I think there is a big difference between a guy who grinds out base hits and someone who margins the hell out of their account to make a few ticks/grinds out profits. Two completely different animals. One can base hit trades in a well funded account and not have to margin the hell out of his money. If you are well funded and have the right strategy/discipline/money mgmt you can make a ton of money being a base hit type trader.
Always Amazed at How Thin this Game Is
- Thread starter jonny1lot
- Start date
I think there is a big difference between a guy who grinds out base hits and someone who margins the hell out of their account to make a few ticks/grinds out profits. Two completely different animals. One can base hit trades in a well funded account and not have to margin the hell out of his money. If you are well funded and have the right strategy/discipline/money mgmt you can make a ton of money being a base hit type trader.
I don't think that way at all, those who have put huge time in learning on how to become competent at their profession don't consider it "thin", perhaps those who are at "breakeven stage" is at thin and eventually they get to next hump. Some of us might say we "grind" it out but it has nothing to do with making small profits or trading on margins, I have never traded on margin. I don't believe taking on debt in financial markets, real estate is different. I wonder how many went belly up when exchanges opened up after 9-11. Eight to twelve ticks are nice size profits in ES doing handful of trades with size, those who grind it out takes small losses, never allows anything over 5 ticks become a loss and really have their stops at plus one tick. I have always done singles in day trading and go for mega profits in long term and I will sit with same idea of trend up to five years in commodities and rolling over contracts. I simply don't have ability to go for longer profits day trading, nothing I have tested has done well, or drawdowns seem to large for my personality. I applaud those who can do it, but I can't. All that matters is many more than losing.
Really, you have not traded enough to get over the should'a could'a would'a s, you do 10,000 trades and five minute after you have forgotten the trade, and watching 8 ticks and not gotten something out of, shame. Perhaps you not done enough back testing finding best are to take profits.
When I use the word margin I'm not referring to leverage. Margin in economics is analogous to a derivative. It's the change in X for a one unit change in Y with respect to Y. When we say something is on the margin, it's the smallest incremental change for a given unit. So If I sell pizzas for a living and I'm the marginal pizza seller, it's referring to the fact that the qty I'm selling is the equilibrium market price. If costs go up by a single incremental change, my supply drops off the market and I can no longer sell pizzas because my marginal cost is greater then my marginal revenue for the next pizza sold. Firms that operate on the margin are vulnerable to any change in cost. Because they have the highest cost and the least optimal inputs, they are the first to go out of business. It's also how we usually solve for price in any given market. Price is determined by the last unit of supply to a given market.
So back to trading, a marginal trader by definition cannot exist in the long run because his survival does not allow for any increase in costs (losses for a trader). Marginal suppliers only exist in the short term. In the long run they are all gone. What can he do to survive? Stop being a marginal supplier to the market!!! Now I know the next response is going to be, but there are always grinders in the market, they never go away. The answer is, yes they do and they are replaced by new ones.
I agree with this statement completely - you said it much more clearly than I ever could, sir.
I think we are talking about 2 totally different things. When I hear the word grinder I am thinking of the trader who looks for the optimal set up(or set ups each day) and looks to take a base hit out of the market. Let's say a guy who is looking for a 2 point scalp in the ES. Sure his risk/reward better be good, and have a good winning % over the long run. But if he goes in each day "grinding out" profits, let's say on average 2-3 points a day on winning days loses on average 1 point a day, that guy is going to make a lot of money over the long run. Sure costs come into play. The guy who does this on 2-3 trades a day vs the guy who does this on 20 trades a day is far better off. Lastly, you have to have decent funding to trade this way. Doing it with a few lots per trade is not going to make you much money in the long run. But if you can trade some decent size, you can do very well.
All this talking about grinders and pizza is making me hungry. Good talking to ya again Mav. been a while. Hope all is well man.
Thanks man. At the end of the day it comes down to how a guy wants to trade. I am more of a base hitter/do less trades guy. You need a certain mentality to do this. Not for everyone. Is a lot of watching the markets and waiting. Seeing the opportunity and hitting the singles and doubles. Works for me.
I have traded on desks surrounded by guys who love buying ES down 10 handles, buy more down 15 handles...more down 20 handles...take huge risks and sometimes get carried out on a stretcher. But I have seen some of these guys have huge scores when they catch it right. I couldn't trade that way. I have had a friend or two taken out of the trading game completely trading this way.
One of the traders in Market Wizards said it perfectly....you get what you want out of the market. Some guys want to be taken to the top of the hill, then to the edge of the cliff. Over and over again.
There's no crying in baseball. Or trading.--Swimr
Everyone knows that doubling-down is a horrible strategy long-term. Just back-test it.
Finally, let me say that anyone doing day trading without a proven "system" is just not going to last very long.
I agree 100% on both parts. I have watched my friends on trading desks get bailed out over and over. Then the one trade that doesn't come back and they are in a gigantic hole. People like to say "I bought ES at 2030....2025....2020........look my average price is now lower". Sure... it definitely is.......and your position size is 3 times as large. I have done this before myself in the early days of my trading.....and it never ended well.
Without a proven strategy or system, whatever it is based on, you will end up over trading, trading on emotions, revenge trading.
I go half in, then the other half later on, if the better price isnt looking counter trend.
Is that the same, works for me.
I lowered my margin from 200:1 to 50:1 and both positions i keep near that so no 3rd or 4th position, 2 is fine.
Taking an educated guess on future market direction is sadly always thin.