Systems, merit and philosophy

Discussions about personal psychology for the individual trader.
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Vince
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Systems, merit and philosophy

Post by Vince » Thu Aug 28, 2003 1:18 pm

I throw a question out to the readers....

At what stage in a persons development would you consider they merit professional help?

For example, in Pop (American) Idol, I see young wannabe's strutting their stuff in the hope of getting a chance to be taken on by the professionals, so that their raw talent can be polished smooth, and they can move from amateur to finely tuned professional.

At what point in someones career do you think this should happen?

Do you think that people should refuse the opportunity to be taken on by professionals, if they do not think, in their heart of hearts, that they are ready yet? If unwise decisions are taken, can they ever be reversed?

If one of the Pop Idol wannabe's sings a great first song...should they then be forced to sing every song in the book, before they are taken on? Surely, they would all die, before they could do it, no?

Essentially, I'm asking, "how long does the piece of string have to be, before it becomes a rope, from which you can hang yourself?"

Thanks in advance

Vince

P.S. This is a general question and not specific to any potential employers I contacted today.

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Post by Sir G » Thu Aug 28, 2003 3:01 pm

Hi Vince-
At what stage in a persons development would you consider they merit professional help?

For example, in Pop (American) Idol, I see young wannabe's strutting their stuff in the hope of getting a chance to be taken on by the professionals, so that their raw talent can be polished smooth, and they can move from amateur to finely tuned professional.

At what point in someones career do you think this should happen?

Do you think that people should refuse the opportunity to be taken on by professionals, if they do not think, in their heart of hearts, that they are ready yet? If unwise decisions are taken, can they ever be reversed?

I think the Pop Idol example you use also points to the fact, that not everyone has the talent that they believe they have. Even those that are on the show are not there because there was an open call and they simply showed up. They were selected to be there. I’m sure the ones on the weekly show were the selected 1% or .1% of all those that tried to be on the show. The crème has already begun to rise at that point. .

Seykota says many are called but few are chosen…. Indeed.

Take the other MJ… Michael Jordan, his gift was basketball. But he always wanted to play baseball… he tried and his baseball talent was basically sub par with the other farm team talent. He said he wants to join the PGA, but on any given day, I could beat him on the links. He tried to run the office of the Washington Wizards and that was also a non event.

The question boils down to, what makes you special? How can you help them, not how can they help you?

The pros are pros for a reason, it would be wrong not to expect them to do what is in THEIR best interest.

Right there Vince are the doors that are wide opened for all of us. How can WE help & improve THEM.

If you can do that, then you can select which door you want to enter and you will be welcomed to stay.

Gordon

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Post by Vince » Thu Aug 28, 2003 3:28 pm

Sir G,

Reasonably good answer - many thanks! Severe weakness in your argument though....and I partly take responsibility for it.

There is one huge and fundamental difference between Pop Idol and trading. The Pop Idols have innate talent that cannot be harnessed, measured, quantified or bottled. In short, it is unique.

I have had such a unique talent myself. As a youngster I was an awesomely brilliant athlete. Any distance over 400 metres and you could forget about beating me if you were a contemporary. It was an innate talent. Even, my brothers, whilst being supremely fit, with the same build as me, and a product of the same loins and sire, couldn't measure up to my performance. It was unique and belonged to me and me alone.

What we are talking about is trading. It is teachable, after all, wasn't that the whole point of the Turtle exercise? It is repeatable, quantifiable and it requires very little innate skill.

Doors aren't necessarily as readily opened for teachable skills. Personalities, jealousies, all manner of emotions are responsible for opening and closing the doors. If you read Seykota, he talks about rejection, and pain and all the other emotions involved with success and trading. Somewhere on Seykota's site he talks about "fairness" and that it doesn't exist, and he is right, when we are talking about non-innate skills.

