What Could Possibly Go Wrong?
Whenever I find myself in a bookstore, I always wander over to the business section to see if there is anybody checking out trading books. Wait 5 minutes, and potential rich trader wannabes show up and browse through books on technical analysis. [The answer is no, I don’t have a life.]
“Hmmmmmm, this looks good. Yes, that’s my ticket! I think it’s potentially time to go pick out the color of my new Porsche 911.”
The fact that every major player in the market knows about your head-and-shoulders bear pattern on a 1 hour chart shouldn’t bother you, should it? I mean, you got something there that only 5 million people know about, and is offered in charting 101. So, what could possibly go wrong?
I can see you sitting there, at your computer, pondering this awesome retirement play off the umpteenth head-and-shoulders pattern.
“Ohhh man, do I take this trade? The ones I sit out work, and the ones I get in lose money. Oh [insert market] God, why can’t they all work? Oh man, what do I do? Is McDonald’s hiring?”
Without knowing it, you have probability anxiety. The bad news? Well, it’s serious, and unless you get the cure, your account is terminal.
Do you understand the ramifications of faulty trading logic and what it can do to your account?
Science Just Proved It
Of the 6% of all trading days that “The Vegas BFSG Algorithm” loses money there are two things I can definitively state: 1) The losses will be small, and 2) I know EXACTLY why it lost money. There isn’t any guesswork.
The only thing I don’t know is the probability distribution of those losing days. I once had 4 losing days in a row, and then it went over 9 months with every day making money.
I know how to make money; I don’t have ESP!
I know “The Vegas BFSG Algorithm” has been built and coded with trading logic that works. I know the limitations of the algorithm, and also know that my probability trade-offs don’t give me a case of “probability anxiety”.
Because It’s The Way The Universe Works
So, next time you trade that horse & belly formation looking for your new red Porsche 911, ask yourself if you have any idea why it should work?
Hope & Change is NOT a trading algorithm.
Many, Many Happy Algo Traders
I love action like today: gold set up perfectly, giving us a buy signal at 1745 at 3:25 AM [Chicago time]. Within the hour, we had a confirmation top [explained in the manual] at 1752.
Bingo – bango, $ 7 / oz. gain on the day. [Thank you Mr. Market, see you tomorrow!!]
Seriously, you gonna make me ask this again? What are you waiting for Skeptic Cat?
Have a good day everyone.