How should a newb trade 50 K

mschey · Apr 29, 2005

Quote from mrfong8:

thank every one again

i probably will only buy no more than 500 shares for now, the more i trade the most i realize why you need a system, because i sometimes would act differently to the same situation, or act similiar in different situation.

O thats' what arcade means.......... is that a analogy or a real term?

You have no edge, why in the world would you trade more than 100 shares at a time. Trade 1 lots profitably, then turn up the size. Seriously, put together a game plan or you are simply going to burn through your 50k! Take my advice, I am one of the truely profitable elite traders. I'm not bragging here, just qualifying myself.

Good luck!

Mike

nkhoi · Apr 30, 2005

Quote from mrfong8:

.. the more i trade the most i realize why you need a system, ..

bingo, you are learning, the trick is making the learning pay before your capital run out

Dustin · Apr 30, 2005

These guys are right. You don't have an edge, and may not even understand what an edge is. That's ok because you have never seen a profitable strategy in action and until you do you won't really "get it". Most of the traders on ET don't get it either so don't get frustrated. As an example check out Don Bright's thread on the OPG strategy.

http://www.elitetrader.com/vb/showthread.php?s=&threadid=43388

That is a real edge, although over the past 5 years it has been diminished. The guys who take it very seriously can still make $10-20k/mo doing it, but it takes skill, practice and research.

If you can not write down your edge on a piece of paper then you should not be trading more than 100 shares at a time. Read that last part again, then maybe again tomorrow.

Good Luck

jomama · Apr 30, 2005

could someone quickly give a definition of "edge" and how it's used in context to these forums? From what I'm hearing in multiple threads it's just a system that works to make money consistently, but I keep wondering if there isn't an extra part to it I'm missing.

nkhoi · Apr 30, 2005

Quote from mrfong8:

...

PS i have about 50K w/ the firm. i think should would give me a lot intraday BP, by i don't want to use too much leverage on it for now. How big of a position should i take?

come to think of it may be you should offer advice on how to find 50k to burn in first place.

martys · Apr 30, 2005

Quote from jomama:

could someone quickly give a definition of "edge" and how it's used in context to these forums? From what I'm hearing in multiple threads it's just a system that works to make money consistently, but I keep wondering if there isn't an extra part to it I'm missing.

If you have enough data points to make sure the extends of your rules are not overfitting the data, you can perform reasonable statistical analysis to see if there is something significant enough to be exploited... this is probably the "going-for-the-number" approach such as data-mining profitable moving averages for a market. There are very smart people out there who can do a ten-times better job at crunching numbers and quantifying patterns. The problem is market changes over time due to possibly overcrowding . Then you have different philosophical schools on what to do when the edge is sick.

The second approach is what I feel safe to take. You have to first immerse into the market as a discretionary trader and experience all the hopes and fears first hand. Then come out as a sadist quantifying the pain and suffering into systems. An example of this would be pattern failures. This type of edge gives me double confidence because it hinges on human emotions which truly never change and you should apply the same statistical analysis in the first approach for confirmation. Richard Dennis is probably the master.

Without going over the numbers and scenerios myself, I would be very skeptical about the validity of any method.

People avoid facing death... in the same way they avoid facing their accounts blowing-up. Honesty will empower us to do the hard things.

Everest · Apr 30, 2005

Quote from mrfong8:

i had another thread but it wasn't written very good,

Uh Huh

PitchBlack · Apr 30, 2005

Quote from mrfong8:

thank every one again

i probably will only buy no more than 500 shares for now, the more i trade the most i realize why you need a system, because i sometimes would act differently to the same situation, or act similiar in different situation.

O thats' what arcade means.......... is that a analogy or a real term?

Put 40K aside and trade with 10K.
If you lost them all you can take another 10K and try again.
If you lose all again, you should analyze if it's not better to stop.
If your conclusion is that you should continue, take another 10K.

You can go "broke" 5 times before wipping out the 50K. At that time it will be clear that you are no trader.

It's a better solution than wipping out 50K in 1 move.

Kap · Apr 30, 2005

In order to learn You gotta lose big, big enuff so it hurts - then you will learn something about yourself

...think of losing that 50K as your initial tuition fee, its step 1.

nononsense · Apr 30, 2005

Quote from Kap:

In order to learn You gotta lose big, big enuff so it hurts - then you will learn something about yourself

...think of losing that 50K as your initial tuition fee, its step 1.

that's certainly one way of trying to 'learn'. However, after you lost your 'initial tuition', chances are that you will not have learned a lot, if anything at all. If you're smart - not many are - open a savings account and deposit your $50,000 till such day that you're sure you know what you're doing. That's the only true secret of trading.
This is NONONSENSE advice!

PS:
if you lose 25K, you'll have to double what's left to get it back;
if you lose 40K, you'll have to quintuple (*5) what's left to get it back;
if you lose 45K, you'll have to decituple(?

) (*10) what's left to get it back;
if you lose 50K, you'll have no tuition money left to keep on learning!