Very difficult to be objective, when you hold someones career in your palm, and you know that what they have, can be quantified, measured and repeated by anybody.
How can WE help & improve THEM.
LET'S GET REAL HERE!!!! What did any of the original Turtles do for Eckhardt and Dennis? Except fulfil a whim of theirs, to prove that trading could be taught!

The film Trading Places, is the absolute perfect example, for what I'm talking about. I am asking for my piece of luck based on merit. Is it too much to ask for or expect? Jeeeez we only come here once, and why not promote success for self starters? After all, the original Turtles had it done for them. Not only that, they recieved a salary a trading account and a huge amount of media coverage...to boot! Even the failure Sands, has managed to thrive successfully for many years, of of it.

In a way, I believe I merit it more than the original Turtles, because I wasn't cossetted and taught by people with obvious wealth and success, gained thru trading, who would have put to bed, any doubt I had about success in the markets being achievable. I paid for the course with my hard earned money and I sat here for almost two years trying to work thru the rules and to filter out the massive amount of noise out there, in order to build my system. To this day, I don't know how I have finally managed to achieve what I have achieved.

I have had to fight everybody around me to get this far, because they all thought I was a complete idiot for even contemplating that; firstly, automated systems could be written, and secondly, that I was capable of building one.

Of course, if Soros had whisked me off for a training course, then I would have been the talk of the town and life would have been a bed of roses for me. Unfortunately, 99.999% of the people in the world only believe success is achievable, after the fact. They don't realise the pain and heart ache that us mere mortals have to go thru, to get success. Boy, wouldn't I have been a different person if I'd been whisked of the street at the age of 19 and given rules for success by the best traders in the world...to send me on my way!

In a wider context....aren't we supposed to be nurturing and generating wealth at every opportunity....after all......that is the engine that drives the world forward, isn't it?

Vince

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Congrats!

Post by William » Thu Aug 28, 2003 6:15 pm

Vince,

Congrats on your progress as a self-taught trader.

One point i am sure you are already aware of, each turtle had varying levels of success. Some failed out immediately (Sands), some did O.K. and some did very well. So while i agree, the turtles were given a good oppurtunity to be successful traders, many still failed. The turtle process still managed to weed out those who were chosen to be good traders.

I think its wasted energy to dwell on other's percieved advantages, things are usually a whole lot different when you learn more about his or her individual situations.

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Post by Kiwi » Thu Aug 28, 2003 6:16 pm

Vince said:
In a wider context....aren't we supposed to be nurturing and generating wealth at every opportunity....after all......that is the engine that drives the world forward, isn't it?
I'd suggest reading a book called "The Wealth and Poverty of Nations" or even one called "The Origins of Virtue" to get an answer to that question.

But back to the original question:
At what stage in a persons development would you consider they merit professional help?
I think that depends how badly one needs help or what one wants. You haven't really told us what you want. In my case I want to make enough money to be wealthier than my parents were and to do the things I want to do. I don't drive a Merc because I think its pretentious and shows some things about people who drive them that I don't want to have shown about me (figure that out :-)) I do have a big house because I enjoy space from my teenagers and I like my pool and the kayaks. If I earn enough trading to cover those expenses and build a little extra capital I've achieved the financial criteria for my happiness.

This seems to make me a happy private trader. Why would I want professional help? Only if I wanted to be a public trader or work for someone else - in which case I'd need to ask what underlying issues were driving that.

John


PS (added at later edit). The time I would seek help was if I found that I wasnt following my own rules or was having real difficulty keeping the discipline. Also, "The Wealth and Poverty of Nations" isnt the Adam Smith book but a recent book analysing why some nations have done well and some poorly. The author is less biassed than many and the book well worth a read whether you're a socialist or a Randian. "The Origins of Virtue" is a wonderful little read that looks at a social evolutionary view of why some of the virtues (like altruism and like training other traders when you can trade perfectly well yourself - something frequently attacked on another forum) may have developed. Highly recommended :)
Last edited by Kiwi on Thu Aug 28, 2003 8:21 pm, edited 1 time in total.

