A lot of people on EliteTrader will beat the market… here is why

Quote from scriabinop23:

You big ass liar.

Those numbers don't check out.

Now if your avg monthly gain was 5%, then it makes more sense. But I don't think you are credible here to make 5% believable.

Unless you started with $20, no commissions, and that account size at $1m is an average, numbers don't check out.

Get back to us with reality.

And if reality is anywhere close to that, and you can give me audited numbers (or at least let me see your printed transaction statements over the last decade), I'll send some money your way as well. You can keep 50% of the after expense profits.
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That is exactly why I don't post here on ET anymore. Unlike many others "I don't need the validation from the lesser minds!" (Sheldon Cooper from the Big Bang Theory, CBS show). No matter what you say here (trying to help and share) turns into barking from the dumb asses. No point. I like and respect neutrino; our dialogs go waaaaay back. I was just trying to give a few rough numbers to encourage him to continue the research. But, as usual, anything you say here turns into a witch hunt against you. I think I am good now for another 6 - 8 month of not posting.
Cheers,
MAESTRO
 
So are we getting somewhere here?

Maestro is trading options. He is > 95 profitable ( which includes 98.6% by the way ) on a monthly base. But he didnt tell how much he is making. Is it over or under 5% and is the big part comming from market making?

Currently we have a daytraders market with the high vola. So these ppl cheerlead their technique and make others believe that there is nothing easier than daytrading. Two years ago they were very quiet and the eod traders were the profitable ones.

If you trade stocks intraday you most certainly will blow up in the future. The reason is because you trade with leverage and if you are long a stock on 4 to 1 leverage and it gets haltet and resumes trading 20% lower, you are 80% lower. This may be happening once in 15 years or twice in 5 years. In the long run you wont survive so you need to be lucky in finding the spot to jump of the train and bring the money in savety. Then you made it and then only by luck. Even Buffett an Sorros or Bill Gates might go broke if the economy becomes a deflation.

The stock market is very competitive and that results in randomness not efficiency. Compare a new emerging market with a mature market like the us markets.
the first is trendy, choppless, the latter choppy, trendless with lots of stop waves and false breakouts.

If you tell others that trading or daytrading is so easy then at least tell also that there are only 5% who make it in the long run. Also hedge funds go belly up left, right and center.

If you know lots of ppl who are profitable: How did they do before the vola increased?
Do they trade leveraged stock-positions?
 
Quote from brokershopping:

As far as the posters on the other thread, forgive the haters. This is a tough business and it's easy to take your aggressions out on some dude in a message board. It is not only a smart question, but it is the smartest question. The answer will determine whether you play the game or not. I have had, and still have, the same question as you. I started in the mid 90's, before internet trading. My return is currently 53x my original investment, but I can expect that if the markets are random, I will be giving this back if trade long enough.
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That's an exceptional record, brokershopping. It’s more than certain that you are doing something right. I think that as people have a natural tendency to fade the trend (pick tops and bottoms), may be its only natural to try to be smart and fade your own track record and exit at the "top". However, I would bet that if you manage to keep doing what you have been doing in the last 14 years, which probably included reinventing yourself and what you do many times, you have a good chance to achieve similarly good returns in the future. It's really tough, market always changes, but I think if one is patient and waits for the right market conditions, the profits will come. As I said in my first post on this thread, think about the alternative returns on capital you can earn in other fields. I know it looks tempting when we look at all those new successful entrepreneurs, but imagine spending the next 10 years of your life burning cash and looking for the next big thing. I am not saying its not worth it, but that you must pursue a goal which excites you and where you have accumulated at least some expertise. So it is not a question of prospective returns but of personal preference. I remember however, one of the market wizards said that the money he made from trading, he lost in real estate and he wasn't very happy about it :) On the other hand if you feel you don't want to continue this fight we do every day in the market, you can put everything in an internationally diversified index fund (a combination of EEM, EFA and SPY will cover the whole world with 0.4% expense ratio) and forget about it until you retire.

My argument that the stock market was a big poker table with many players on it where you no longer have any advantage over the others because there are too many participants, was really strong. But think about it - if there was a table with one weak player, the odds of you sitting there would be just as small because you will have competition from many other players who want to sit on the same table :) So I have to modify that argument in that you still have an advantage on the big table but it is very, very small. But at least it’s available.
 
Quote from brokershopping:

I think it is an important question and anyone who trades should give it serious consideration. If the "edge" is a fallacy and prices are truly random, it is a bad bet to think you will succeed. Just like playing the slot machines there would be no possible strategy that could make the expected return positive, and though there may be winners in the short term, in the long run (very very long run) ALL traders would fail due to the cost of commissions. It's human nature to make order out of disorder, and people will try to find methods of beating it. But in the same way slot machine strategies are doomed to fail, so will trading strategies, in the LONG run, IF the markets are random. This includes any "money management" schemes one might propose. In addition, a few traders would seem to experience long term success, even many years of steady gains. But in the same way flipping 30 heads in a row WILL occur given enough flips, so some traders would experience seemingly uncanny results. This would only be due to luck.

So the big question is, are the markets random? I don't know. I tend to think, and maybe this is a fools bias, that they behave more like a poker game, and thus with skill one can read the "tells" and exploit them. Like poker, it is so close to randomness that it takes special attentiveness to find the tells, and the vast majority will not find them.

