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  • #1,001
  • Apr 25, 2012 12:01pm Apr 25, 2012 12:01pm
Quoting LazyPawn
jeanlouie, I will make a few final points in answer to your last message, without quoting you. It's not my intention to convince you of anything. If your critical thinking is good enough you will no doubt reach the same conclusions as I have.

My main point, which started this discussion, is that trading is VERY DIFFICULT. Not the act of clicking buy and sell of course - by trading I mean being constantly profitable, over a long period of time. How do I know that?

1. The top traders make huge amounts of money. Where does it come from? Usually it's...
I think compared to trading, investing is much easier. Of course you then gotta have a much longer time-horizon and that goes against our "I want everything now" culture.
But I would suggest, if somebody is always blowing up one account after the other, it might be more beneficial to just look out for good companies and invest in those.

Most of the rich got rich by investing wisely or growing their own company. That's something to think about.
  • #1,002
  • Apr 25, 2012 12:25pm Apr 25, 2012 12:25pm
trading is extremely difficult and that more I learn, the more I practice the more i realize


I TRULY DO NOT KNOW SHIT.
AVT INVENIAM VIAM AVT FACIAM
  • #1,003
  • Apr 25, 2012 12:50pm Apr 25, 2012 12:50pm
Quoting 60minuteman
are you saying you need an ivy-league education to trade forex? got any proof of that? I have found it to be the opposite..
Actually I am just talking out of my ass, I have made no research nor study regarding the success rate of Ivy league and the common folk.

However I am currently taking Open free non-accredited classes from Yale university on econ 252 ( The financial Markets) I am taking some Harvard open learning classes on probability and game theory, economic classes from Berkely and statistics classes as well.

The more I learn to piece together risk models, valuations etc.... the more i realize how complex this trading can be, but with this intellectually stimulating work plus the time i put in to the markets, I can tell you that it is extremely difficult.

and I found a correlation between life itself and the markets.

you get the equivalent to religious people ,who take everything on faith and claim how simple trading is. How easy it is to make x% and LP has made a very concise argument on the fallacy of such claims. Ambiguity, flashy language, specious logic but no proof to substantiate their claims.

Let me tell you, that I consider myself a BRILLIANT guy, with all my achievements at my young age yet......My little wealth that i somehow have has been due to my career. The trading account well.....it generates no consistent growth, lucky streaks up, slumps, mostly=0 since inception.

After trading for a year, I can tell you

1) exactly how time frames can be viewed in relation to each other
2) set realistic targets according to statistical volatility and calculate future possible volatility from current standard deviations.
3) I can tell you the Average ranges of the 5 min, 1 hour, 1 day charts, I also have a theory on how to exploit this
4) I can calculate by hand EMA's, SMA's, Geometric Averages, Bollinger Bands, % Bands, MACD, RSI, ATR, CCI etc...
5) I can integrate the theory of EMH, and Behavioral inefficiencies and prove it via Distributions in returns. As well as give you a very reasonable argument on how to reconcile predictability of the Market with Kurtosis, Heteroskedasticity, and Random walk, through Macro economic models.
6)I am well versed in how to or at least know about calculating + % mathematical expectations through the little knowledge i have in probability theory.
7) I am very knowledgeable in Japanese candle sticks (I have even found the compound candles that give optimum probability of success )
8) Price action? Hell I can write a book on price action with the relevance to price levels and structuring such levels in quartiles.

As you can see i should be swimming in money I am so brilliant and dedicated, I even got offers to work for 2 Hedge funds. I have not really blown my account yet, and I even experienced lucky streaks where i had the opportunity to have good equity growth.

But although I only have my own reality and perception of things to go by....I hate to admit it but I am not as good as i would like to be at this point, and the more knowledge and better I get at trading the more humbling it is.

hell i am back to demo,

surely you cannot say my lack of intellect is what is causing my lack of success.
AVT INVENIAM VIAM AVT FACIAM
  • #1,004
  • Apr 25, 2012 1:01pm Apr 25, 2012 1:01pm
by the way i do realize that just because I CANNOT DO IT (yet) DOES NOT MEAN SOME ONE ELSE CAN'T

Hell my son (he is 3) was able to make some good calls (up or down?) mostly trend following, but can he do this simple "dad is going up" consistently? understand when the market structure is different? reduce his risk in case of a reversal on the lucky call he makes?