Vince
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Post by Vince » Thu Aug 28, 2003 6:21 pm

Kiwi,

I want freedom, thats all! It doesn't cost much for me, because whilst I would love another Mercedes SLK and a Ferrari 360 Spyder, I really want to sit on a beach and be able to chill for the rest of my life. 3K GBP net pcm (index linked) for the rest of my life, would do nicely!

Vince

P.S. I definitely want to read the "Wealth and Poverty of Nations" its on the top of my reading list after I've read Chickenhawk - about Nam.

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Post by NeueZiel » Fri Aug 29, 2003 12:15 am

Like that old saying... "Once you know the why, then you will know the how."

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Post by enigma » Fri Aug 29, 2003 6:26 am

I didn't think that the Turtle experiment proved whether traders are born or could be bred. Firstly, the candidates went through quite a bit of screening before being selected for the test. This indicated that Dennis and Eckhardt were already looking for characteristics of a good trader, which kinda cotradict their original bet. In order to prove that trading could be taught, should they not have chosen the candidates by random?

From what I understand, some of the basic traits of a good trader are discipline (including emotional discispline), flexibility (open-minded) and organised, which are generally very difficult to teach. So, being born with (some of) these characteristics is essential for a trader. Therefore, in some ways, traders are born, no?

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Post by William » Fri Aug 29, 2003 8:17 am

Enigma,

I agree that they did some parsing out to help increase their odds on having good traders, so the study would not be able to prove that totally random people could be good traders. But the fact that they did screening and some people still weren't good traders suggests to me that it is an innate ability. They were taught the necessary skills to be very profitable traders. If they were capable of following the rules they should have been equally profitable. However, the emotional element of trading, can't be taught, either you can handle it or you can't.

Dennis and Eckhardt reduced trading down to the only thing they couldn't control and ultimately, the one thing their study definitively proved was the importance of psychology in trading.

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Post by Vince » Fri Aug 29, 2003 11:01 am

The ones who failed, misinterpreted the rules, in the same way I did, for the last 2 years.

TT was specifically about a bet, between Eckhardt and Dennis, that trading could be taught.

There is no emotion in trading. c.f. told me himself, that he has a computer that can put on, in excess of 4000 trades a day. That was when I met him on St Thomas, last year.

Filtering candidates was a process that had to be done, faced with mountains of CVs for few places.
Last edited by Vince on Fri Aug 29, 2003 2:59 pm, edited 1 time in total.

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Post by damian » Fri Aug 29, 2003 11:49 am

Vince,

How long have you been trading for?

damian

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Post by William » Fri Aug 29, 2003 11:56 am

By misinterpret, does that mean not be able to follow? c.f. has mentioned that of those that could follow the rules and initiate the same trades at the same time, they still came out with different results..because they couldnt follow the rules the entire time with an abandonment of what they deemed common sense.
After the trade my account was up $78,000 which represented about a 100% increase in just under a few weeks. The other turtles made far less money than I did on this trade. In fact, the next best win was $28,000. This was amazing. We had all been taught exactly the same thing but my return for January was three times or more than the best of the other turtles.

In terms of the bet, i know Dennis is thought to have won the bet. But what did it prove? I think it proved that they could create a system, based on a set of rules that encompass the correct ways to discretionary trade, that could be implemented systematically by anyone who was capable of following the rules. However, i think they also found out, that
not everyone can follow the rules. So to say that Dennis won, i think its with the caveat that the "anyone" in question has the right emotional profile.

But i agree with your assertion, that good trading is unemotional and good traders are able to check their emotions at the door. But i dont think all people can do that... no matter who taught them or what rules they apply...
There is no emotion in trading. c.f. told me himself, that he has a computer that can put on, in excess of 4000 trades a day. That was when I met him on St Thomas, last year.
If trading weren't an emotional process, why would c.f. hire traders who have "a cast iron stomach" and can handle pressure.
The difference in return had nothing to do with knowledge and everything to do with emotional and psychological factors. Over the years, I keep finding evidence that emotional and psychological strength are the most important ingredients in successful trading.

