Guys I'm typing this from the hospital as I'm still here with my
wife, but I check in from time to time to see how things are going,
anyway I'm amazed at all the crazed pms that I have been getting.
Yes the market is down today, but that is not surprising
because it was at resistance. Now regarding the system, a
system is a system, either follow it or don't. However here's
some additional things that I would like to add to system trading
because some of you seem to be very novice at system
trading.
I've said this many times before, while mechanical systems are
supposed to take away the emotion in trading by making the
decisions for you, in reality I think they can have the opposite
effect, I call this 'System Sickness'. Systems can actually
have the opposite effect and make you more emotional about trading
because of many reasons, one of which could be a trust issue with
the system, or you feel like you don't have control, etc.
I've traded systems long enough to know that this is very
common. I find that while systems are supposed to make
trading easier and more methodical by making the decisions for you,
they can also bring out the destructive emotional side in you!
And emotion and trading do not mix well!
Anyway regarding the market, I am not trading this week because
I'm in the hospital and we had a baby this week, however don't ONLY
trade the SPY system and put all of your money into it, trade other
things as well, diversify. For example, even though I have
not traded this week, to me shorting SLV looked like a
no brainer yesterday on the oversold bounce as it clearly
formed a bear flag and filled the gap (where it found perfect
resistance yesterday which provided a nice low risk short) - see
the attached chart. My point is, don't focus all your money
on the SPY system and over leverage, trade other things as well,
such as the SLV short that was pretty obvious yesterday).
Also Steve has had a lot of nice trades pop this week for
nice 1 day trades at least.
What also worries me is when I see all this discussion about how
to get more leverage out of the system, instead of trading SPY,
people want to leverage up to 2X and 3X ETF's, as well as options
and futures. This can be dangerous because trading is such an
emotional game, over leveraging ones self is a dangerous game
because while the gains will be higher for good trades, the losses
might be un-bearable to you emotionally during the bad trades,
which are just a normal part of the system. It's OK to use
these leveraged instruments when trading the SPY system, but what
is NOT Ok is for folks to use them on a large percentage of their
portfolio! For example if you are trading a $20K account ,
don't trade the whole $20K with options or 3X ETF's because the bad
trades that will occur from time to time may be too much for your
psychology to handle; and for that matter don't trade your whole
account even with the slower 1X SPY ETF! or worse yet $40K of
a $20K account because you are using 2X margin!
Trading is not just a numbers game, it's an emotional game (and
emotion is why most people fail). So If you happen to trade
any of the more leveraged ETF's, please use proper money management
that fits with your personal risk tolerance. If you have
trouble sitting through a drawn down in a system, or an individual
stock, then you probably need to reduce your position size in order
to match up with your psychology.
Again also make sure to trade other things, diversify, like my
example with the SLV short, see the chart example
Posted by fishbait on 11th of May 2011 at 06:26 pm
The hardest thing to do is trust something mechanical when we
are flying blind. If the airplane is flying at night in a storm all
the pilot has is his mechanical instruments. If he decides to
ignore then he surely will crash. The same is true of mechanical
trading systems that have been back tested for 15 years or so. This
is why I believe only in a mechanical system. Once it is set up and
running a 5th grader can operate it. So if Matt has done his
backtrading properly and never changes the program, then this is
the holy grail of a trading system. I would rather fly using
instuments than blind.
Posted by xxnileshxx on 11th of May 2011 at 02:53 pm
Matt I agree with everything you say here and I did pick up some
ZSL yesterday and have nice gain today. What should I do
cover?
The Main issue I found with following the system are as
follows. Non of them are bad just factors that could bother
people on top of what you already said in your post.
1) Evern though we know this is mechanical system it is little
hard to believe it as 100% mechinical as we don't know the
internals and it is solely based on us trusnting you.
2) Just after the first trade was entered you had to take a
leave not says its bad just that it bother's an individual psych
when the captain puts the ship on auto pilot and goes away especial
when its the maiden voyage.
3) Initially I do recall seeing a post saying close the trade if
SPY closes above 135.50 i think it was. Which was the case
yesterday.
With all this factors in play I found myself question the trade
more so they I would have otherwise. I am still in it
and had to pull back off of my trigger finger today at the open to
close the position. Hopefully the trade would earn me more
the2% gain which I at at the open.
thanks for all that you do and sharing this system with
us. Good luck with the Baby first 3 months are generally very
good and quiet.
1. I understand that, black box systems can be difficult
to follow at times since you don't know what they are based on,
though you do know the general concept of it. However my post
was about money management and system trading in general. If
you over leverage, it's always a problem with system trading
regardless if you know every detail about it.