NO

any IDIOT CAN MAKE MONEY.....

CONSISTENTLY? WITH TARGETS AND ACCEPTABLE Beta? How about consistent Alpha?

NO

At Least no convincing proof has been offered.
AVT INVENIAM VIAM AVT FACIAM
  • #1,005
  • Apr 25, 2012 1:16pm Apr 25, 2012 1:16pm
Quoting the redlion
by the way i do realize that just because I CANNOT DO IT (yet) DOES NOT MEAN SOME ONE ELSE CAN'T

Hell my son (he is 3) was able to make some good calls (up or down?) mostly trend following, but can he do this simple "dad is going up" consistently? understand when the market structure is different? reduce his risk in case of a reversal on the lucky call he makes?

NO

any IDIOT CAN MAKE MONEY.....

CONSISTENTLY? WITH TARGETS AND ACCEPTABLE Beta? How about consistent Alpha?

NO

At Least no convincing proof has been offered.
As wall street shows us over and over again, consistency is something really rare, even among professionals.
  • #1,006
  • Apr 25, 2012 1:42pm Apr 25, 2012 1:42pm
Quoting jeanlouie

Tim Sykes (a penny stock trader) did, and they have 7+ figure bank accounts now.
Timmy Sykes, don't make me laugh!

Last I heard Timmy Sykes lost all the money he made in college, and subsequently lost a big chunk of client's money and closed the Cilantro fund. He now lives off touting trading books and DVD's on forums!

The guy's a dick anyway, didn't you watch Wall St Warriors?
  • #1,007
  • Apr 25, 2012 1:51pm Apr 25, 2012 1:51pm
Quoting LazyPawn

You can find successful traders with little understanding of economy and fundamentals and no programming skills but who are lucky to have this savant-like narrow skill of "reading" where the price is headed
I think the common skill ice-cream sellers and the like have is the same as the basic essence of trading, it's not so much about reading where price is heading but more about what you do with a trade once you're in it! You can have the best analyst and the most accurate price direction predictor in the world and they still might not be able to make/retain money!

Soros probably put it best when he said "It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong.", it's my favorite quote hence it's in my sig.....↓
  • #1,008
  • Apr 25, 2012 2:11pm Apr 25, 2012 2:11pm
Quoting pipmutt
I think the common skill ice-cream sellers and the like have is the same as the basic essence of trading, it's not so much about reading where price is heading but more about what you do with a trade once you're in it! You can have the best analyst and the most accurate price direction predictor in the world and they still might not be able to make/retain money!
agreed!

now...if you are trading for a living you agree that you will be placing many a trade in your trading life right?

with a simple edge that gives you >50% probability of success, it is not enough to just cut losses short let profits run...

Volatility is another monster to deal with not only direction, here is where it gets complicated

1/2 time you will have direction right
how do you account for the times where volatility takes out your stop (if you place stops) and the times you don't meet your targets?
plus the times you are just mistaken on the directional bias directional?

see the TAF crew says dance the dance, which ok that sounds good but every step on your "dance" is speculation on price formation, price formations fail... then average down....ok did not revert to mean it actually is a strong directional move. This negates the positive probability expectation essential to come up on top on random events.

The crew that says S/D, or S/R and price formations or single candle triggers.
again S/D, S/R, BB are all mean reverting strategies, how about the fake outs that spike and take your stops? then revert, or the times it does not revert, or the fake mean reversions?...now you get decreased win:loss aka death by a thousand stops.

so then the question is what kind of risk management model do you have when you are wrong? this does take some sort of intelligence to come up with.

so let me ask you pip mutt

how do you MANAGE your positions once in a trade, that does not diminish your win:loss and does not compromise risk:reward?
AVT INVENIAM VIAM AVT FACIAM
  • #1,009
  • Apr 25, 2012 2:11pm Apr 25, 2012 2:11pm
Quoting pipmutt
Timmy Sykes, don't make me laugh!

Last I heard Timmy Sykes lost all the money he made in college, and subsequently lost a big chunk of client's money and closed the Cilantro fund. He now lives off touting trading books and DVD's on forums!

The guy's a dick anyway, didn't you watch Wall St Warriors?
Hmm I didn't know that, just googled now. Turns out he is still in the trading game, and making money, ranked #1 trader in Covester, his Cilantro fund returned 70% growth year over year, turning 700k into 3million then due to problems of a single illiquid stock he closed the fund...lost a third...but because of prior gains, accounts would still be in the green.

