Glad to be of amusement , I know I sound pedantic even a little autistic in stating the obvious , however this emotive cheap way of being persuasive is facile and certainly has no place in trading, where truth is important , in short , I ain't got no time for it .
Every professional trader said market had changed dramatically over the years
- Thread starter TripleJs
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How do you even know the guy saying it is a professional trader? Too many charlatans claiming to know and will teach you how to easily, make millions if you pay them $5,000, $10,000 or more? A lot of the guys claiming to be professional traders are not traders but, salesmen. They are selling you a course for thousands and get a cut, if you are dumb enough to sign and pay for it. How do I know they are not even traders? I have attended a couple of so called seminars in hotels. All of it just a big sales job trying to sell you their courses and seminars, for thousands of dollars. When all they talk is how it is so easy to make millions in the stockmarket, without talking about or showing any setup or risk management, you know you have a charlatan in front of you.
While true in theory, that's much harder in practice. You can shoot for a 3:1 or even 5:1 reward:risk ratio. You'll get it occasionally. But choppy markets will kill you. You can't force your desires (huge profits and small losses) on the market. You have to accept what it gives you.
That is true. You take what the market gives you. Breakouts that work occur all the time. You have to have the patience to out wait choppy markets. Keep your losses as small as possible and let the winners run.
So then the question is how do you wait out choppy markets? How do you know when it's a "real" breakout? Again, easier said than done in my opinion. I've seen people use volatility indicators and other things as filters, but never seen them help much in systematic testing. Others use their discretion. Again, I've never seen these traders post their long-term results and actually prove they outperform the market.
Surely this depends on what you're trading and time frame / trading style? I.e., if you're intraday trading there must have been some changes since the advent of electronic trading. We know this since pit traders are gone now and how even good off-the-floor scalpers lost their edge.
As for long term trading - we used to have something called economic cycles, too. They seem to be gone these days with 2020 being the ultimate f**k you to fundamentals. I have a friend who believes himself to be an investing genious starting his 'career' in 2010. He was white as a sheet in March 2020, but his confidence and portfolio was restored shortly after.
But fundamentally, I'm sure the general principles are still the same. So it might be a matter of nuance.
I think the world-record recovery in 2020 (like 5 months from 30%+ drawdown back to new highs?) has given lots of traders way too much confidence. This is especially true of 20-something year old option "gurus" on Youtube. They think selling premium (with no regard to risk or hedging) is free money. If the market crashes, it will just bounce right back up. In fact, they've told me (in comments) that I'm probably not suited for the stock market because you can't fear losses. I know a LOT more about losses and multi-year bear markets than any of them.
Absolutely true.
An interesting thing regarding my friend who sold his apartment and started his investing career in 2010. I recently listened to an interview with a trader who started out as an investor doing the very same thing (selling his apartment and putting it all into the stock market) at the very top prior to the financial crisis.
Same action. Very different outcome.
Trading breakouts is simple; I never said it was easy.
When the market isn't trending you trade small or don't trade at all.
Be very selective in the stocks you trade.
Cut your losses quickly.
You know it's a real breakout when it takes off. You can't know before hand.
I don't use any indicators or discretion. The stock either meets all the criteria or it doesn't. I'll either take a small loss or some kind of profit. The 80/20 rule seems to apply. I make 80% of my profits on 20% of my trades.
I'm not sure what traders you are referring to that haven't proved they have outperformed the market.
I've never the performance verified via account statements or a 3rd-part auditing service for traders. I'm talking about long-term performance. I know breakout traders can do very well in strong trends.