2. My wife had a baby, it's that simple. I think it's
actually kind of nuts to even bring that up. Also Tom has the
system on his computer and understand it completely; it was made
clear by me that Tom would be issuing any buy/sell signals to the
system in my absence, therefore it really doesn't matter that
I have been gone with my wife during our special time.
3. Tom never said anything about closing above 135.5 yesterday.
Closing above 135.5 to close out the long trade was true on
Monday, NOT yesterday, big difference. You have your facts
wrong here.
Posted by xxnileshxx on 11th of May 2011 at 11:06 pm
Matt if you are upset or offended by my comments please forgive
me. since it is pissing of so many people I must be a
bad writer.
Guys who think I doubt Matt or the system totally don't
understand what I was attempting to say. I was just trying to
point out things that might cause people to post all the time
asking what to do next with the system or doubt the
system.
I was probably one of the first one to sign on to the system
Just because of my trust in Matt and BPT. If I did not trust
the system I would have been out of the trade by now.
Human mind thinks of lot of things what I posted was just a
fraction of what goes through someone's head but you evaluate each
one and make a judgment just like you guys are making now on my
posts.
Wow, we haven't closed one trade on the system yet and you're
already questioning it? A little patience is in order, I
think. The system has an outstanding track record. Why
don't you give it the full 6 months first, then you can decide
whether you want to renew?
I do have to say that your second point is a little
offensive. I mean, come on, he just had a baby! He is
kind enough to post from the hospital, when really, he should be
giving his full attention to his wife and kid. Not only that,
this is a
mechanical system, which
should not require any handholding. Just trade the signals,
for better or for worse.
seriously??? you don't really believe its a fully
mechanical system? With a 16-year tradestation performance
report? In the back of your mind you think that there's a
possibility matt went back and painstakingly manipulated 16 years
of data to fool everyone to get your $60/month. LOL.
LOL. LOL.
matt is replying to posts from his wife's hospital room, you've
got Tom and Steve who are here every day, Tom is totally up on the
system. And its an automated system.
There was one day when Matt could see early that if the SPY
closed above 135.50, or whatever it was, the system would close the
trade. Its a dynamic system. That day is long
gone. This was already asked and ansered by Matt right here
on this blog, writing from the hospital...
At least read matt's posts, if you're so concerned about him
abandoning ship.
Posted by goap1207 on 12th of May 2011 at 02:27 am
I agree with recent comments from Michael, Pebs, etc. Some
of the comments are ridiculous, nonsensical, and counter
productive. Please let Matt, Steve, and the Sytem do the
work.......There has been one trade...PLEASE be patient.
Please read Matt's comments and the info in the Q and A section on
the System. It is very thorough. Please stop asking
when we get in and out. The System will tell us. I am
not telling anyone what to do, but simply stating that more
appropriate comments will make for a better trading
experience.
Posted by jaycrockett on 11th of May 2011 at 07:13 pm
Thank you, Michael. I was so upset when I read the xxniles
post that I couldn't calm myself enough to respond. I only
wish I could erase it before Matt sees it. Obviously some BPT
members signed on without any idea what a trading system is.
I surely don't want them to ruin it for us all. We could not
replace it!!
Most PM or buy side traders use
short term trading models or systematic high frequency strategies.
Matt has given you
the tools - let the system do the work.
Posting should be for
generating constructive ideas.
Everything else
is just noise.
Ours is not to reason why,
Ours is but to obey the sell and buy (signals).
Into the land of Prosperity
Ride the five hundred.
(with apologies to Tennyson)
Well said Matt. I made a similar post last week about
diversifying b/t discretionary and system trading. Also about
over-leveraging, and just focusing the majority of one's time with
one's discretionary trading. Don't watch the system so much and
just let it trade on its own.
Newsletter
Subscribe to our email list for regular free market updates
as well as a chance to get coupons!
System Psychology, etc
Posted by matt on 11th of May 2011 at 12:46 pm
Guys I'm typing this from the hospital as I'm still here with my wife, but I check in from time to time to see how things are going, anyway I'm amazed at all the crazed pms that I have been getting. Yes the market is down today, but that is not surprising because it was at resistance. Now regarding the system, a system is a system, either follow it or don't. However here's some additional things that I would like to add to system trading because some of you seem to be very novice at system trading.
I've said this many times before, while mechanical systems are supposed to take away the emotion in trading by making the decisions for you, in reality I think they can have the opposite effect, I call this 'System Sickness'. Systems can actually have the opposite effect and make you more emotional about trading because of many reasons, one of which could be a trust issue with the system, or you feel like you don't have control, etc. I've traded systems long enough to know that this is very common. I find that while systems are supposed to make trading easier and more methodical by making the decisions for you, they can also bring out the destructive emotional side in you! And emotion and trading do not mix well!
