We Are The Dumb Money!!!!!

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Derek27
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Ferru123 wrote:
Fri Feb 16, 2018 2:46 pm
What is obvious to Peter might not be obvious to lesser mortals! :)
Derek27 wrote:
Fri Feb 16, 2018 2:43 pm
I think the operative word here is obvious. ;)
I'm not speaking for Peter but I would imagine there's an infinite number of 'obvious' errors you can make, and it's mainly newcomers learning the craft that make them. A checklist of errors to avoid would be very much tailored to an individual.

Top of my list of errors to avoid would be overstaking but it may not appear on somebody else's list.
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Euler
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People hate losses and will do everything to avoid them is an obvious one.
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ruthlessimon
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Derek27 wrote:
Fri Feb 16, 2018 3:07 pm
Top of my list of errors to avoid would be overstaking but it may not appear on somebody else's list.
Take it back 1 step - why is the trader overstaking? Quickly I think you'll see it's not an obvious problem
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Derek27
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ruthlessimon wrote:
Fri Feb 16, 2018 3:13 pm
Derek27 wrote:
Fri Feb 16, 2018 3:07 pm
Top of my list of errors to avoid would be overstaking but it may not appear on somebody else's list.
Take it back 1 step - why is the trader overstaking? Quickly I think you'll see it's not an obvious problem
It's not an obvious error at the time, but on reviewing your trading it becomes obvious. Anyone who suffers a significant loss should be able to quickly work out what they did wrong.
Anna List
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Ferru123 wrote:
Fri Feb 16, 2018 2:43 pm
Anna List wrote:
Fri Feb 16, 2018 11:55 am
I seem to remember betfair dropping a bol**ck, just before they introduced PC, by releasing a statement that inferred that 95% of their customers lost over the long term so I'm sorely tempted to go with Bluesky's 95% rather than Ferru's 70%.
TBH, that could well be far closer to the truth than my vaguely remembered figure from years ago. :)

So that raises an interesting thought - it would appear that, for the vast majority of Betfair users, the advantage of using the exchange is that they lose money more slowly than they do with the bookie (yet just as surely - the pleasure or agony persists for longer).

Jeff
Correct but there's also an added "advantage?" to betfair users and that is that the number of ways that one can lose with betfair is far greater than with a bookie. For example, one can lay a horse and trade with betfair. Also, one can win much and often with betfair and they won't close your account.
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ruthlessimon
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Derek27 wrote:
Fri Feb 16, 2018 3:31 pm
Anyone who suffers a significant loss should be able to quickly work out what they did wrong.
I was thinking about this; not necessarily.

Why can't a government implement austerity to sort out its deficit? It should be super easy. However, by cutting spending, it cuts its income.

Let's say you have an edge, & you're constantly having massive loses on low vol markets. The easy answer is, "the low vol markets are the cause of my problem - cut them". 3mths later, nothing has changed. What the trader didn't realise is that his biggest winners were coming from those low vol markets. Trading is such a complex, intertwined problem - which imo is why not having "the right type of intelligence" (i.e. being inventive & obscure) is the biggest factor for failure, not psychology. Although people won't like that being said, & Peter certainly can't go round saying that - but imo it's true
Iron
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LeTiss wrote:
Fri Feb 16, 2018 3:00 pm
It's a bit like chasing after an attractive woman who you know is a lesbian. You keep trying just on the off chance she gets bored of dildos and strap-ons
Classic! :lol:
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Derek27
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ruthlessimon wrote:
Fri Feb 16, 2018 3:43 pm
Derek27 wrote:
Fri Feb 16, 2018 3:31 pm
Anyone who suffers a significant loss should be able to quickly work out what they did wrong.
I was thinking about this; not necessarily.

Why can't a government implement austerity to sort out its deficit? It should be super easy. However, by cutting spending, it cuts its income.

