Deal for New trader

iloveoptions · Jul 4, 2007

Quote from Purple Barney:

A handful of Zangers who are profitably year in and year out? There will always be those who are a product of randomness, and others, who have proven consistency, that are a product of skill.

I guess the real question isn't what MY edge is, but is there ANY edge at all? Does an edge exist? I don't need a list of profitable traders to tell me that, all I need is ONE. If there is ONE trader out there who can profit, not for a month, not for a year, but year in and year out. Beating the markets, beating the majority of all traders. If this trader exists, then that means there IS an edge. That its possible. And its not all random.

The good news is, theres not one, but many many such traders, who have proven over time that this is not a random game. But for newbies like me, I have an idea of what this edge is, vaguely, I don't have it completely under my grasp, which is why chances are I won't be profitable in 6 months, a year, but as long as this "edge" EXISTS, I can be out there searching for it.

Maybe I will never find it and end up a school teacher, but as long as its possible, I would like to give it a try. And if I never find it, it won't be because of randomness.

My advice to you is don't let all that jargon and Edge talk scare you. The best edge is the one that is sitting between the six inches of your head...brains and common sense. If you're determined to make it, you will make it. Best wishes.

Purple Barney · Jul 4, 2007

I completely agree with everything you just said. Why not trade futures? Familiarity is the only thing. I have never traded prop but have been a retail trader for years, which is why I am starting with equities. In the future I would be moving into futures I'm sure.

One question. Do you think there is an edge? Or are the Zangers, Richard Dennis's all a product of randomness.

Quote from Maverick74:

Well, let's look at it this way. Let's assume for arguments sake that there is no edge anywhere, not in stocks, options, futures or FX. So given this setup, if one were forced to trade, what would be the optimal product?

Well, it would have to be the most liquid product, with the lowest transaction cost, with the least amount of inside information and one that is not prone to unpredictable gaps that are out of our control. This leaves one answer, futures.

Again, this is under the assumption that no edge exists anywhere. Futures have one tick spreads, very deep liquidity, very low transaction costs, and there really is no inside information on futures that one can use against you.

Now if one actually believes they have some kind of edge, assuming the edge is either mechanical in nature or quantitative, then why not apply that edge to a product that has all the above attributes. This would be the "logical" solution.

Maverick74 · Jul 4, 2007

Quote from Purple Barney:

A handful of Zangers who are profitably year in and year out? There will always be those who are a product of randomness, and others, who have proven consistency, that are a product of skill.

I guess the real question isn't what MY edge is, but is there ANY edge at all? Does an edge exist? I don't need a list of profitable traders to tell me that, all I need is ONE. If there is ONE trader out there who can profit, not for a month, not for a year, but year in and year out. Beating the markets, beating the majority of all traders. If this trader exists, then that means there IS an edge. That its possible. And its not all random.

The good news is, theres not one, but many many such traders, who have proven over time that this is not a random game. But for newbies like me, I have an idea of what this edge is, vaguely, I don't have it completely under my grasp, which is why chances are I won't be profitable in 6 months, a year, but as long as this "edge" EXISTS, I can be out there searching for it.

Maybe I will never find it and end up a school teacher, but as long as its possible, I would like to give it a try. And if I never find it, it won't be because of randomness.

There are a lot of fallacies in your thinking here. Let's play a game. Say I have a sports touting service. I call you every week, give you my picks for this week's college and pro football games. You pay me a fixed amount of money up front for this information. I tell you I have all sorts of inside information. My results are well documented throughout the industry, I rarely ever, ever lose. I am the BEST. I charge you $500 for this week's picks. I give you my college football 3 team parlay as well as my Sunday Lock of the year. As usual, I come through in flying colors. I pick every game correctly. You are amazed, but it's only week you tell yourself, let's see how I do next week.

I call you once again, give you my picks and yet again, I come through and pick 4 out of 6 winners. The process repeats itself week in and week out. I keep calling, and you keep winning. You are beside yourself. You can't explain it. You tell all your friends about me, they don't believe you. I have now won 18 weeks in a row!!! You keep betting bigger and bigger. I never lose! So finally we get to the playoffs, your friends have been won over and decide to call me. I give them my picks. They bet huge. They get killed!!!!

They call you up and scream at you. You say, what are you talking about? Mav came through yet again. Only then do you learn that I gave your friends the opposite picks that I gave you. You later discover that this is actually the con. That I call thousands of people every week with picks. I give one side to half the people and the other side to the other half. Every week, I only call back the winners. And every week, half my clients win.

Till we get to the playoffs and I have 50 customers, yourself included, that have never seen me lose. You see, it's very easy to get very lucky. But just like in life, rarely are things what they seem. Don't fall for it. The world is full of streaky winners. Lots of them. Ever wonder why the average person can't replicate the streaky winner?

Purple Barney · Jul 4, 2007

Quote from Maverick74:

There are a lot of fallacies in your thinking here.

Ok, I'm not sure how your example applies here, unless you are saying all the Zangers in the world have been conning us. I get your point that streaks happen, but do you really think people that profit year after year for 20, 30 years are just on one big streak? Or a big con? I believe skill exists in trading. And skill = edge. The reason why everyone can't be one of the big winners is because not everyone is that good. Not everyone can be a Michael Jordan or Johny Chan, but should we all stop playing basketball and poker because of it? Since they were just a "streaky winner"? Or should we keep playing and try to learn even more, since they have showed us what is possible.

Obviously you wouldnt agree with any of this if you thought that trading is all luck and randomness. Is that what you believe?

Maverick74 · Jul 4, 2007

Quote from iloveoptions:

My advice to you is don't let all that jargon and Edge talk scare you. The best edge is the one that is sitting between the six inches of your head...brains and common sense. If you're determined to make it, you will make it. Best wishes.

