How long would be able to survive in business casino, if the majority of its visitors are not lost, but won? Same on the market. In order to continue to exist, the market should act in such a way that the participants lost. Otherwise, where to get money to pay the winners, if the majority wins? Casino has certain advantages compared to the market - it can pre-set rules of the game, which will provide the owner of the mathematical advantage. The market also can not directly control how to play each individual player. Most traders - is smart, educated people. They have almost unlimited sources of information on how to trade (...;) - Remarks. Moishe ...). They are powerful computers with intelligent programs designed to win the market. Why, then, because a high percentage of traders, bearing losses?
It is well known answer is that traders can not adequately manage their emotions in order to achieve success. This is certainly true. Another less-known reason is that the market is constantly misinforming the participants. I do not want to say that the market has its own free will, or there is a conspiratorial group among insiders, set itself the aim to manipulate the market. That something is happening by itself due to the nature of the market. Market like the enemy, who kept trying to make you play badly.
The most common explanation for this phenomenon is the concept of random self-empowerment. Traders are not always rewarded with a profit when doing everything right, just as not every time they are punished with a loss, when they operate properly. It is therefore extremely difficult to articulate what is right and what is not. Compare with an electric fence. Every time you walk along it and do not touch the wires, you feel fine. Every time you touch the wires, you get an electric shock. Therefore, neither for people nor for the animals do not need much time to learn how to deal with an electric fence.
Think about how much easier it would be to learn to trade, if every time a trader should not be the correct procedure for decision-making, he would automatically receive a loss. And at the same time, if received remuneration in the form of profit each time took the right decision. You could learn to properly sell much faster.
As a real opponent, trying to get you to trade properly, the market is constantly sending you the misinformation. A significant part of this misinformation is that the market is constantly changing its behavior, so that even a successful trader must be constantly vigilant and ready to change their approaches to preserve profits.
Have you attention to the consistently low results, which provide various trade advisers (trading experts)? This is the usual well-known example of the idea that no mechanical approach can not be successful for very long, because the market is changing.
Every successful tereyder has a lot of periods when his system or method may stop working. If the market has changed, do about it nothing is impossible. You can only fix the problem and try to change the system. This is the reason for malpractice reoptimizatsii trading systems. Let's assume that you have a great trading system based on three moving averages. When tested on data for the past few years, she brought an incredible amount of easy profits. Of course, that you are using different sets of optimized moving averages for different markets, because each market, "his face". You are tuned to the markets and are ready to trade.
But wait! You know that the market is constantly changing in order to knock traders out of a rut. It is therefore logical to assume that the right set of moving averages will vary over time. Therefore, as part of your approach, you set for yourself frequency reoptimizatsii its system of moving averages - and the more the better.
Let me reveal to you a little secret. Your system will always be an excellent trade in the past, but most likely will create losses in the real trade, regardless of how often you it reoptimiziruete. Yes, of course, you will have periods with a decent profit. It will inspire you. However, this market given you another batch of misinformation that you cheered and continued in the same erroneous manner. In the long run, if we do not take into account the unusually successful, you will definitely lose.
I do not want to say that the market does not change. He obviously does. One of my favorite sayings about the market says: "In the future, all will be well, as it was, just different." All I want to say is that any attempt to modify your approach to match recent changes will be like for the dogs attempt to grab its tail.
When you reoptimiziruete system every two weeks, you agree to make the assumption that within the next two weeks the market will behave the same way as the previous two. This is a nice suggestion, but is there any evidence to support it? Studies show just the opposite. The best options for the next period is not likely to be consistent with the best parameters of the last period, regardless of what window of time you take.
When people ask me how the behavior of the system over the past 12 months to get information on how to behave in this system the next 12 months, I always ask the question. What makes you think that the market in 1997 will be more similar to the market in 1996 than the market in 1987 or 1993. In fact, 1997 will be more similar to other previous years, but not for 1996.
The purpose of this disinformation is a market trader in the cause suspicion to correct profitable trading techniques and to abandon them too soon. One of the most pronounced features of professional traders is the commitment of their trading systems for a much longer time than in the unprofitable traders. We all go through periods of losses, regardless of what approach we follow. We can not increase our chances of success is constantly changing their approach. Since the number of losers approaches and systems are much higher than the number of revenue-generating, changing the system often do we actually reduce your chances.
The correct solution would be to find an approach that does not require optimization and working on a large number of markets. To correct fit the historical data, use the same rules for all markets. If you can trade this system in the future over a long period on a large number of unrelated markets, you will almost certainly succeed, though it can never be guaranteed 100 per cent.
The reason this approach works is that although markets are changing their short-term patterns, they generally remain trend. This is what gives you the advantage. If you trade trends in the long run you will win. Attempts to permanently modify your system to adapt to changing patterns in the recent past will not increase your chances of success. Almost certainly you will fail.
