Tuesday, July 04, 2006

A full glass


Trying to process too much information while trading is the same as trying to fill a glass beyond the point it is full, the rest is wasted.

Try to get a concise useable set of data to use in making trades, or invest.

"Lost"




Ignoring visible (in your charts) and measurable phenomenon, like for instance a buy program signaled by a falling TRIN or a consistently high $TICK will require some very adept survival skills and money management compared to paying attention to where these are.

While it's entirely possible to make money fading these indicators, a trader is best served by knowing where he is, not by fantasizing some market that fits the trade he is in at the moment.

In survival training, when one can't match his own reality of where he is to what he actually sees - he is said to be lost.

A very cautious approach to survival is recommended for someone who is losing, or is falling out of sync or lost. Excuses and imagination aren't particularly helpful and can lead to even poor money management or disaster trades.

When you find yourself at odds with the market it is more important to obey all the risk control rules you put in and have to control loses, not less, in fact it is a high survival trait to pay extra close attention when life is more stressed and dire straights exist. Seeing is usually not the problem, realizing the potential for disaster and taking measured usual steps to avoid it is what is often ignored.

A potential exists in any programed completely mechanical trading system for this same sort of lostness, with the dynamic interaction of the market to be ignored, its what produces failed strategies more often than not, I suspect.