Becoming an independent trader

ssrrkk · Feb 4, 2012

Quote from darktrader:

if I would have read a post like mine 4 years ago, I don't know if I have had the intelligence to understand that this could happen to everybody me included, but believe me it is full of stories like mine.

I'm not telling you that you should give up, I think it could be done, but you should keep your job untill you have something that really works, and in my opinion there is no logic to go live without extensive testing on the simulator. You have to consider simulation like real, if you fail with simulator, if you break the rules with simulator, you have to feel bad, you have to feel like a real loser, because if it is true that what works on sim could not work live, it is sure that what doesn't work on sim won't work on real.

I was reading the thread trying to catch some suggestion from those who are profitable, the problem is that nobody will tell you what to look for with precision, they are vague, you know, observe how the market moves, understand how the market really works, translated should mean, price action and market is an auction, which is vague too, because you don't understand where to study PA (I have al brooks last book it is written very bad imo, and for me who I am not english mother tongue is a nightmare, at least if i know for sure that al brooks is a profitable trader maybe I could spend 2 years on trying understanding his book), market is an auction should be market profile or/and order flow, but I'm just guessing, anyway imagine after this 4 years and all this money how I can concentrate on PA and MP and order flow without knowing for sure that is the right path, anyway now I'm concentrating on money management that is for sure on of the key elements.

darktrader,
have you ever back tested a strategy? Or at least have you come up with strategies that at least appear to work when looking at the last 3 years of data? I may be mistaken but it seems to me you are reading books, then just diving into live trading without studying past charts and coming up with high probability set ups and exit rules.

tenthousandmen · Feb 5, 2012

Quote from beachhouse:

I fully agree with you. These small traders need to go to a school like Yale first and then work for a big firm, like Lehman Brothers and MF Global. Then start trading with $5 million. Personally, I think $7.5 million will make it more likely to succeed, because the extra $2.5 million act as a cushion.

Where did you go? Stanford? Devry?

silverspeedy · Feb 5, 2012

Zenstudent - excellent post, one of the best I've ever read on any forum. Thanks for your directness, practicality, and obvious impartiality for those of us trying to get to the next level.

Quote from Zen Student:

Bloody hell, the first one to beat me to what I thought would be the first reply to this gentleman. And it proves my point!

No no no no NO. Emphatically no. Do not start dicking around in the market. It is not psychology. This is an excuse by people who have not done the work to understand. If your personality suffers from such issues that prevent the correct execution of a proven strategy then you are in the wrong business. You do not need to start engaging in inaccurate, unplanned, shoot from the hip gambling to assuage some fears about your psychology not being up to it.

No, you need $25k for an equity margin account. If you want 6:1 leverage, you can fund a futures account with $10k and trade 1 lot in the mini Dow futures. Exchange margin requirement is around $6k and IB discount this 50% for intraday positions. At $5 per index point there is plenty to spare. No need to ever fund your first live account with more than $10k or initially trade more than 1 lot when you have tested out your strategy.

This isn't about your heartbeat rising (a sure indication of uncontrolled risk and personality issues). $100k/month can be done at the rate of $5-8k a day with minimal drawdowns. Assuming accurate trading, you are looking at needing 10-15 lots in something like YM to achieve these returns. This shouldn't require more than $100-150k funding with possible risk around $8-10k in a worst case scenario. Accurate trading does not have "massive drawdowns" or "tolerance to endure" $XYZ big losses.

The rest of your post makes some interesting points, and I can see it is overall well intentioned. However, as you point out you are still doing the journey yourself. The attitude you have to risk / psychology / money management is not professional in my view. It is typical of the professional classes who have made a decently good income and have money to spare. This business is about optimising advantages and constructing accuracy. No need for haphazardness, gambling, blowups, etc to get to where one wants to go.

50% a year? Try 50% a month. 1-2% a day is very possible in futures, with liquidity limits not being an issue at the 1 million a year mark. Let the thread starter set his own standards for what he wants to achieve.

dealmaker · Feb 5, 2012

No trader that is doing day-trading needs to backtest, its just a complete waste of time. Backtesting is designed for investing and position trading and I don't believe there is a single trader here with an account large enough to position trade effectively...
Most traders on here are trading off of either one or five minute charts....

ps position trades are done on fundamental analysis.....

Quote from ssrrkk:

darktrader,
have you ever back tested a strategy? Or at least have you come up with strategies that at least appear to work when looking at the last 3 years of data? I may be mistaken but it seems to me you are reading books, then just diving into live trading without studying past charts and coming up with high probability set ups and exit rules.

ssrrkk · Feb 5, 2012

Quote from dealmaker:

No trader that is doing day-trading needs to backtest, its just a complete waste of time. Backtesting is designed for investing and position trading and I don't believe there is a single trader here with an account large enough to position trade effectively...
Most traders on here are trading off of either one or five minute charts....

ps position trades are done on fundamental analysis.....