- Forum Mgmnt
Another trader, who was fired from the program, is an example of the opposite. He was extremely interested in money and making it big. I remember during the program that he was shopping around for classic Rolls Royce cars. He was a flashy dresser and wore a lot of gold.

As a result of his strong desire to be rich, he was very greatly affected by the market swings. I remember one time that a profitable position came back giving up all the profits and I came back from vacation and noticed that his telephone was in little pieces. While I was out, he got extremely angry and smashed his telephone into bits.


If by saying "trade" you mean that you will pull some random guy off the street, give him rules, an account and a computer and have it automatically trade itself, with that guy essentially pulling a Rip Van Winkle method of trading, yea sure anybody can trade a fully automated system.

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Post by Vince » Fri Aug 29, 2003 12:14 pm

By misinterpret, does that mean not be able to follow?
By misinterpret, I mean that they thought that the rules worked in a different way, than they actually did. I had the same problem myself. From the TT manual, it really is difficult to clear away all of the noise, in order to understand the rules correctly. I would also guess that some of the rules were left out, purposely, for them to work out, for themselves. It was this that seperated their results and not emotion.

c.f. had a major advantage over people like Russell Sands, in that he was a computer programmer and importantly, he had been writing trading simulation programs for 2 years, before the course.

I would guess that c.f. was able to test the rules quickly and efficiently, and that people like Sands weren't able too, because they weren't programmers or they weren't familiar with writing trading programs. I would guess that when c.f. came back from the Christmas break, he had been programming and testing the rules, and he'd had an AHA about some of the unwritten rules....and it was this, that enabled him to shoot ahead.


Vince

P.S. I'm adding a caveat. I say "I guess" a lot in the post above. I say that because I am driven by common sense based on the evidence as I see it. My interpretation of common sense has got me into a lot of trouble over the years! But I have generally been proved to be right.
Last edited by Vince on Fri Aug 29, 2003 2:55 pm, edited 1 time in total.

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Post by William » Fri Aug 29, 2003 12:53 pm

not to belabor this point but i find this interesting...

I think this is an interesting thought experiment, which in the end may prove my point about psychology and emotions.
From what i gather, you believe c.f. succeeded because he found out some secret in the rules, that Richard left for them to find, that seperated him from the others, based on your guess that he spent his Christmas break testing the concepts on a trading harness.

Interesting, because i recall c.f. stated that some of the people in the TT program had the same beliefs. They didnt trust the rules that Richard gave them. That to me is psychology and emotion. Something about their personalities would not allow them to accept what they had been given, they wanted more before they could trade it like Dennis. We all like to buy the secret formula, or find out how the moon affects the market, under the assumption that a simple breakout system couldnt possibly work. I think this happens because people like hard to find or hard to think of concepts, because most people believe it increases the merit of an approach, under the auspice of if it were so easy everyone else would be doing it. As humans we have the ability to hear white noise and turn it into a symphony.

So your belief that there was a secret behind the secret rules falls in line with what many of the TT traders who underpeformed c.f. believed.

Now, maybe i am wrong, perhaps there were some secrets that c.f. found. But in my testing, i have found the rules they provided were extremely profitable during that period. Second, what did Dennis have to gain by giving strangers his money with incomplete rules. All that would do would greatly increase the odds of him losing his money and his bet.

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Post by Vince » Fri Aug 29, 2003 1:15 pm

Interesting, because i recall c.f. stated that some of the people in the TT program had the same beliefs. They didnt trust the rules that Richard gave them.
When I met c.f. last October in St Thomas, I told him that the reason he was able to trade the rules was that "he had taken ownership of them." By that, I meant that he understood all of the nuances of the rules, could backtest them quickly and efficiently and knew that he could follow them blindly.