Lol yeah the guy seems to be a teeny bit of a dick, talking to his mum like that, but I do like the 'go get it' attitude, I watched Wall Street Warriors. He literally was living the dream of heaps of members here on ff, trading from your home in your pajama robes with a 7 digit bank account lol.
  • #1,010
  • Apr 25, 2012 2:31pm Apr 25, 2012 2:31pm
When you get to the stage of realising you cant predict anything you can merely can with the flow and see if the flow continues.

At first when you realise this quiting will be your first thoughts dont your getting there.

Its more about risk to reward try to enter at a level where its not got much room against you before you exit then just trust the flow wait patiently dont watch is key and let the flow do its thing. Or not ofcourse.

All seems quite simple to me these days thats 7 years and 1000nds of hours of screen time for you.

Beating stock trading was easier than forex hugely 18months before i was kicking butt on that. But also a lot harder work load wise.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #1,011
  • Apr 25, 2012 2:32pm Apr 25, 2012 2:32pm
Quoting the redlion
how do you MANAGE your positions once in a trade, that does not diminish your win:loss and does not compromise risk:reward?
The million dollar question!
  • #1,012
  • Apr 25, 2012 2:36pm Apr 25, 2012 2:36pm
Quoting the redlion
Actually I am just talking out of my ass, I have made no research nor study regarding the success rate of Ivy league and the common folk.

However I am currently taking Open free non-accredited classes from Yale university on econ 252 ( The financial Markets) I am taking some Harvard open learning classes on probability and game theory, economic classes from Berkely and statistics classes as well.

The more I learn to piece together risk models, valuations etc.... the more i realize how complex this trading can be, but with this intellectually stimulating...
was just replying to your statement implying that quality of education and intellect are the defining element in a successful trader...

I disagree, that is all...
tradewith60
  • #1,013
  • Apr 25, 2012 2:42pm Apr 25, 2012 2:42pm
Quoting the redlion
trading is extremely difficult and that more I learn, the more I practice the more i realize


I TRULY DO NOT KNOW SHIT.
Redlion, I've seen your posts on FF and I think you're harsh on yourself, you clearly know a lot...

but, as long as you think it is really hard, it will be really hard, self fulfilling prophecy and all that..
tradewith60
  • #1,014
  • Apr 25, 2012 3:09pm Apr 25, 2012 3:09pm
Quoting LazyPawn
The million dollar question!
indeed it is.

I have been working on risk models consisting on hedging my spot position with a derivative instrument.

the premise is that in order to make money we need + expectation, ONLY AFTER one can actually analyse most possible direction.

lets say 20 max loss and 50 max gain, as to have (20/50) = 40% now this is simplified because casinos make million on 15% or so

now the assumptions

1) we are good at market analysis
2) good at volatility calculations

even so we can be wrong. Here is where the question lies.

a limit order (stop loss) acts like failed no touch option, VERY susceptible to volatility.

i was thinking of using binary/digital options, but the current retail brokers pay out is 85% of premium max = - 15% expectation and i believe it was -16.6% combined expectation hedging the spot with the binaries as it stands, and possibly more due to the expiry constraints.


IDEALLY the holy grail would be a extended expiry touch option at stop loss level however somehow this is not offered, all touch options have max expiry of 1 hr so doesn't work.

so the next best thing i thought of is bull spread, which does give incredibly good expectations 38% however expiry constraint is the problem here. the less theta the greater the pip range so cancels out benefit if expiry is to far away.

now.......... i am working on a model with negative correlated instruments like eur/usd and usd/chf to piece it as a sort of indefinite expiry sort of bull spread, not opening simultaneous long/shorts because well...

that is a neutral position with double spread....but a short synthetically calculated at the place where my s/l is in the primary instrument i am trading.

i haven't worked out the protection costs yet like double spread and poss neg swap if it out weights the benefit of the protection itself but looks promising.


now if people here instead of ego posturing and LOOK IS SO EASY, I AM SO GOOD, would crowd source and come up with better strategies maybe...just maybe we would actually accomplish something.
AVT INVENIAM VIAM AVT FACIAM
  • #1,015
  • Apr 25, 2012 3:33pm Apr 25, 2012 3:33pm
I think the more rigid are method of trading, the more it sucumbs to the very parts of trading which make it seem impossibly hard.the random part in the middle,when were in a trade and constantly at risk from its perils.

