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Opportunities for One Big Score!

  • #1
  • First Post: Jul 4, 2015 7:59am Jul 4, 2015 7:59am
Quote
You only need to make one big score in finance to be a hero forever
Quote

Merton Miller

I recently stumbled across some quotes by Merton Miller and it got me thinking.

First let me say that my very first trade I went BIG! I traded 1 lot of crude oil and made a few thousand bucks in a few seconds. I knew I was going to be a HERO! In my first 3-6 months of trading I was trading between 6-12 lots of wheat, soybeans, cotton, crude and gold. In those days I would routinely have $10k days and never really experienced any significant losses.

Then I started to educate myself (I started trading in 2006 after having lunch with a hedge fund manager using only the advice he provided). I bought every book you could find and started tinkering with my entries and exits and I thought I was becoming a better, more professional trader. I stopped going for the big trades and started looking for logical places to exit. Suddenly I started losing. Not big losses because I educated myself to risk reward ratios, but I was losing more frequently as each day passed. I was dying a slow death by a thousand cuts! (to be fair, market conditions changed drastically between 2007 - 2010)

Ever since I have traded small with inconsistant success. Then this past week I came across this interesting statement by Merton Miller:

Quote
any state of affairs that will allow traders of any market instrument to create a riskless money machine will almost immediately disappear.


Now the light bulb in my tiny brain is glowing! I distinctly recall telling anyone who would listen back when i was throwing lots around with reckless abandon, that the Chicago Board of Trade (now part of CME) was my personal ATM machine!

Is it possible that the market provides short windows of opportunity, glitches in the matrix, that allow for "ONE BIG SCORE"? And if so, once the market (or the matrix) realizes the tiny window has been opened, does it quickly closes it and that state immediately disappears as Miller suggested??

I would be very interested to know how other traders feel about this concept.
  • #2
  • Jul 4, 2015 8:06am Jul 4, 2015 8:06am
Just a little background on Merton Miller. He was an economic powerhouse at the infamous Chicago School of Economics. He won a Nobel Prize in Economics in 1990, was on the the staff at the University of Chicago's Booth School of Business, was a director at both the Chicago Board of Trade and the Chicago Mercantile Exchange, and wrote several papers and books on finance/economics.
  • #3
  • Jul 4, 2015 12:01pm Jul 4, 2015 12:01pm
Quoting enochben
In those days I would routinely have $10k days and never really experienced any significant losses. Then I started to educate myself..
//----

hey ben..... 10k days..... .....

don't worry.... i have enough $ losses for the both of us.... my largest ever was right at 30k.... earlier this year i lost just over 18k in a single day.... followed by about 2 k over the next few days.....
//------

i don't know about matrix glitches but there is no doubt big scores are brought on by rare events.... like the yen strength following the earthquake.... yen weakness on abenomics..... rubles weakness on sanctions.... chf weakness on the peg and strength on the de-peg .... brazil economy , venezuela oil ..... the list could go on and on.....

somewhat rare events that could create the big score for those properly positioned.... with the exception of the seconds following chf to be or not to be's, those windows of opportunity are not small....

most stretch months or some for years.....h
to trade and code, keep both simple... no call to impress....h
  • #4
  • Jul 4, 2015 12:12pm Jul 4, 2015 12:12pm
This is what happens with big scams and vault robberies, they only get "closed up" once someone has been there before anyone else knowing, so I believe this theory could be right. Look at weekend gaps, 90% of the time they close up again.
  • #5
  • Jul 4, 2015 2:05pm Jul 4, 2015 2:05pm
Quoting Mooz
{quote} I totally AGREE........I think this most traders are conditioned to be more academic, cautious as a rule of thumb trades in trades etc..... which are good things ....... BUT there are those who have strategies, and just believes in there trading plan and execute..............like a close friend of mind One of the smartest dudes I know. He turned a $10k acct and turned it into $several(M) in a little less than 2 years (90% came from Forex)....... Well he didn't do that having fears of losing.... Here's the thing...He was a newbie to trading......He...
I wholeheartedly concur
  • #6
  • Jul 5, 2015 5:44am Jul 5, 2015 5:44am
John Paulson is credited with having the singe greatest trade in financial history. That one trade almost ruined the entire financial industry, but it made Paulson a HERO (to some). In 2007 Paulson made essentially US $10 million/day while netting his hedge fund $15 Billion that year. His balls were nailed to the wall and he went "AL IN"! Looking at his recent returns he is having an impossible time recreating those returns - did he have his one big score? Is it possible for him to hit a grand slam like that again?