There is certainly an element of individual psychology in it, but he had the tools and knowledge to be able to test....and that makes a big difference.

I did exactly the same when I bought the Turtle rules. The first thing I said to Mike, was that I was going to program and test them. What would I have done without the ability to code and test them? Probably chucked them into the bin.

Funnily, over the years I have talked too many programmers, because that's the space I occupy, mathematicians etc about the rules and almost all of them have refused to accept that the rules can work, without ever attempting to try to code them. I sent my results to one of them the other day....and I knew he was gutted that they could work. I bet he'll be buying the book someday soon!

Why did they all refuse to believe? Yep! Probably because there is a psychological component about it all.....although I did have a vested interest in them......after all...I'd shelled out 1K to get them!!

This whole process for me has been about authentication. I bought them because what was said on the TT site made absolute common sense to me. It was a common sense that sat comfortably with my own sense of common sense. There was the Soros link that further confirmed my suspicions. Knowing these things kept me looking at the rules all the time. Even though I went off on a tangent for almost 18 months, the original rules were still mulling in my head.

Importantly, the authentication for me, was much harder than for the original turtles because they were being taught by traders with a recorded history of success. All of us going thru this process remotely via web and emails had to fight tooth and nail to believe that what we have been told and sold is true. How far a person is willing to believe in the rules.....thats an important psychological question, I should think. What makes some believe and others not...is an interesting point.



There is no "secret" behind the "secret" rules ...... now available for free. There was some common sense required. That common sense could only be got by; test, analysis, stop, think, proceed. The faster you could perform this process, then the faster you became a success......c.f. vis-a-vis Russell.

Vince

P.S. Another caveat - In a lot of my posts I have worn my heart on my sleeve. I have done it with TT as well. I haven't always done it because I want something, but because I have always believed that there were other people behind what was happening....and I figured that they would be interested in the thought processes of the people trying to reconcile with themselves, whether they'd bought a Turkey or a Dove. I wanted to record the emotions, using myself as an example, for the higher beings to be aware of what we go thru. Does that make sense?

P.P.S. I guess that the latest experiment is to test whether people can take the rules for free, and try to own them, eh?

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A little remark on the TT rules and the Turtles

Post by verec » Mon Jan 05, 2004 8:29 am

I'm not exactly buying the argument that Mr Faith had an edge by being a computer geek that some others didn't.

The way I view all this is that the mind set I would have had (and currently have with the rules) is that I would be following them EXACTLY WHATEVER the outcome. The reason is that, if I failed by following THEIR rules, it wouldn't be MY fault. By this I don't mean that I don't want to take full responsibilities for my own failure, but I certainly don't want to be held accountable for OTHER's failure.

Put another way, there was all the incentive to FOLLOW the rules, NO MATTER what intermediary results could turn up to be, because it wasn't any of the turtle own experiment, it was Mr Dennis & Eckard's!

Following the rules AND failing would have shown a problem with the rules themselves, and I'm sure that both of them would have loved getting back to the drawing board to explain that particular set of events that ended-up invalidating the rules. As Mr Dennis said himself, he gave them "the confidence in the system".

I don't see as particularly heroic the fact of following the rules given by a worl-wide authority! And if you absolutely wanted to prove them wrong, just follow blindly their rules to the point of failure! And if it turns out that, by following THEIR rules, YOU win, then you have gained an extraordinary edge, because you have built the experience of successful trading. Which means that the "emotional control" vanishes competely out of the window ...

[Later edit]
The reason I do not trade the Turtle rules at the moment (or any other for that matter!) is because Mr Denis retired a couple of years after the Turtle experiment ended, with a drawdown of 49% in the equity he managed. (see Market Wizard#2) and I don't know what set of rules he was using when he got burnt. To me, this means now that whatever set of rules I will finally follow, will have stood the 20 years+ back-testing -- and I'm not there yet.

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