instead of trading. When you dont uderstand whats happening on the screen in front of you and the market moves against you thats when frustration sets in, you can chase losses and go in play, ultimately blowing your bank.

[SeaHorseRacing]

I have the t-shirt with along with some others.

I have gambled out of controlled, sat and closed my eyes and just been crazy in the past. I think the most important thing to learn from trading is that you have to make a multiple changes to stop this behavior.

The most important "thing" to learn in trading is. Your going to get bad days. Regardless of how good you are.

I believe there are two phases to overcome to be successful in trading excluding market knowledge and practice.

1) When you have a bad day, trade and behave reckless. Learn how to overcome and prevent this

2) Knowing when luck really wasnt on your side which will see you succeed.
There are trades everyday where the market did not do what I expected it to. Rather then beat myself up I have learned that it is just noise in a small percentage of losses.

I think our brain also expects us to register huge returns for every race. Its mentality.
Never look at short term results. If anyone out there is really struggling to deal with control and blowing banks teach yourself to manage your losses and profits over a longer term.
Dont get me wrong. This is very hard to do. But anyone can learn it.

I only ever look at my P&L on a Wednesday. Not during the day or any other time.

I was going through some spreadsheets last Sunday and I was looking at February. One of my first ever decent months. I went 4-5 days of about 70% losses. Yet I pulled through a £280 and £150 trade that gave me a cracking week. Just on those facts shows why this game is so hard.

It takes a lot of work but its all about seeing the bigger picture.

If your new. Market knowledge will come with experience, Sit it out for 12 months and work purely on bad habits and learning about yourself. Everything else comes with time.

Teach yourself to close trades on your terms. Again not easy to do.

Passion is really important too. When i started trading I wanted to learn horses, greyhounds, tennis and football.

I am passionate about racing. I only trade horses and a bit of grehounds with the odd other market. Massive football fan but when it comes to trading I just dont have the drive or passion to trade it and i think thats why i suck at it and dont trade it. Along with Tennis.

Trading just for the money is not enough, have a passion or find something in it to learn a passion for it.

[ShaunWhite]

I only ever look at my P&L on a Wednesday. Not during the day or any other time.

Similar things have been said before but when your balance is displayed on the BA main window, how do you not glance at it occasionally? It's always nice to make sure everything is settled and you also see your balance when you log onto BF (which I always do as a precaution against BA crashing, even though it never has)

You might not know your exact P&L from a glance but you have a pretty good idea of it.