Here is the full article detailing the greatest trade ever made: http://www.wsj.com/articles/SB100014...99740849179448
  • #7
  • Jul 5, 2015 8:54am Jul 5, 2015 8:54am
Quoting enochben
{quote}{quote} I recently stumbled across some quotes by Merton Miller and it got me thinking. First let me say that my very first trade I went BIG! I traded 1 lot of crude oil and made a few thousand bucks in a few seconds. I knew I was going to be a HERO! In my first 3-6 months of trading I was trading between 6-12 lots of wheat, soybeans, cotton, crude and gold. In those days I would routinely have $10k days and never really experienced any significant losses. Then I started to educate myself (I started trading in 2006 after having lunch with...
You have made a great point here!

It does really looks like the market act in the way you described, have some glitches (inefficiency), correct them as soon as they are spotted, etc.

I used to think this was the case, however that may just be an illusion.
Even if the market do constantly change (and therefore inefficiencies tend to present themselves on a cyclical way) in truth the real structural inefficiencies (the ones really used to make profits by millions of traders) are constant, so we can say the same ones we observe in today markets were present also 1 year ago, 10 yearso ago, 50 and 100 years ago.

Perhaps what have changed it's something in you, we always look away and "blame", the market has changed, the system has stopped working, the manipulation has gone wild, the fundamental situation is unstable, I don't want to convince you about anything, but perhaps you can try to look at yourself also, and see if something has changed there.

You may discover interesting stuffs!
  • #8
  • Jul 5, 2015 10:17am Jul 5, 2015 10:17am
Quoting tunera
{quote} You have made a great point here! It does really looks like the market act in the way you described, have some glitches (inefficiency), correct them as soon as they are spotted, etc. I used to think this was the case, however that may just be an illusion. Even if the market do constantly change (and therefore inefficiencies tend to present themselves on a cyclical way) in truth the real structural inefficiencies (the ones really used to make profits by millions of traders) are constant, so we can say the same ones we observe in today markets...
  • #9
  • Jul 5, 2015 10:20am Jul 5, 2015 10:20am
Quoting tunera
{quote} You have made a great point here! It does really looks like the market act in the way you described, have some glitches (inefficiency), correct them as soon as they are spotted, etc. I used to think this was the case, however that may just be an illusion. Even if the market do constantly change (and therefore inefficiencies tend to present themselves on a cyclical way) in truth the real structural inefficiencies (the ones really used to make profits by millions of traders) are constant, so we can say the same ones we observe in today markets...
You might be on to something here. I probably changed much more than the markets. During the times I mentioned I was losing 5 properties at the same time while going thru a tumultuous marriage that eventually ended up in divorce.

When I was just starting my friend advised me that you should not trade if you are having problems in your life - he explicitly instructed me that if you have a fight with your wife - DO NOT TRADE for a day or two! But I am the kinda of guy that only learns from experience.

But, enough about me and my problems, the market could care less what I was going thru and I still had some success during the KAOS -- at the end of the day the premise of this thread is does the market provide small windows for traders to make that ONE BIG SCORE - ala Paulson???
  • #10
  • Jul 5, 2015 11:57am Jul 5, 2015 11:57am
Quoting enochben
{quote} You might be on to something here. I probably changed much more than the markets. During the times I mentioned I was losing 5 properties at the same time while going thru a tumultuous marriage that eventually ended up in divorce. When I was just starting my friend advised me that you should not trade if you are having problems in your life - he explicitly instructed me that if you have a fight with your wife - DO NOT TRADE for a day or two! But I am the kinda of guy that only learns from experience. But, enough about me and my problems,...
I see your point now, sorry I went a little bit out of topic then.

To end up sharing my thought about your question, I say YES the market does provide indeed very good windows for traders to make BIG SCORES from time to time!
Not everyday of course.

Best of wishes to you
  • #11
  • Edited 1:03pm Jul 5, 2015 12:25pm | Edited 1:03pm
Quoting enochben
at the end of the day the premise of this thread is does the market provide small windows for traders to make that ONE BIG SCORE - ala Paulson???
it's not the market that routinely offers the possibility of a "big score", but the exogenous forces that create big market moves. These come up all the time and can be anticipated. For instance, did you go long VIX futures or options last week, in anticipation of an extreme market reaction to the Greek referendum result? That could be a "big score" if you did. Or not. The point is, "big scores" are available regularly to traders who know where/how to look for them. If those traders are controlling the risks they take in that pursuit, if they can survive long enough, it's probably just a matter of time before they get that "big score".

Another question: is it better to risk your equity on low-probability "big score" trades, or should you rather "settle" for very reliable, high-probability but low return trades?
"If The Fool persists in his Folly he will become wise." - William Blake
  • #12
  • Jul 5, 2015 1:15pm Jul 5, 2015 1:15pm
Quoting enochben
{quote}{quote} Is it possible that the market provides short windows of opportunity, glitches in the matrix, that allow for "ONE BIG SCORE"? And if so, once the market (or the matrix) realizes the tiny window has been opened, does it quickly closes it and that state immediately disappears as Miller suggested?? I would be very interested to know how other traders feel about this concept.
Some things in the markets are efficiencies that get ironed out, others are structural and permanent. Not all opportunities are created equal. The Fool's vix options is a great example of relatively short window trades. The past 3 years of yen weakening is a longer term one. But there's others that are part of the way the market's configured, others still based on mechanics of group behaviour and they're not going anywhere anytime soon.

