I am close to the understanding of trading practice, which is described by Alexander Kurguzkin:
Trading practice = observations + statistics
What is practice? Practice is when you regularly have some kind of contact with some difficult aspect of reality. Half an hour a day, for example. And after a couple of years, you suddenly find that in dealing with this difficult aspect of reality, you perform better than 95% of the rest. It suddenly turns out that you somehow, even imperceptibly, have collected what is called insights, and built what is called vision. And that now you can talk about this aspect of reality at a level that most others simply do not see.
When it comes to relations with the market, it is critically important to be on the other side of this border of 5% with vision versus 95% without vision. Because in a low-signal probability game, if you don’t get close to the top performers, then there’s no point in participating in it. At best, you’ll get erratic results that don’t justify your efforts (contact with the game can be quite exhausting), at worst, you’ll feed the game.
However, in the case of a probabilistic game, not every contact will be practice. The probabilistic nature and noise will hide the essence of what is happening from you. What you will take for insights and vision may turn out to be overfitting to the vagaries of chance.
Therefore, “looking at the chart for half an hour a day, periodically trying to make a trade” is not a practice that leads to progress. You can devote all day to this activity with a result close to zero.
What I suggest as a practice is not just “look at the chart”. This is a sequential collection of statistics of the phenomena observed on the graph. It is in this form that your contact with the chart turns into practice.
Collect statistics for half an hour a day. Meditate on the results. And in a couple of years it will turn out that you understand the essence of what is happening better than 95% of the rest.
Does this mean you shouldn’t look at the graph? No, you need to look at the schedule. To receive questions. Questions that your statistics will then answer. If you look at a graph to get answers from it, you are making a mistake, because behind the wall of noise from random outcomes you will not be able to get answers with acceptable reliability.
When you watch graphs, you see different phenomena that seem to add up to a certain logical scheme, and you notice dozens of different factors and parameters that seem to somehow influence the outcomes of these phenomena. So you get questions – “how much does parameter A influence the outcome of phenomenon B?”
And many here will be so convinced of their own insight that they will immediately get an answer out of nowhere. They will remember a couple of examples of similar development and will think that they understand how the factor affects the result.
But, unfortunately, most of the factors do not influence the result so much that you can do without collecting statistics. Perhaps one can even say that there are no such factors that influence the result so strongly that one can notice this influence in a couple of examples. One can hope to catch this influence in a couple of dozen examples, but a person cannot keep in memory so many cases without significant distortion. Psychology inevitably reduces memories to a couple of the most emotionally intense cases.
Therefore, statistics are indispensable.
Practice, therefore, falls into two parts – you need to look at the graph to formulate questions and you need to look at the statistics to get answers.
If you leave out the first part of the practice (observation), you will get a classic “naive” algorithmic trader who runs a backtester on random combinations of indicators without understanding the logical essence of the resulting “strategies”, and taking re-adjustment to local circumstances for another grail.
If you leave out the second part of the practice (statistics), you will get a classic “intuitive” trader who thinks that the financial pain that he experiences from contacting his wallet with the chart will teach him something sooner or later.
All this only works in combination. Meditation on the graph should be complemented by meditation on the collected statistics of phenomena. This practice is what moves your vision forward.
A. Kurguzkin, https://long-short.pro