for me personaly i spent a long time on my entries .not just turning points,but momentum of money flow,and values which have delayed in there value to related pairings.theres many oddities that give very good entry value in comparison to r/r.fake outs break outs ect are all after the fact,and in themselves can be great entries,it depends how you look at it.the information giving hints as to fake or break are there,atleast enough to gain a slight advantage.

the problem with this type of trading is its not easy to wright in any format and can somtimes leave you thinking you infact dont have a method at all especially after reading the forums.ther are times i switch on my platform and go completly blank and trade as if i hadnt ever seen a price chart before,other times its like playing a piano blindfolded.very easy when your gaining and bloody hard when your loosing
  • #1,016
  • Apr 25, 2012 3:33pm Apr 25, 2012 3:33pm
Quoting the redlion
indeed it is.

I have been working on risk models consisting on hedging my spot position with a derivative instrument.

the premise is that in order to make money we need + expectation, ONLY AFTER one can actually analyse most possible direction.

lets say 20 max loss and 50 max gain, as to have (20/50) = 40% now this is simplified because casinos make million on 15% or so

now the assumptions

1) we are good at market analysis
2) good at volatility calculations

even so we can be wrong. Here is where the question lies.

a limit order (stop loss)...

Good to see some serious thinking outside of the box there, rather than the normal stuff, sadly like a casino the entire game is rigged to be against you and no 1 is dumb enough to offer / mess up and offer anything different.

It is easy, IF you understand it and let it be easy, getting to that level isn't easy.

4 for 4 this week, no time for more sadly haven't been in to catch any big moves so, I don't get many setups so loads of screen time for not much.

So tempted by gold, it woulda worked a few times today then ofcourse that break down would hurt but hey.

Need more balls and more patience to hold longer and I'm there and not wanting to never lose get me moving my SL again then writing off weeks of good work in 1 trade

Always another challenge.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #1,017
  • Apr 25, 2012 3:35pm Apr 25, 2012 3:35pm
I think the more rigid are method of trading, the more it sucumbs to the very parts of trading which make it seem impossibly hard.the random part in the middle,when were in a trade and constantly at risk from its perils.

for me personaly i spent a long time on my entries .not just turning points,but momentum of money flow,and values which have delayed in there value to related pairings.theres many oddities that give very good entry value in comparison to r/r.fake outs break outs ect are all after the fact,and in themselves can be great entries,it depends how you look at it.the information giving hints as to fake or break , there are,atleast enough to gain a slight advantage.

the problem with this type of trading is its not easy to wright in any format and can somtimes leave you thinking you infact dont have a method at all especially after reading the forums.ther are times i switch on my platform and go completly blank and trade as if i hadnt ever seen a price chart before,other times its like playing a piano blindfolded.very easy when your gaining and bloody hard when your loosing
  • #1,018
  • Apr 25, 2012 3:43pm Apr 25, 2012 3:43pm
I also believe alot of traders thrive to be perfect traders ,with perfect styles or systems,it takes them away from the fact its only about making money,nothing else ,however you can do it,dosnt need to be clean and pleasing to the eye,it can be crude and quite unatractive .obsene to some,its about money nothing else
  • #1,019
  • Apr 25, 2012 4:18pm Apr 25, 2012 4:18pm
Quoting the redlion

so then the question is what kind of risk management model do you have when you are wrong?
There must be a thousand different ways, the most popular (especially among retail forex traders) seems to be the stop loss. Either the market agreed with your analysis or it didn't. If volatility is a concern then reduce position size and widen stop accordingly. Money management and compounding obviously play an important part, as does flexibility rather than a rigid set of rules.

The bottom line I suppose would be exploit profitable trades, compound gains, and cut unprofitable trades short. Seems logical and practical, no?
  • #1,020
  • Apr 25, 2012 4:43pm Apr 25, 2012 4:43pm
Quoting jeanlouie

He literally was living the dream of heaps of members here on ff, trading from your home in your pajama robes with a 7 digit bank account lol.
I thought his inclusion in the series was to show some sort of contrast between the pros and the wannabe's. While he was dicking around on a golf cart with his yes'man pal, the real elite were rubbing shoulders with potentially valuable contacts and playing polo in The Hamptons!

I remember he was having another go at making a million from trading, how did that work out do you know?
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