In an effort to convince myself that the markets display some predictable behavior, I look at breakout plays of small cap stocks during the late 90's. I believe that at this time, breakout trades would yield non-random results. I conclude that if there is one example of predictable behavior, there are most likely others, and you can't say the markets are random.

One other thing to consider is the spread. In theory (maybe not in practice) you have just as much chance of making the spread as anyone (if you bid to buy and offer to sell, of course), and if the spread is larger than your commission, you should have a positive expected value of return.
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I don't think we can call the markets "random". They are the product of human behavior, of supply and demand, and there are trends in human preferences and expectations for the future which it takes time to be exhausted and reversed. In the beginning they start because of some fundamental shift and later attract speculation and become self-sustaining for a while. By being quick and vigilant you can ride these trends as they manifest themselves in the price and exit when you notice a reversal. The basic tools of technical analysis (like trend lines and S/R lines) can help you identify these breakouts and reversals. The reason why markets appear random is because millions of people use the same tools to capture these trends, and that simply gives many false signals. How would a chart look like, if almost no one speculated on the trends using the tools of technical analysis? Here is an example of such chart... Can you guess what it represents? By the way I think it is possible to replicate very closely the returns on the chart, so it is tradable:

[image]

As you can see, there isn't much noise, you could have bought in 1998 when it penetrated the 1990 high and sell in 2007 when the trend broke for a +100% return and a Sharpe ratio of 3.1 ! That's hindsight of course, but it's a good example of not very efficient market where there was nothing random about it (there is a huge spread however).

I would agree that trends we see on charts are nothing but illusion in our minds. But a rising price on chart or on a times&sales window means that currently there is a rising demand for the item. And since demand doesn't rise and fall randomly, it usually takes some time for people to react to the imbalance, you can profit by going long and betting that it will continue to rise until you see evidence of change. That is to me what speculation is all about. It's difficult because many people do it but there are no barriers to entry and you don't have to sell anything to anybody, so why not take a shot and let the market teach you something about survival of the fittest :cool:
 

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Quote from neutrino:

I don't think we can call the markets "random". They are the product of human behavior, of supply and demand, and there are trends in human preferences and expectations for the future which it takes time to be exhausted and reversed. In the beginning they start because of some fundamental shift and later attract speculation and become self-sustaining for a while. By being quick and vigilant you can ride these trends as they manifest themselves in the price and exit when you notice a reversal. The basic tools of technical analysis (like trend lines and S/R lines) can help you identify these breakouts and reversals. The reason why markets appear random is because millions of people use the same tools to capture these trends, and that simply gives many false signals. How would a chart look like, if almost no one speculated on the trends using the tools of technical analysis? Here is an example of such chart... Can you guess what it represents? By the way I think it is possible to replicate very closely the returns on the chart, so it is tradable:

[image]

As you can see, there isn't much noise, you could have bought in 1998 when it penetrated the 1990 high and sell in 2007 when the trend broke for a +100% return and a Sharpe ratio of 3.1 ! That's hindsight of course, but it's a good example of not very efficient market where there was nothing random about it (there is a huge spread however).

I would agree that trends we see on charts are nothing but illusion in our minds. But a rising price on chart or on a times&sales window means that currently there is a rising demand for the item. And since demand doesn't rise and fall randomly, it usually takes some time for people to react to the imbalance, you can profit by going long and betting that it will continue to rise until you see evidence of change. That is to me what speculation is all about. It's difficult because many people do it but there are no barriers to entry and you don't have to sell anything to anybody, so why not take a shot and let the market teach you something about survival of the fittest :cool:
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Can you read the 'game'? If you are not involved within the game then it is not about you, and your one contract does not change a thing once you decide to 'anticipate' as ljyoung puts it.
 
goldenarm, you said:

At my trading desk, 9 out of 10 traders have been net positive consistently for months to years.

In the last two years even a noob could make money daytrading. We saw that from 2000 to 2003. Everyone was making money daytrading while longer term traders had a really hard time.
Of course there are profitable traders but how did they do under normal conditions?

Did they only recently become profitable?
 
riskfreetrading are you mainly selling options?

Are you always hedged?

Is it a problem when your market becomes illiquid due to a black swan event?

Sorry for asking such direct questions but being right > 90% of the time always rings my alarm bells.
 
apples to oranges??

what exactly are you trying to compare, what to whom?


the multi-billion dollar players drive the markets ... the profit for the small trader lies between their bid and ask.


I've just figured out price movement, after about 5 years of obsession.


Consider yourself the house, ...
 
Quote from MAESTRO:

Here are some statistics for you:

Years of active trading > 12
Total executed trades > 20,000
Average account size over 12 years > $1,000,000
Average monthly return > 10%
Losing months over 12 Years 2
Max Monthly Loss < 10%
Percent Profitable Months > 95%

I don�t think it�s a fluke! Do you, neutrino?
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Maestro, thank you for sharing! Your track record is an inspiration to those new to the game.

To the doubters: I would not be surprised if ">1M" and ">10%" are actually more like >5M and >15%. maestro is likely being modest here.
 
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