College Students and Other Future Traders

Quote from hapaboy:

Just wanted to say this is a very, very fine thread.

Error/RS, you've done it again. :)
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Thanks Hap, I am flattered:)

The truth is, like most people who trade, I got to learn mostly from others. By being around and observing and asking questions. I don't think that it is easy (or even possible) to learn to trade without help.

Books can be useful, but they never really did much for me personally. Maybe I did not read enough of them. I valued "Trading in the Zone" by Mark Douglas, and I enjoyed "Reminiscences" about Livermore. But both of these books were more about emotional approach than they were about how to trade. They certainly were not textbooks or instructional manuals. Then again, attitude (discipline and staying positive and focused) is a MAJOR building block for successful trading.

I always believed that ET as a site is essentially a place for traders to share ideas and information.

The purpose of starting this thread was to try and convey that belief once again to the many who seem to discourage the newer less experienced and aspiring guys. As I said in the first post here.....if someone asks a legitimate question (and really, virtually all of them are), if the reader doesn't want to give an answer, or can't, there is no reason to try and chase off the person who posed the question.

Everyone starts at the beginning. There is no shame in being new and uninformed. We all were at one time or another.

And with few exceptions, those of us who have traded for any amount of time have learned and benefited from the experiences of others.

I have never believed that there is a single thing I could tell someone to help them that in any way would hurt my results as a trader. I never knew any unique "secret method" that would be ruined if I gave it away. I know there are many traders who feel differently. Or at least they claim to have a "method" that if divulged, would dissipate their "edge".

I always thought this was more than a little silly. The market is just too large to be affected by any relatively small number of traders that may share a "secret". (Personally, I just don't believe there are any secrets, but I am open to the possibility that I could be wrong).

I have said so many times, that to me, the basics of trading boil down to only three things. Discipline, Timing, and Stock Selection.

That's it. Really seems very simple. But as we all know, it takes time to develop these skills.

For many traders these days, Stock Selection is not a factor. The large number of traders that trade just the minis, or the ETFs for example, need not concern themselves with what issues to trade. But still, Timing and Discipline will always be crucial to every trader.

These are not skills anyone can learn in school or from a book. There are no shortcuts. Experience comes from doing it. And from making all the mistakes.

If anyone can learn from the mistakes of others, that may indeed speed up the learning process a little. But not by a lot. It is our nature to make all the same mistakes.

Again, as I stated early on this thread, there are some mistakes I have NEVER seen new traders NOT MAKE. No matter how many times a new trader will hear from more experienced guys the same warnings, they will nonetheless be compelled by their instincts to make the identical errors. It is money in the bank that you will see every new trader CHASE. Same with over trading. Same with holding losers. Same with not letting winners run. We all do the same things when we start.

This is why no one gets a degree from college or grad school and is entrusted with the funds of investors. No one wants their money used as tuition for someone else to learn with. The mistakes are part of becoming a good trader. They are unavoidable. They are necessary really.

Sharing experiences can not hurt anyone. But it can help others.

Peace
:)RS
 
Quote from Error 404:


This is why no one gets a degree from college or grad school and is entrusted with the funds of investors. No one wants their money used as tuition for someone else to learn with. The mistakes are part of becoming a good trader. They are unavoidable. They are necessary really.

Sharing experiences can not hurt anyone. But it can help others.

Peace
:)RS
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This is not totally true though. I've seen new MBAs work at the buy side firm that I worked for as assistant portfolio manager right out of b-school, which is ridiculous. And I'm sure this is common practice at many places. And then they become portfolio manager in like 1-2yrs. So, in those first 2yrs they are practicing on your retirement money in a sense! haha. And even after 1-2yrs , it doesn't mean they have seen enough market cycle. This is what happened to a lot of funds in the 90s.

Read about Lincoln Capital in Barrons' last week. They basically lost 95% of their funds in the last 2 years. LOL! What a joke?! It's because management listened to the new crop of managers buying tech and interent and never selling. They had asset of $45B and now nly $2B! That's 95% drop.

That's really messed up. The point is one can't learn to trade/invest in any other way than trading and investing.
 
Quote from trader99:




This is not totally true though. I've seen new MBAs work at the buy side firm that I worked for as assistant portfolio mnager right out of b-school, which is ridiculous. ......