Let's say you have an edge, & you're constantly having massive loses on low vol markets. The easy answer is, "the low vol markets are the cause of my problem - cut them". 3mths later, nothing has changed. What the trader didn't realise is that his biggest winners were coming from those low vol markets. Trading is such a complex, intertwined problem - which imo is why not having "the right type of intelligence" (i.e. being inventive & obscure) is the biggest factor for failure, not psychology. Although people won't like that being said, & Peter certainly can't go round saying that - but imo it's true
It goes without saying that a lack of intelligence or aptitude will lead to failure. But there are also some fairly intelligent people who will never succeed in trading because they don't have the right mindset.
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ruthlessimon
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Derek27 wrote:
Fri Feb 16, 2018 4:05 pm
It goes without saying that a lack of intelligence or aptitude will lead to failure. But there are also some fairly intelligent people who will never succeed in trading because they don't have the right mindset.
Now this is the interesting bit :)

To that, I'd say are these people the majority? Personally, I think tarnishing everyone with the psychology brush is the easy/lazy & less painful option. Also, it's tricky to define the difference.

If someone genuinely doesn't understand/see something, is that a psychology or intelligence problem?
spreadbetting
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The 'mindset' argument is always trotted out as the reason people lose on exchanges :lol:
Iron
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If you suffer a significant loss on an individual trade, you must have been over-staking.

But let's say you suffer a significant loss over the course of a series of 500 trades. It might be far from clear which of your entry and/or exit criteria led to the loss.

Here's another example of how things aren't always clear cut. Conventional trading wisdom says that you should offer to the market, rather than take. However, there are cases in Peter's videos where he takes from the market so it is always an error to offer to the market, or does it depend on the situation?

Peter alludes to loss aversion, but I'm not sure that not scratching a trade that's losing money is always a losing approach, providing you stake accordingly. I think it depends on your strategy. Some trades may think, 'I am entering at a value price, so I am going to exit at BSP come what may, as I trust it to be a fair price'.

I am reminded of a thread where Peter challenged people to find losing strategies, and no-one succeeded. Other than taking the back price and vice versa, it's hard to think of a strategy that will lose more money than you'd lose through your bank being eroded by commission.

Jeff
Derek27 wrote:
Fri Feb 16, 2018 3:31 pm
It's not an obvious error at the time, but on reviewing your trading it becomes obvious. Anyone who suffers a significant loss should be able to quickly work out what they did wrong.
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Derek27
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There is a clear difference. I'm an intelligent person with a good understanding of trading but I have occasionally let frustration or carelessness get the better of me, resulting in some fairly amateurish mistakes. This is clearly a mindset/psychology issue.
Iron
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Derek27 wrote:
Fri Feb 16, 2018 4:05 pm
It goes without saying that a lack of intelligence or aptitude will lead to failure. But there are also some fairly intelligent people who will never succeed in trading because they don't have the right mindset.
A lack of aptitude will lead to failure in any endeavour, at least until aptitude is acquired.

A lack of intelligence? Define 'intelligence' (actually, don't - whole books have been written on the subject!).

I once read that traders are in the top 10% of the general population, yet most lose money. Perhaps they partly lose money because of their intelligence, not despite it (if they fall into the 'intelligence trap', for example - numerous examples exist on this forum, and, yes, I'm guilty of it too!). Or maybe intelligence isn't the biggest predictor of success - maybe it's things like discipline.

Someone who is dumb as a rock can watch a trading video, apply the approach being shown, and make money if they are disciplined enough. The intelligent person may spend hours over-analysing the video, and end up with an approach that lacks whatever made the method used in the video profitable. William Eckhart, the guy behind the Turtles, once observed that he could publish his methods in a newspaper, but no-one would use them...

Jeff
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Derek27
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Ferru123 wrote:
Fri Feb 16, 2018 4:17 pm
Here's another example of how things aren't always clear cut. Conventional trading wisdom says that you should offer to the market, rather than take. However, there are cases in Peter's videos where he takes from the market so it is always an error to offer to the market, or does it depend on the situation?
I think it's stretching it to call that conventional trading wisdom - I have always offered and taken from the market, as appropriate. It's certainly not an error and in very volatile markets where somebody places an order at a daft price, you would have to be bonkers not to take it - if you don't somebody else will and the opportunity is gone.
Iron
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OK, fine. But I'd love to see an example of one of these obvious errors I hear so much about. :)

The list of obvious errors so far:

A. Overstaking
B. Backing at the bottom of the spread and vice versa.
C. Erm, that's it. :)

Jeff
Derek27 wrote:
Fri Feb 16, 2018 4:24 pm
I think it's stretching it to call that conventional trading wisdom - I have always offered and taken from the market, as appropriate. It's certainly not an error and in very volatile markets where somebody places an order at a daft price, you would have to be bonkers not to take it - if you don't somebody else will and the opportunity is gone.
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