How simple are professional trader's strategies?

[lovethetrade]

Professional is subjective, basic is subjective, complexity is subjective.

The pros do it this way because I'm pro so I know how they do it. Get your hand off it Lol

 

[Visaria]

Basic?

Assuming you are talking about technical type of trading, then the answer is the whole range from unbelievably simple to unbelievably complex. I personally know hedge fund managers here in London who use simple moving average crossovers and also some with insane algos.

 

[R1234]

I think that every strategy, whether a basic trader or a professional, uses very simple inputs to generate a buy/sell decision for any asset - call this a basic relationship. The inputs may consist of price momentum or reversion indicators or other factors besides price history. What sets the professional apart from the basic trader is how they use these basic relationships as building blocks in a complex system. The complex system will have the ability to look at the interactions between these building blocks (often 10s to 100s in number) and assign dynamic weights to each one.

 

[ironchef]

This.

It's not about whether the entry set-ups are "basic": it's about the risk-management and trade-management.

There are professionals and then there are professionals.

We do have all those "rogue" professional traders that managed to lose billions for their banks, and 80% of professional hedge funds consistently underperform indices since 2009 even before fees.

Maybe a small mom and pop retail trader like me still have a chance?

Kidding aside, I finally appreciate risk management after lot's of coaching from you all. However, trade management is still WIP.

Regards,

 

[JackRab]

Maybe a small mom and pop retail trader like me still have a chance?

I don't see why not... if you don't do anything stupid

Just don't try to compete in areas that are totally dominated by big players through high infrastructure spending...

 

[murray t turtle]

Basic?

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Yes; ''simple with a modest position ''.I sometimes like to check Merriam Websters dictionary [Since 1828];fine.

M Websters lists another definition of simple = stupid. Doing penny stocks is stupid, like gambling.Aim @ charts since 1828 also; or as far back as you can study ; wisdom is profitable to direct.

 

[ironchef]

I don't see why not... if you don't do anything stupid

Just don't try to compete in areas that are totally dominated by big players through high infrastructure spending...

Thank you for your encouragement.

But I do not know what I do not know so how do I know if I am doing anything stupid?

Regards,

 

[JackRab]

Thank you for your encouragement.

But I do not know what I do not know so how do I know if I am doing anything stupid?

Regards,

By being up to date with what's going on in a stock. If it seems cheap or expensive... there's a reason for it. Be aware of those possible reasons, not by copying some analysts reason... there are a lot of analysts who just sit there and type crap... but by doing some of your own research.

Be up to date with the economic calendar, macro and on micro level. Be aware of events.

And, don't try to compete at the same level as big funds that do milli-second strategies. Or at least be aware that when you do, you're the slowest one.

 

[sle]

But I do not know what I do not know so how do I know if I am doing anything stupid?

(a) Most stupidities in trading can be prevented by simple common sense.
(b) Experience. To quote my old boss, "spanked bottom is a well calibrated model"
(c) Play to your advantages. Being small has a lot of value. Mice have meals much more frequently than tigers do.

 

[Buy1Sell2]

For most people, the risk management is secondary to alpha generation - if you do not have alpha, you can't generate revenue no matter how well you manage risk.

Most people lose money