Curtis M. Faith knyga “Way of the Turtle” yra apibūdinama kaip viena iš geriausių knygų apie aktyvaus prekiavimo psichologiją. Tiesiog nesigilinant per daug galima būtų teigti, kad ji iš tiesų yra pakankamai nebloga, lengvai skaitoma ir apie paprastus žmones, tačiau kad tikrai nėra būtina skaityti ją visą. Dėl to žemiau pateikiamos pagrindinės ir įdomiausios ištraukos iš šios knygos.
To trade well you need to understand the human mind. Markets are comprised of individuals, all with hopes, fears and foibles. As a trader you are seeking out opportunities that arise from these human emotions. Fortunately, some very smart people — behavioral finance pioneers — have identified the ways that human emotion affects one‘s decision-making process. The field of behavioral finance brought to popular attention in Robert Shiller‘s fascinating book.
Winning traders make money by exploiting the consistently irrational behavior patterns of other traders.
In trading, even a correct approach can result in losing trades, perhaps a few in a row. These losses can cause traders to doubt themselves and their decision process. And they then evaluate the approach they have been using negatively because the outcome of that approach has been negative. The next bias makes this problem particularly acute.
A Turtle never tries to predict market direction but instead looks for indications that a market is in a particular state. This is an important concept. Good traders don‘t try to predict what the market will do; instead they look at the indications of what the market is doing.
Trade with an edge, manage risk, be consistent, and keep it simple. The entire Turtle training, and indeed the basis for all successful trading, can be summed up in these four core principles.
Arguably the most important element of the Turtle Way and the pivotal difference between the approach and perspective used by winning traders and that used by losing traders is that the Turtles were taught how to think in terms of the long run when trading and we were given a system with an edge.
The Turtle Mind
- Think in terms of the long run when trading.
- Avoid outcome bias.
- Believe in the effects of trading with positive expectation.
The Turtle Way views losses in the same manner: They are the cost of doing business rather than an indication of a trading error or a bad decision. To approach losses in this way, we had to know that the method by which the losses were incurred would pay out over the long run. The Turtles believed in the long-term success of trading with positive expectation.
The lessons of the Turtle class can be summed up in these four points:
- Trade with an Edge: Find a trading strategy that will produce positive returns over the long run because it has a positive expectation.
- Manage Risk: Control risk so that you can continue to trade or you may not be around to see the benefits of a positive expectation system.
- Be Consistent: Execute your plan consistently to achieve the positive expectation of your system.
- Keep It Simple: The core of our approach was simple: catch every trend. Two or three trades might account for all your profits, so don‘t miss a trend or you might kill your whole year. This is simple and easy to understand, not easy to do.
Over the years I kept finding evidence that emotional and psychological strength are the most important ingredients in successful trading.
Good trading is not about being right, it is about trading right. If you want to be successful, you need to think of the long run and ignore the outcomes of individual trades.
Winning traders think in the present and avoid thinking too much about the future. Beginners want to predict the future in their trading. When they win, they think it means they were right and they feel like heroes. When they lose, they feel like scum. That is the wrong approach.
Turtles do not care about being right. They care about making money. Turtles do not pretend to be able to predict the future. They never look at markets and say: „Gold is going up.“ They look at the future as unknowable in specifics but foreseeable in character. In other words, it is impossible to know whether a market is going to go up or down or whether a trend will stop now or in two months. You do know that there will be trends and that the character of price movement will not change because human emotion and cognition will not change.
Ironically, as well as thinking too much about the future, most traders dwell too much on the past. Turtles learn from the past but don‘t worry about it. They don‘t berate themselves for mistakes they have made. They also don‘t criticize themselves for trades in which they lost money, they know that is part of the game.
Dos and Don’ts for Thinking Like a Turtle
- Trade in the present: Do not dwell on the past or try to predict the future.The former is counterproductive, and the latter is impossible.
- Think in terms of probabilities, not prediction: Instead of trying to be right by predicting the market, focus on methods in which the probabilities are in your favor for a successful outcome over the long run.
- Take responsibility for your own trades: Don’t blame your mistakes and failures on others, the markets, your broker, and so forth.Take responsibility for your mistakes and learn from them.
Trading with an edge is what separates the professionals from the amateurs. Ignore this and you will be eaten by those who don‘t.
System edges come from three components:
- Portfolio selection: The algorithms that select which markets are valid for trading on any specific day.
- Entry signals: The algorithms that determine when to buy or sell to enter a trade.
- Exit signals: The algorithms that determine when to buy or sell to exit a trade.
Ruin is the risk you should be concerned with the most. It can come like a thief in the night and steal everything if you aren‘t watching carefully.
In trading as in life, the young often fail to see the value in studying the history that occurred before they existed. Be young, but don‘t be foolish. Study history.
The periods of maximum drawdown invariably occur at the tail end of large trends or periods of positive equity increases. At those times, markets tend to correlate more highly than they normally do. This is true for futures and stocks. At the end of a large trend when it breaks down and reverses, it seems that everything moves against you at once, even markets that normally do not seem correlated become so on those volatile days when a large trend disintegrates.
Anyone who tells you that you can expect to see a particular level of performance is lying or does not know what he is talking about. If he is trying to sell you something, I strongly suspect the former.
Trading is not a sprint; it‘s boxing. The market will beat you up, screw with your head, and do anything it can to defeat you. But when the bell sounds at the end of the twelfth round, you must be standing in the ring in order to win.
A robust trading program is built on the premise that you cannot predict the specific market conditions you will encounter in your actual trading. Robust trading accounts for this by building systems that are robust because they are adaptable or simple and are not specifically dependent on market conditions. A mature robust trading program trades many different systems in many different markets and is much more likely to perform consistently in the future than is a program that trades a small number of systems that have been highly tailored to a small number of markets.
The market does not care how you feel. It will not prop up your ego or console you when you are down. Therefore, trading is not for everyone. If you are unwilling to face the truth about the markets and the truth about your own limitations, fears, and failures, you will not succeed.
There are many successful discretionary traders, but there are far more unsuccessful ones. The biggest reason for this is that the ego is not your friend as a trader. The ego wants to be right, it wants to predict, and it wants to know secrets. The ego makes it much more difficult to trade well by avoiding the cognitive biases that hinder profits.
Remember that a plan means nothing if it is not acted on. If you really want to be a successful trader, commit yourself to the first step. I did, and I‘ve never regretted it.
It had every component of a complete trading system that covers each of the decisions required for successful trading:
- Markets: What to buy or sell.
- Position Sizing: How much to buy or sell.
- Entries: When to buy or sell.
- Stops: When to get out of a losing position.
- Exits: When to get out of a winning position.
- Tactics: How to buy or sell.
There is an expression: „There are old traders and there are bold traders, but there are no old bold traders.“ Most traders who do not use stops go broke.
Ištraukos iš knygos Way of the Turtle
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