If you had to start over...
- Thread starter David's faith
- Start date
@David's faith if you have a newcomer who you need to teach, cut away the charts, the math and the execution software.
give him 5k and let him arb craigslist all day. It's the same basic principle and teaches him the value of grunt work/research, how people actually transact and how stupid they sometimes are, why transaction costs and execution matter (a lot) more than the actual trade idea and how to watch flow.
On top of that - and in my opinion this is the most important thing - he learns what kind of role he actually plays in the market and why he's getting paid. He learns when it's worth to carry inventory for a risk premium and when you need to flip inventory fast as soon as you trade against flow.
Inventory/risk management can also be taught very well because you have to deploy capital where the volume is instead of dumping everything into one item and hope for a homerun.
It should take him about 3 months to get it and this lesson is much more valuable than stuffing his brain with a bunch of arcane concepts he cannot relate to anyways. I've done that with a couple of juniors and you'll learn pretty quickly who's worth putting time into and who just goofs around with charting and pretty statistics.
give him 5k and let him arb craigslist all day. It's the same basic principle and teaches him the value of grunt work/research, how people actually transact and how stupid they sometimes are, why transaction costs and execution matter (a lot) more than the actual trade idea and how to watch flow.
On top of that - and in my opinion this is the most important thing - he learns what kind of role he actually plays in the market and why he's getting paid. He learns when it's worth to carry inventory for a risk premium and when you need to flip inventory fast as soon as you trade against flow.
Inventory/risk management can also be taught very well because you have to deploy capital where the volume is instead of dumping everything into one item and hope for a homerun.
It should take him about 3 months to get it and this lesson is much more valuable than stuffing his brain with a bunch of arcane concepts he cannot relate to anyways. I've done that with a couple of juniors and you'll learn pretty quickly who's worth putting time into and who just goofs around with charting and pretty statistics.
I think you will find that most of the people on here try to use indicators. Of course if you have an idea you have to check back a few days to see if it is valid. Let's say there is a very obvious price level so you put your order there. How can you, even in principle, know when that order will be filled? That is what I mean by the random nature of time. That is why back testing indicators is futile.
While i do respect your trading knowledge...i have to really disagree with you here. Reason is...i have been arbing craigslist since i was 16 (currently 37)...had my dealers license at 18 going to auto auctions to flip vehicles...did the same with off road stuff when I got a bit older...then guns/ammo a little after that (technically didnt "arb" them as that would be illegal...i only traded to "improve my collection" of course).
on top of having a natural ability to trade physical goods successfully...i was professionally trained by Halliburton to sell multi million dollar Fluid jobs to operators. I am a very good salesman both from nature as well as nurture...and I have a very good eye for mispricing and potential value...
All of that ability has meant absolutely nothing when it comes to trading the financial markets. The main reasons: Trading completely eliminates the individuals innate sales ability...the market does not care how personable you are, how respectful or nice or likeable you are, how well written your sales listing is, your ability to communicate effectively, etc... Also completely eliminated is the ability/opportunity to improve the physical good (sweat equity) before selling. I bought a 5.0 fox body once for $200 because the engine shook terribly and it was dirty, new harmonic balancer and it ran like new, pull out the interior and clean thoroughly so it looks like a loved vehicle and boom, 10 bagger.
trading physical goods and trading financial markets have been complete opposites for me, unfortunately lol.
Scat, your charts are totally naked- no volume bars in another frame- no moving average or similar?
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Indicator:
a thing, especially a trend or fact, that indicates the state or level of something.
Everyone uses some type of indicator. Even if you're just using a blank chart with only candles, that is still indicating something to you. Some indicators are just a deviation of price action, to pretend they are 100% useless (if they are coded with purpose, probability and you understand the concept and how to use them) is kind of ignorant. A computer can track multiple charts and multiple things where as a human would struggle to keep up on one. If you're just going to slap on a random indicator and wait for two lines to cross, ok that can be stupid no argument there, but ideally in a real conversation you would think it would be safe enough to assume, that's not what people are or at least should be talking about.
Furthermore if the argument is going to be "well no because only current action matters in trading" how crazy is that? Of course there's dynamic buyers and sellers in the market and of course one of the most effective ways to trade is trading what's in front of you and taking advantage of it as it happens. I am not denying that, but it's just stupid to think that is the only edge you can obtain in the markets.
Like do you really think larger players just press buy and sell on huge positions all at once? generally not, unless it's some type of extreme emergency. They would be trading against themselves and pricing themselves out, it's not in their best interest to do that. What would be? well not to state the obvious, but getting a net weighted average over time would be much more beneficial for them. Which clearly if they are doing that, can leave clues behind for other people as to there being a higher probability the market is going to move in one direction than the other, given they are accumulating for a long or even a short.
a thing, especially a trend or fact, that indicates the state or level of something.
Everyone uses some type of indicator. Even if you're just using a blank chart with only candles, that is still indicating something to you. Some indicators are just a deviation of price action, to pretend they are 100% useless (if they are coded with purpose, probability and you understand the concept and how to use them) is kind of ignorant. A computer can track multiple charts and multiple things where as a human would struggle to keep up on one. If you're just going to slap on a random indicator and wait for two lines to cross, ok that can be stupid no argument there, but ideally in a real conversation you would think it would be safe enough to assume, that's not what people are or at least should be talking about.
Furthermore if the argument is going to be "well no because only current action matters in trading" how crazy is that? Of course there's dynamic buyers and sellers in the market and of course one of the most effective ways to trade is trading what's in front of you and taking advantage of it as it happens. I am not denying that, but it's just stupid to think that is the only edge you can obtain in the markets.
Like do you really think larger players just press buy and sell on huge positions all at once? generally not, unless it's some type of extreme emergency. They would be trading against themselves and pricing themselves out, it's not in their best interest to do that. What would be? well not to state the obvious, but getting a net weighted average over time would be much more beneficial for them. Which clearly if they are doing that, can leave clues behind for other people as to there being a higher probability the market is going to move in one direction than the other, given they are accumulating for a long or even a short.
Well, yes and no. While you're right when you say that you cannot negotiate the trades in person, you still have to be conneccted in this business to make it.
Take negotiation out of the equation, it's basically a matter of scouting bids, figure out where the market really trades and buy below value by sniping low offers. It doesn't matter if you make pennies or dollars, it's the process that counts.
You don't want to do this forever, but before you dig into forward rates, bond convexity and implied vol you should know how a market works and how money is made
Once he has the basics down(which you stated he does). It's just a matter of how much you care about the guy and his success. You do what hardly no one mentions or does and you sit him down and show him real time how you actually run a profitable trading day. Than how to run a profitable week and than a month. So he can actually see and start to comprehend at least the macro picture of what it takes.
Psychology #1
Risk Management #2
Price Action #3 <- no indicators, just MS and gather as many perspectives and models as possible.
I don't understand, you just said no indicators. Price action is an indicator, just trying to clarify if can use indicators or not.