Anyway regarding the market, I am not trading this week because I'm in the hospital and we had a baby this week, however don't ONLY trade the SPY system and put all of your money into it, trade other things as well, diversify. For example, even though I have not traded this week, to me shorting SLV looked like a no brainer yesterday on the oversold bounce as it clearly formed a bear flag and filled the gap (where it found perfect resistance yesterday which provided a nice low risk short) - see the attached chart. My point is, don't focus all your money on the SPY system and over leverage, trade other things as well, such as the SLV short that was pretty obvious yesterday). Also Steve has had a lot of nice trades pop this week for nice 1 day trades at least.
What also worries me is when I see all this discussion about how to get more leverage out of the system, instead of trading SPY, people want to leverage up to 2X and 3X ETF's, as well as options and futures. This can be dangerous because trading is such an emotional game, over leveraging ones self is a dangerous game because while the gains will be higher for good trades, the losses might be un-bearable to you emotionally during the bad trades, which are just a normal part of the system. It's OK to use these leveraged instruments when trading the SPY system, but what is NOT Ok is for folks to use them on a large percentage of their portfolio! For example if you are trading a $20K account , don't trade the whole $20K with options or 3X ETF's because the bad trades that will occur from time to time may be too much for your psychology to handle; and for that matter don't trade your whole account even with the slower 1X SPY ETF! or worse yet $40K of a $20K account because you are using 2X margin!
Trading is not just a numbers game, it's an emotional game (and emotion is why most people fail). So If you happen to trade any of the more leveraged ETF's, please use proper money management that fits with your personal risk tolerance. If you have trouble sitting through a drawn down in a system, or an individual stock, then you probably need to reduce your position size in order to match up with your psychology.
Again also make sure to trade other things, diversify, like my example with the SLV short, see the chart example
trust
Posted by fishbait on 11th of May 2011 at 06:26 pm
The hardest thing to do is trust something mechanical when we are flying blind. If the airplane is flying at night in a storm all the pilot has is his mechanical instruments. If he decides to ignore then he surely will crash. The same is true of mechanical trading systems that have been back tested for 15 years or so. This is why I believe only in a mechanical system. Once it is set up and running a 5th grader can operate it. So if Matt has done his backtrading properly and never changes the program, then this is the holy grail of a trading system. I would rather fly using instuments than blind.
Movie Quote: Hunt for Red October
Posted by cubby on 11th of May 2011 at 06:55 pm
Kamarov : Stop pissing, Yuri. Give me a stopwatch and a map, and I'll fly the Alps in a plane with no windows.
Yuri (Diving Officer) : If the map is accurate enough.
agreed with the psych part of the bit but
Posted by xxnileshxx on 11th of May 2011 at 02:53 pm
Matt I agree with everything you say here and I did pick up some ZSL yesterday and have nice gain today. What should I do cover?
The Main issue I found with following the system are as follows. Non of them are bad just factors that could bother people on top of what you already said in your post.
1) Evern though we know this is mechanical system it is little hard to believe it as 100% mechinical as we don't know the internals and it is solely based on us trusnting you.
2) Just after the first trade was entered you had to take a leave not says its bad just that it bother's an individual psych when the captain puts the ship on auto pilot and goes away especial when its the maiden voyage.
3) Initially I do recall seeing a post saying close the trade if SPY closes above 135.50 i think it was. Which was the case yesterday.
With all this factors in play I found myself question the trade more so they I would have otherwise. I am still in it and had to pull back off of my trigger finger today at the open to close the position. Hopefully the trade would earn me more the2% gain which I at at the open.
thanks for all that you do and sharing this system with us. Good luck with the Baby first 3 months are generally very good and quiet.
xxnileshxx - 1. I understand that,
Posted by matt on 12th of May 2011 at 02:37 am
xxnileshxx -
1. I understand that, black box systems can be difficult to follow at times since you don't know what they are based on, though you do know the general concept of it. However my post was about money management and system trading in general. If you over leverage, it's always a problem with system trading regardless if you know every detail about it.
2. My wife had a baby, it's that simple. I think it's actually kind of nuts to even bring that up. Also Tom has the system on his computer and understand it completely; it was made clear by me that Tom would be issuing any buy/sell signals to the system in my absence, therefore it really doesn't matter that I have been gone with my wife during our special time.
3. Tom never said anything about closing above 135.5 yesterday. Closing above 135.5 to close out the long trade was true on Monday, NOT yesterday, big difference. You have your facts wrong here.
I do not doubt Matt or the System
Posted by xxnileshxx on 11th of May 2011 at 11:06 pm
Matt if you are upset or offended by my comments please forgive me. since it is pissing of so many people I must be a bad writer.
Guys who think I doubt Matt or the system totally don't understand what I was attempting to say. I was just trying to point out things that might cause people to post all the time asking what to do next with the system or doubt the system.