LOL! What a joke?! .....

They had asset of $45B and now nly $2B! That's 95% drop.

That's really messed up. The point is one can't learn to trade/invest in any other way than trading and investing.
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That is pretty interesting. I didn't know that there were situations in which anyone would put serious money into the hands of inexperienced traders.

Goes to show what can be expected.

When I worked for Schonfeld, he said he expected new traders to average losing $40k before they had a clue.

That was in much easier times.

Peace,
:)RS
 
Quote from Error 404:



That is pretty interesting. I didn't know that there were situations in which anyone would put serious money into the hands of inexperienced traders.

Goes to show what can be expected.

When I worked for Schonfeld, he said he expected new traders to average losing $40k before they had a clue.

That was in much easier times.

Peace,
:)RS
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Yeah, it's pretty standard in the industry. New MBAs get $75-80K base + bonus. So, first year total comp hovers around 110-150K(if you are from a top b-school).

But you are right. Most of them don't become portfolio manager right away. They learn from senior guys for a few years. But my point is unless you experience the pain and the emotions and the various cycles and patterns in the market, you can't possible invest/trade that well.
 
Quote from Error 404:



I have said so many times, that to me, the basics of trading boil down to only three things. Discipline, Timing, and Stock Selection.

That's it. Really seems very simple. But as we all know, it takes time to develop these skills.


If anyone can learn from the mistakes of others, that may indeed speed up the learning process a little. But not by a lot. It is our nature to make all the same mistakes.
Peace
:)RS
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RS,

this is so true! We are know and heard about cutting losses, riding winners, position sizing, discipline etc. But we still have to experience it FIRST hand in order to have it in our system! I know too well about cutitng losses, because I've already been to hell and back with it. And I'm learning about riding winners, because before I kick myself for getting out of a winning trade too early. Now, I try to stay in as long as it's sitll going my way.

But, now I think I'm beginning to learn/internalize about position sizing. I had a HUGE SHORT POSITION in JNJ this morning. But I got out too soon. And I only kept a 100 shares and rode it all the way to near the bottom. Yeah. I was holding onto my winner. But so what? BFD?!!! It was only for 100 shares. If I had the full load on or most of it, then I would be a lot happier.

This really burns me. But I think there's no other way to learn to trade than to experience the mistakes FIRST HAND. And all the emotions and pain that goes with it. But here's a light at the end of the tunnel for all of us prop/day traders. You get to practice various things on a relatively small scale first. And once you master these basic skills it's just a matter of scaling it UP. If you can get rid of most of your bad habits when you are small, imagine how well you will be doing when you are BIG.

Whereas, most institutional jobs, people start out BIG. And never even have the experience of learning their mistakes from the market. And they paid dearly. Like that Jacob Internet fund down 98% since inception or whatever. Or even your average fund manager or prop trader on Wall St. There's no point trading millions until you worked out all the nuisances of trading. This is a really important point.

But the rub is that if you work at smaller time horizon too long it might be more difficult to transition to longer horizon since you
are more bound to be trigger happy. But the same patterns should hold! That's the beauty of the market.

-99
 
Quote from trader99:




But here's a light at the end of the tunnel for all of us prop/day traders. You get to practice various things on a relatively small scale first. And once you master these basic skills it's just a matter of scaling it UP. If you can get rid of most of your bad habits when you are small, imagine how well you will be doing when you are BIG.
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That's what i'm trying to do with my swingtrades.

We shouldn't be afraid to try different methods and strategies. But, do it in a way so if it doesn't work out, you won't get hurt.
 
Quote from trader99:



RS,

I'm learning about riding winners, because before I kick myself for getting out of a winning trade too early. Now, I try to stay in as long as it's sitll going my way.
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Damn...just typed a long response to this, the spell checker froze, and I lost the whole thing.

Anyway, the short version of what I had to say (which was a repetition of what I have said here before) is that I believe you must have a REASON for exiting a winning trade.

I know that there is always a lot of repetition in my trading posts. This is probably because I don't know all that much, and what I do know doesn't really change.

While many traders just use targets, I don't believe in a target price being a good reason to book a winner.

I am sorry I lost the long version of my explanation for this. And I need to get back to trading, and don't have the time to re-write what I said.