I never said he can't make money. But if he is going to trade a product with such a large vig as equities, he better have an edge to offset. Look, I traded equities back in the day where we paid 2 cents a share and $200 for bullets for 1500 shares. Guys before me paid 3 cents a share. That's 30 times what guys are paying now!!!! And we made money, because we had a legitimate edge. There is nothing wrong with paying the vig if you have an edge to compensate for it. Hence my question of what his edge was. Otherwise he would be better served trading a product with a smaller vig. Econ 101.

CaptainObvious · Jul 4, 2007

I tend to agree. I don't like it because it requires a change on my part, but it does seem to be the logical progression for the retail trader.

Quote from Maverick74:

Well, let's look at it this way. Let's assume for arguments sake that there is no edge anywhere, not in stocks, options, futures or FX. So given this setup, if one were forced to trade, what would be the optimal product?

Well, it would have to be the most liquid product, with the lowest transaction cost, with the least amount of inside information and one that is not prone to unpredictable gaps that are out of our control. This leaves one answer, futures.

Again, this is under the assumption that no edge exists anywhere. Futures have one tick spreads, very deep liquidity, very low transaction costs, and there really is no inside information on futures that one can use against you.

Now if one actually believes they have some kind of edge, assuming the edge is either mechanical in nature or quantitative, then why not apply that edge to a product that has all the above attributes. This would be the "logical" solution.

Purple Barney · Jul 4, 2007

Quote from Maverick74:

Hence my question of what his edge was. Otherwise he would be better served trading a product with a smaller vig. Econ 101.

And my question is does any edge exist and can i learn it. If its yes, then that is my goal. "Making money" is only a product of this edge/skill, not a goal.

IV_Trader · Jul 4, 2007

Quote from Maverick74:

There are a lot of fallacies in your thinking here. Let's play a game. Say I have a sports touting service. I call you every week, give you my picks for this week's college and pro football games. You pay me a fixed amount of money up front for this information. I tell you I have all sorts of inside information. My results are well documented throughout the industry, I rarely ever, ever lose. I am the BEST. I charge you $500 for this week's picks. I give you my college football 3 team parlay as well as my Sunday Lock of the year. As usual, I come through in flying colors. I pick every game correctly. You are amazed, but it's only week you tell yourself, let's see how I do next week.

I call you once again, give you my picks and yet again, I come through and pick 4 out of 6 winners. The process repeats itself week in and week out. I keep calling, and you keep winning. You are beside yourself. You can't explain it. You tell all your friends about me, they don't believe you. I have now won 18 weeks in a row!!! You keep betting bigger and bigger. I never lose! So finally we get to the playoffs, your friends have been won over and decide to call me. I give them my picks. They bet huge. They get killed!!!!

They call you up and scream at you. You say, what are you talking about? Mav came through yet again. Only then do you learn that I gave your friends the opposite picks that I gave you. You later discover that this is actually the con. That I call thousands of people every week with picks. I give one side to half the people and the other side to the other half. Every week, I only call back the winners. And every week, half my clients win.

Till we get to the playoffs and I have 50 customers, yourself included, that have never seen me lose. You see, it's very easy to get very lucky. But just like in life, rarely are things what they seem. Don't fall for it. The world is full of streaky winners. Lots of them. Ever wonder why the average person can't replicate the streaky winner?

everything is very true , but how do they get "My results are well documented throughout the industry, I rarely ever, ever lose. I am the BEST. " ?

Maverick74 · Jul 4, 2007

Quote from Purple Barney:

Ok, I'm not sure how your example applies here, unless you are saying all the Zangers in the world have been conning us. I get your point that streaks happen, but do you really think people that profit year after year for 20, 30 years are just on one big streak? Or a big con? I believe skill exists in trading. And skill = edge. The reason why everyone can't be one of the big winners is because not everyone is that good. Not everyone can be a Michael Jordan or Johny Chan, but should we all stop playing basketball and poker because of it? Since they were just a "streaky winner"? Or should we keep playing and try to learn even more, since they have showed us what is possible.

Obviously you wouldn't agree with any of this if you thought that trading is all luck and randomness. Is that what you believe?

OK, maybe it's my writing skills, but you are missing every point I'm trying to make here. One, you are confusing skill with edge, don't do that again. They are not the same thing. A lot of people have skills. Few have edges. Yes, I believe there are a lot of lucky people who have been streaky and profited by being at the right place at the right time in history. Not all people, but a lot of people.

Now on to your next confusion. You seem to think, again maybe it's just my poor writing, that if one does not have an edge, they can't be profitable. I never said that. I asked you on the first post of this thread, why are you trading equities? I then went on to further explain to you why I thought equities was a poor choice because of the high vig. I then asked you what edge you had to overcome this high vig. Now you are talking about Michael Jordan and Johnny Chan and skill. LOL. Obviously you and I are having completely different conversations. Again, maybe that's my fault.

Look, I'll say it again, anyone can make money trading any product. Guys that make money, make money because they either have an edge, or they are simply great traders. Usually if they don't have an edge, a trader will wish to trade the product that has the least vig or obstacle to being profitable. Hence the reasons why not a lot of guys on ET are trading pork bellies.

Therefore I suggested a product that would be optimal to trade considering the fact that you mentioned you had no edge. I think I have clarified my thoughts more clearly this time around.

Maverick74 · Jul 4, 2007

Quote from IV_Trader:

everything is very true , but how do they get "My results are well documented throughout the industry, I rarely ever, ever lose. I am the BEST. " ?

That's easy. The guy runs 100 different touting services. Come on IV, that question is on a standard SAT test. LOL.