Human nature is such that we are always trying something to improve. I'm not trying to make you not improve your system in the future. Just do not let zadurit myself thinking that your system has become better because of the fact that it somehow adapts to the constantly changing market. It might be better if it is profitable for a long time or if trading with profit more markets.
It is well known answer is that traders can not adequately manage their emotions in order to achieve success. This is certainly true. Another less-known reason is that the market is constantly misinforming the participants. I do not want to say that the market has its own free will, or there is a conspiratorial group among insiders, set itself the aim to manipulate the market. That something is happening by itself due to the nature of the market. Market like the enemy, who kept trying to make you play badly.
The most common explanation for this phenomenon is the concept of random self-empowerment. Traders are not always rewarded with a profit when doing everything right, just as not every time they are punished with a loss, when they operate properly. It is therefore extremely difficult to articulate what is right and what is not. Compare with an electric fence. Every time you walk along it and do not touch the wires, you feel fine. Every time you touch the wires, you get an electric shock. Therefore, neither for people nor for the animals do not need much time to learn how to deal with an electric fence.
Think about how much easier it would be to learn to trade, if every time a trader should not be the correct procedure for decision-making, he would automatically receive a loss. And at the same time, if received remuneration in the form of profit each time took the right decision. You could learn to properly sell much faster.
As a real opponent, trying to get you to trade properly, the market is constantly sending you the misinformation. A significant part of this misinformation is that the market is constantly changing its behavior, so that even a successful trader must be constantly vigilant and ready to change their approaches to preserve profits.
Have you attention to the consistently low results, which provide various trade advisers (trading experts)? This is the usual well-known example of the idea that no mechanical approach can not be successful for very long, because the market is changing.
Every successful tereyder has a lot of periods when his system or method may stop working. If the market has changed, do about it nothing is impossible. You can only fix the problem and try to change the system. This is the reason for malpractice reoptimizatsii trading systems. Let's assume that you have a great trading system based on three moving averages. When tested on data for the past few years, she brought an incredible amount of easy profits. Of course, that you are using different sets of optimized moving averages for different markets, because each market, "his face". You are tuned to the markets and are ready to trade.
But wait! You know that the market is constantly changing in order to knock traders out of a rut. It is therefore logical to assume that the right set of moving averages will vary over time. Therefore, as part of your approach, you set for yourself frequency reoptimizatsii its system of moving averages - and the more the better.
Let me reveal to you a little secret. Your system will always be an excellent trade in the past, but most likely will create losses in the real trade, regardless of how often you it reoptimiziruete. Yes, of course, you will have periods with a decent profit. It will inspire you. However, this market given you another batch of misinformation that you cheered and continued in the same erroneous manner. In the long run, if we do not take into account the unusually successful, you will definitely lose.
I do not want to say that the market does not change. He obviously does. One of my favorite sayings about the market says: "In the future, all will be well, as it was, just different." All I want to say is that any attempt to modify your approach to match recent changes will be like for the dogs attempt to grab its tail.
When you reoptimiziruete system every two weeks, you agree to make the assumption that within the next two weeks the market will behave the same way as the previous two. This is a nice suggestion, but is there any evidence to support it? Studies show just the opposite. The best options for the next period is not likely to be consistent with the best parameters of the last period, regardless of what window of time you take.
When people ask me how the behavior of the system over the past 12 months to get information on how to behave in this system the next 12 months, I always ask the question. What makes you think that the market in 1997 will be more similar to the market in 1996 than the market in 1987 or 1993. In fact, 1997 will be more similar to other previous years, but not for 1996.
The purpose of this disinformation is a market trader in the cause suspicion to correct profitable trading techniques and to abandon them too soon. One of the most pronounced features of professional traders is the commitment of their trading systems for a much longer time than in the unprofitable traders. We all go through periods of losses, regardless of what approach we follow. We can not increase our chances of success is constantly changing their approach. Since the number of losers approaches and systems are much higher than the number of revenue-generating, changing the system often do we actually reduce your chances.
The correct solution would be to find an approach that does not require optimization and working on a large number of markets. To correct fit the historical data, use the same rules for all markets. If you can trade this system in the future over a long period on a large number of unrelated markets, you will almost certainly succeed, though it can never be guaranteed 100 per cent.
The reason this approach works is that although markets are changing their short-term patterns, they generally remain trend. This is what gives you the advantage. If you trade trends in the long run you will win. Attempts to permanently modify your system to adapt to changing patterns in the recent past will not increase your chances of success. Almost certainly you will fail.
Human nature is such that we are always trying something to improve. I'm not trying to make you not improve your system in the future. Just do not let zadurit myself thinking that your system has become better because of the fact that it somehow adapts to the constantly changing market. It might be better if it is profitable for a long time or if trading with profit more markets.
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