But just as we all have a "reason" to enter a trade, we should all have (IMO) an equally good "reason" to exit.

Losses are easy to find reasons to book. Winners, however seem to be difficult for people to hold. And of course, for inexperienced traders (those who still have to work on their discipline...it's all easier said than done), holding losers seems to be easy for them to do. So why can't they hold winners? It is all just backward.

Getting used to holding winners can be difficult. Taken a bit out of context, here is a bit of what I had to say about this last August (when I was still RS7):

Quote from rs7:

This is an emotional conundrum for some. Seen it a million times.
My advice has always been that if you are not comfortable holding positions until there is a compelling reason to exit, and I know this is very hard for a lot of traders (particularly newer traders who tend to be more tentative); exit your trade as you would while still keeping a small part of the trade open so you get used to longer holding times.
This is not intended to promote legging out. That is a whole different issue. But if you are trading for example, 1000 shares (or less, or more), get out of 900 and hold 100. This will not dramatically affect your overall profit, and MAY help you to develop a comfort level with longer holds.
You can do the same with smaller positions, however, I do realize if you are starting with 200 shares, then you will be holding 50% instead of 10%. ....do what you have to. I don't know if odd lots are a realistic way to do this. Not familiar with how commissions work with odd lots. But even that may work.
Most important thing to me has always been to have a GOOD REASON to exit a trade. Just as you should to enter. It just seems easier for people to exit a winning trade without any compelling reasons.
This is my style, and not necessarily the right thing for everyone. It is a matter of conviction, discipline, and comfort. But it can be worked on. Some traders have to scalp quickly. I understand that everyone has to be comfortable with their style. But this "legging out" exercise may work for you. It has worked for many.
I know I have said all this before....excuse the repetition (if it applies to you).

Good Luck,
RS7
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There was a better post about holding winners, but I did not find what I was looking for. I will definitely make the effort to find it later when I have the time.

Peace,
:)RS
 
Quote from Error 404:



Damn...just typed a long response to this, the spell checker froze, and I lost the whole thing.

Anyway, the short version of what I had to say (which was a repetition of what I have said here before) is that I believe you must have a REASON for exiting a winning trade.

I know that there is always a lot of repetition in my trading posts. This is probably because I don't know all that much, and what I do know doesn't really change.

While many traders just use targets, I don't believe in a target price being a good reason to book a winner.

I am sorry I lost the long version of my explanation for this. And I need to get back to trading, and don't have the time to re-write what I said.

But just as we all have a "reason" to enter a trade, we should all have (IMO) an equally good "reason" to exit.

Losses are easy to find reasons to book. Winners, however seem to be difficult for people to hold. And of course, for inexperienced traders (those who still have to work on their discipline...it's all easier said than done), holding losers seems to be easy for them to do. So why can't they hold winners? It is all just backward.

Getting used to holding winners can be difficult. Taken a bit out of context, here is a bit of what I had to say about this last August (when I was still RS7):



There was a better post about holding winners, but I did not find what I was looking for. I will definitely make the effort to find it later when I have the time.

Peace,
:)RS
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I agree. IF there is nothing wrong, don't fix it (exit).

Just be glued to look for flaws that inevitably come up and end a trend. At that point protect you gains and end the risk you are now encountering.

One of the least risky places to have capital is in a flawless trend.
 
Greetings, I'm the newbie piker referred to in the first post.

Let me first say thanks to all those generous ET members who have helped me since I joined. You've been a great help. To all those who act personally offended by a newbie asking questions, relax...it's a friggin message board.

As for me, I'll continue to paper trade as I finish up school and develop my non-trading career. I'm doing exactly what I should be doing. I'm not gonna be a sucker and plunk down 2k when I'm guaranteed to lose being so undercapitalized.

If I get called a newbie or piker, fine. I realize I'll get no respect with trading until I produce real results. So be it. My goal in life isn't to command respect on an anonymous message board.

Again, thanks to all those who've helped me learn along the way.
 
a private trader. Take the tuition money for college, and use it as tuition money you may lose in the stock market as you learn to trade. A college degree is a $100,000 piece of useless paper, unless you want to be a doctor or dentist. Take that $100,000 and have a well capitalized trading account...................
 
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