I was probably one of the first one to sign on to the system Just because of my trust in Matt and BPT. If I did not trust the system I would have been out of the trade by now.
Human mind thinks of lot of things what I posted was just a fraction of what goes through someone's head but you evaluate each one and make a judgment just like you guys are making now on my posts.
xxnileshxx - my post had
Posted by matt on 12th of May 2011 at 12:21 am
xxnileshxx - my post had nothing to do with your post. In fact I hadn't even read your post until now
Wow, we haven't closed one
Posted by pebs on 11th of May 2011 at 06:13 pm
Wow, we haven't closed one trade on the system yet and you're already questioning it? A little patience is in order, I think. The system has an outstanding track record. Why don't you give it the full 6 months first, then you can decide whether you want to renew?
I do have to say that your second point is a little offensive. I mean, come on, he just had a baby! He is kind enough to post from the hospital, when really, he should be giving his full attention to his wife and kid. Not only that, this is a mechanical system, which should not require any handholding. Just trade the signals, for better or for worse.
xxniles
Posted by Michael on 11th of May 2011 at 04:44 pm
seriously??? you don't really believe its a fully mechanical system? With a 16-year tradestation performance report? In the back of your mind you think that there's a possibility matt went back and painstakingly manipulated 16 years of data to fool everyone to get your $60/month. LOL. LOL. LOL.
matt is replying to posts from his wife's hospital room, you've got Tom and Steve who are here every day, Tom is totally up on the system. And its an automated system.
There was one day when Matt could see early that if the SPY closed above 135.50, or whatever it was, the system would close the trade. Its a dynamic system. That day is long gone. This was already asked and ansered by Matt right here on this blog, writing from the hospital...
At least read matt's posts, if you're so concerned about him abandoning ship.
I would be embarrassed for posting this nonsense.
Please go back and do your homework on the system!
Posted by goap1207 on 12th of May 2011 at 02:27 am
I agree with recent comments from Michael, Pebs, etc. Some of the comments are ridiculous, nonsensical, and counter productive. Please let Matt, Steve, and the Sytem do the work.......There has been one trade...PLEASE be patient. Please read Matt's comments and the info in the Q and A section on the System. It is very thorough. Please stop asking when we get in and out. The System will tell us. I am not telling anyone what to do, but simply stating that more appropriate comments will make for a better trading experience.
Thank you, Michael. I was
Posted by jaycrockett on 11th of May 2011 at 07:13 pm
Thank you, Michael. I was so upset when I read the xxniles post that I couldn't calm myself enough to respond. I only wish I could erase it before Matt sees it. Obviously some BPT members signed on without any idea what a trading system is. I surely don't want them to ruin it for us all. We could not replace it!!
Well said Michael
Posted by ascr on 11th of May 2011 at 04:52 pm
Well said Michael
Thanks Michael... Most PM or buy side
Posted by mp11 on 11th of May 2011 at 07:56 pm
Thanks Michael...
Most PM or buy side traders use short term trading models or systematic high frequency strategies. Matt has given you the tools - let the system do the work. Posting should be for generating constructive ideas. Everything else is just noise.
Ours is not to reason
Posted by yojimbo on 11th of May 2011 at 05:20 pm
Ours is not to reason why,
Ours is but to obey the sell and buy (signals).
Into the land of Prosperity
Ride the five hundred.
(with apologies to Tennyson)
giddyup!
Hard to get past the fact that the '500' were riding to their certain deaths...
Posted by lessarda on 12th of May 2011 at 10:30 am
maybe you could pull something from Dante's Paradiso?
Perhaps the most erudite post (for this bunch) evah!
Posted by cubby on 11th of May 2011 at 05:59 pm
Thank you for reminding me of the beauty that transcends mere mathematical score keeping.
Winning is good, yes. But you lost a hundred of those heroes; there were 600!
Great post
cubby - only 500 of
Posted by yojimbo on 11th of May 2011 at 06:08 pm
cubby - only 500 of them subscribed to the SPY swing system. ;)
Doh! ~ I forgot the 'limit.' My bad.
Posted by cubby on 11th of May 2011 at 06:19 pm
You are right! I forgot the limit!
I like it...
Posted by burkmere on 11th of May 2011 at 05:20 pm
"Just do it."
The system is not a lottery ticket
Posted by rikkwan on 11th of May 2011 at 08:29 pm
Believe it or not, successful trading/investing still takes time, patience, and discipline
Well said Matt. I made
Posted by cw12 on 11th of May 2011 at 12:57 pm
Well said Matt. I made a similar post last week about diversifying b/t discretionary and system trading. Also about over-leveraging, and just focusing the majority of one's time with one's discretionary trading. Don't watch the system so much and just let it trade on its own.