To each his own, but I personally would never consider trading live using an untested strategy.

beachhouse · Feb 5, 2012

Quote from darktrader:

I have al brooks last book it is written very bad imo, and for me who I am not english mother tongue is a nightmare, at least if i know for sure that al brooks is a profitable trader maybe I could spend 2 years on trying understanding his book

Al Brooks is aka Nodoji.

He is pretending to be a woman on ET, trying to sell his books.

Anyone who can trade won't write books. Writing books is a sign that he fails as a trader.

Nodoji, aka Al Brooks, posted "her" first posts several years ago on ET, claiming "she" had just started trading. But, but, but, "she" demonstrated a large trading vocabulary with all those fancy terms, such as support/resistance, moving averages, fibonacci, lamboginni, stochastics...... These terms are clearly a sign of many years of reading/trading/writing. Definitely not a sign of a newbie.

That is something Nodoji has failed to offer an explanation for. She could, as a newbie, threw all kinds of trading terms at whatever scenario other mentioned.

Isn't that strange?

I hate book writers/scam artists. I glanced at the Table of Contents of one of Al Brooks books on Amazon.com, it is garbage, full of shit.

darktrader · Feb 5, 2012

Quote from ssrrkk:

darktrader,
have you ever back tested a strategy? Or at least have you come up with strategies that at least appear to work when looking at the last 3 years of data? I may be mistaken but it seems to me you are reading books, then just diving into live trading without studying past charts and coming up with high probability set ups and exit rules.

ssrrkk,

basically i did what you said, and this is how I lost my money, actually half a of that money was wasted with bad investments in stock but my losses with daytrading affected my decisions with my long term investment.

anyway I tried with a few, putting a lot of effort to program etc, but then abandoned as I had the first drawdowns, you know the classic jumping from one method to another, but it was testing sim live not backtesting, I backtested some stuff to understand what kind of exit is the best in general, trailing or not trailing, risk reward stuff, etc...

anyway now I know that I have to give a strategy the time to really understand if it could work, but before starting to come up with new ideas I need to understand where to look for without wasting anymore time, I mean I have to learn something that is really usefull to build a methodology that could work, you know I can't spend 1 year on Al brooks if he is not for real, market profile make sense to me it seams something based on a logic premise, so I'm going to study this stuff, currenlty I'm reading Van Tharp anyway.

darktrader · Feb 5, 2012

Quote from beachhouse:

Al Brooks is aka Nodoji.

He is pretending to be a woman on ET, trying to sell his books.

Anyone who can trade won't write books. Writing books is a sign that he fails as a trader.

Nodoji, aka Al Brooks, posted "her" first posts several years ago on ET, claiming "she" had just started trading. But, but, but, "she" demonstrated a large trading vocabulary with all those fancy terms, such as support/resistance, moving averages, fibonacci, lamboginni, stochastics...... These terms are clearly a sign of many years of reading/trading/writing. Definitely not a sign of a newbie.

That is something Nodoji has failed to offer an explanation for. She could, as a newbie, threw all kinds of trading terms at whatever scenario other mentioned.

Isn't that strange?

I hate book writers/scam artists. I glanced at the Table of Contents of one of Al Brooks books on Amazon.com, it is garbage, full of shit.

If he/she/they is/are not profitable, it is really not encouraging because if someone have spent so far so much time and efforts to learn to trade and still fail, really we have no chances....

Paddler · Feb 5, 2012

Quote from darktrader:
anyway now I know that I have to give a strategy the time to really understand if it could work, but before starting to come up with new ideas I need to understand where to look for without wasting anymore time, I mean I have to learn something that is really usefull to build a methodology that could work, you know I can't spend 1 year on Al brooks if he is not for real, market profile make sense to me it seams something based on a logic premise, so I'm going to study this stuff, currenlty I'm reading Van Tharp anyway.

The auctioning theory and profiling put up by MP gurus like Steidlmayer, James Dalton and etc is fascinating. However, it would take your months and years to absorb, just as difficult as the price actions by Al Brooks. More importantly, the application is the weakest link.

I like JHM.

Unfortunately, the minds of most people here are "fixed". Good luck.

J.Joseph · Feb 5, 2012

Okay, I know you've already got 14 pages of replies, but I'm a big believer in psychology so I'll offer this up.

With that much money I know it's not appealing to "begin small" and very tempting to put in more money. But here's the appeal to starting small.

If you trade a small position size then the "position size" to "broker fees" ratio will put you at a disadvantage. It will take a larger percentage win to break even. This may sound counter-productive, but it's like Skywalker running with Yoda on his shoulders. It's harder, but it makes running without him seem easier. The smaller account holds you to a higher standard. If you trade a smaller account, you'll almost guarantee that you'll lose during your "training period," but, there's a 99.9% chance that would happen anyway. But because it's a small account, it kind of doesn't matter. If you can break even or win with this kind of disadvantage, then trading a larger account will actually be easy. Giving yourself the "advantage" of a larger account is tempting, but, really, who can break even, let alone win, with a $2000 account? Break even with that and you'll kill with with a million dollar account when you get there.