Throwing Money Out the Window
May 4, 2006 by Trader Rich
This is going to be a real quick post. I'll elaborate more when I have time later today. This week, I feel like I'm driving 85 miles an hour down Route 80 in a convertible with 1000 $10 bills just thrown on the seats and on the floor. You can imagine how quickly people would be slamming on the brakes to grab some money off the highway.
Out of total and utter frustration, I actually took the advice of 1 of you who stated that why not go Contrarian on yourself and if you are about to go long on a trade, go short instead. Well, not having a good trading week and unable to get any upward pip profit movement, I decided this morning to do the opposite of what "conventional wisdom" from my brain was telling me. WHAT DO YOU KNOW, a quick and easy 30 pip profit. If I had done this over the last 2 weeks, I would have been very profitable. I don't want to do this though and I don't even know if it could even be successful after a while. I'm thinking that it would be hard for me to continue to study the charts looking for a setup and then at the moment of execution, go opposite of what I think. Could doing this actually change the way I think about trading and mold my thinking to a profitable way? Would I subconsciously look for setups that were contrarian and then go opposite of this which would really just be doing what I'm doing now? Who knows.
Talk to you later.
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In order to greatly reduce the problem you refer to with contrarian trades (there isn’t a way to 100% eliminate it) , I wrote a little excel speradsheet where I input the trade I like and it calculates the trade to type in including stops and exit points. The advantage of this is that all my mental process goes into the trade I like, and I don’t spend time calculating the contrarian position, which I can now mindlessly type in.
A man after my own mind, my system is working so bad that I had the same thought!
The real question is, what does this imply!…
Hey Uri. Thanks. Do you care to share the spreadsheet?? rich@forexproject.com.
This may imply that it could be a game of flat out guessing with money management.
MHO is forming around the notion that all indicators are bullshit. I traded the London session last night, I had 5, 20, 100 EMAs, tried to trade the crosses and bounces. Everytime I traded it went the other way….arrrghhhh!
When I stepped away and cleared my mind I took the indicators off the chart, I have been picking the tops & bottoms of a wedge! This got me thinking, are indicators preventing me from thinking about the PRICE, what is the PRICE doing.
Craig, I had thought the same thing. I was just thinking that I focus to much on the bottom of my charts (the indicators), than the top (the price)
Rich, if I understand you correctly, I don’t think it implies guessing is the same thing. If that were the case, statistically speaking a trader should on average break even minus the bid/ask spread - and most traders lose much more than that.
I was wondering if this results partially because most of us make the wrong choices in interpreting trading patterns which seems “obvious” to see at the time, but in reality just aren’t there.