Although the secret squirrel stuff may have more appeal, application's probably more important. I met a guy the other day who turned 50k into several million over 3 years with a laughably simple stocks and shares strategy that he freely shared. It doesn't have to be complex to be profitable.
  • #13
  • Jul 5, 2015 1:20pm Jul 5, 2015 1:20pm
Being at the right place at the right time, can give you nice returns.
All posts are my personal opinion
  • #14
  • Jul 5, 2015 2:15pm Jul 5, 2015 2:15pm
hayseed some it up well,with a average of fundamental knowledge these big scores are happening on regular basis ,all ways have and always will.to illustrate a few,the indices were rising from news that more euro printing and likewise in usa,stalled at there highs and the Greek problem comes back to topic ,bing bang bosh 500 pips fall on ft100 and many more on the dax ect,the dax is already 300 + pips down today on result from vote.this same thing although not as big has happened each time they are due repayments or need renegotiation .

the euro has fallen almost 3000 pips of recent.all related to the same events ,already priced in hance no real fall in last few weeks ,smart money .cant remember which top man it was but he was shorting from the top and continued selling to the breathing point.

this is what successful traders make there living from.clean and simple changing fundamental s.

the problem is we tend to see them in hindsight they tend to trade them in real time
  • #15
  • Jul 5, 2015 3:15pm Jul 5, 2015 3:15pm
Quoting triphop
I met a guy the other day who turned 50k into several million over 3 years with a laughably simple stocks and shares strategy that he freely shared. It doesn't have to be complex to be profitable.
share....? Sounds like a new thread idea....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #16
  • Jul 5, 2015 4:15pm Jul 5, 2015 4:15pm
Quoting The Fool
{quote} share....? Sounds like a new thread idea....
Probably more for another forum being stocks and shares but sure... he followed FTSE, Dax and Dow. Every day, he'd alert for the 5 biggest shares that were furthest away from their yearly average. He'd then look at each one and decide whether or not to buy. Not buying any was also an option.
He'd hold them until they returned to close to median prices, with a reasonable stop. No time stops.

Ah, I said, so it's really in your discretion right? How did you decide which ones to buy and which ones to leave (long only strategy)? He shrugged and said he simply looked at whether there was a significant structural reason why they were so low. So long as it wasn't irreversible, he'd buy. Irreversible - lost IP, or industry change that kind of thing, he'd leave, the rest he'd buy. He lost a load of trades too, but the gains were much bigger than the losers.
15-30 minutes a day.
He's since moved into cash though, thinks stocks and shares have topped - which could give rise to a short only strategy on the same principle I guess.

Simple eh? Got something a bit more interesting on options though I'll ping you.
  • #17
  • Jul 5, 2015 6:06pm Jul 5, 2015 6:06pm
Quoting triphop
{quote} Probably more for another forum being stocks and shares but sure... he followed FTSE, Dax and Dow. Every day, he'd alert for the 5 biggest shares that were furthest away from their yearly average.
Reversion to the mean - well known strategy.

http://www.investopedia.com/terms/m/meanreversion.asp
  • #18
  • Jul 5, 2015 6:47pm Jul 5, 2015 6:47pm
Quoting enochben
{quote} Reversion to the mean - well known strategy. http://www.investopedia.com/terms/m/meanreversion.asp
What you mean someone's thought of this before?! :nerd:

Usually the devil's in the detail; similarly with breakouts strats too, but in this case what was impressive was just how little detail there was.
  • #19
  • Jul 7, 2015 1:11am Jul 7, 2015 1:11am
My friend! So good to see you here. There are opportunities all around us. I believe that most retail traders will never get to that 'hero' status however.

1 as you have tried to lay out here is that the market 'fixes' itself, for lack of better term, so unless a trader was in @ the beginning or pretty early, they are just going to be chasing a trade, which usually ends in losing money.
2 their risk management is ass-backwards & wouldn't allow for the big trade AND
3 most people are lemmings and don't truly have what it takes to be able to have that kind of trade potential.

Be a pig, not a lemming... http://www.businessinsider.com/druck...ed-bets-2015-4
  • #20
  • Jul 7, 2015 2:23am Jul 7, 2015 2:23am
Mongolian - you always come thru with gems that hit home the point! The second paragraph from the article you posted says it all -

Quote
you see something in the market that really, really excites you, "bet the ranch on it."

and i love the BE A PIG mantra! lol
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