I'm sick and tired of work! :)

[Steve Tvardek]

Do you trade fulltime? Partime? If so, are you successful?

Please give us a little background about your experiences so we can see why you feel the way you do.

Quote from spect8or:

There's nothing surprising about that. At any given time, plenty of traders will be experiencing a stretch of good fortune (including traders with actual skills).

 

[cashmoney69]

Traders are trying to profit from future events that have not yet happened and therefor there is always a degree of luck involved even if very small. Unless you know the future, there's always a chance that you will be wrong, no matter how skilled you are. To say that trading is 100% skill just does not make sense IMO.

 

[Hydroblunt]

Quote from spect8or:

There's nothing surprising about that. At any given time, plenty of traders will be experiencing a stretch of good fortune (including traders with actual skills).

The only way this is true if they are milking an edge. It's not trading luck but more of a being at the right time in the right place thing.

And those traders end up leaving once the edge is gone. There has been a big run of those from NYOB steppers, bullets, Millenium/NYFIX and now as tapereading the specialist slowly becomes extinct.

But to say that someone can be consistently profitable on a daily basis for a couple years just based on trading luck, that's a far stretch. It's also easily disproved if you go over the trades of the individual. You'll find patterns in the losses, the wins, the # of trades and time periods, which means the trades are not random.

 

[spect8or]

Quote from Steve Tvardek:

Do you trade fulltime? Partime? If so, are you successful?

Please give us a little background about your experiences so we can see why you feel the way you do.

In other words, you probably feel that what I'm saying is quite reasonable, but if only I could be exposed as some bitter crank, you could then rest easy and forget about the implications of my reasoning.

The lengths some people go to...

Just to recap, I never said that all trading results were due to chance. They might be, and that is indeed what financial theory predicts. But I'll allow that there is room for skill in trading. But nevertheless, there does seem to be a large element of randomness in market behavior, even if it is not omnipresent. The existence of such random behavior does imply that some trading results will be the result of luck, however. And what I originally said is that traders massively underestimate this.

To the poster who talked about robust systems. If you run Monte Carlo simulations on those systems, you'll find that as robust as they are, there is still a chance (often very small, but nevertheless) of going bust. Quite simply, in trading, you can be doing 'everything right' and lose money, and do 'everything wrong' and make it.

Lastly, it's not as if experience doesn't bear out what I'm saying. Trading consistency is rare. Trading results of even the best traders show great variability, even when profitable over long periods of time. During such variable times, 'incorrect' leverage will bust them, or draw them down to the point of throwing in the towel. And that's exactly what we observe. (Of course, that doesn't apply to ET's daytrading elite, making the steady 1k/day on MACD crossovers or tapereading the specialist.)

 

[cashmoney69]

Quote from spect8or:

Trading consistency is rare. Trading results of even the best traders show great variability, even when profitable over long periods of time.

Do you mean consistency as in profitability? , or consistant in how they trade (strategy)?. What are the variables that lead to the inconsistantcy?

 

[elit]

Quote from salvar:

O.k. I'll bite.

First, I'd like to say that I honestly find it amazing what rubbish is posted in this forum on the difficulties of trading. Particularly since most of those posting it have not turned the corner to being consistantly profitable themselves.

Becoming consistantly profitable is primarily about skill, not luck if you have a systemized methodology. Here's why:

1. If you follow a systemized methodology and have calculated its successes and failures in the past, and presuming that you've done enough comprehensive testing (weeding out systems that deliver errant local optima) to determine that it is a robust system then you can have a statistically reasonable chance that it will continue to perform in said fashion in the future. Given this knowledge you can calculate your expectancy (ala Van Tharp). Given that you have a system with positive expectancy then your "skill" is the primary force of your success and not "luck".

2. If you have no systemized methodology or have not verified the above then it is debateable if your success or failure in trading is indeed luck.

The mysterious "key" to success that Jelly Jam keeps refering to is simply this: The outcome of the next trade is indeterminate (i.e. luck), however, with a systemized methodology the outcome of the sum of the next 100 trades is 97% skill (luck of course plays a small role in any endeavor).

For the original poster (if you're still listening) here is my advice. Keep your day job until you've done at least 1000-2000 hours worth of testing (funny that no one mentions that in this forum - perhaps that's why they have trouble trading). If you've done that and you've developed some systems that are robust and have a positive expectancy then start trading them on paper. Spend at least another 500-1000 hours on this. Then start with a small account and trade small (assuming that your systems are designed to perform in this fashion). Do this again for 500-1000 hours. If you find that you cannot do the above then I would say trading is not for you (you don't "love it" enough). If you do the above you will either be successful or will have quit long before you complete the above.

Now get off this message board and start testing

Thank you for a good post, Salvar! This is good advice! I will follow it.

 

[DHOHHI]

Quote from spect8or:

Just to recap, I never said that all trading results were due to chance. They might be, and that is indeed what financial theory predicts. But I'll allow that there is room for skill in trading.

Quite simply, in trading, you can be doing 'everything right' and lose money, and do 'everything wrong' and make it.

Trading consistency is rare. Trading results of even the best traders show great variability, even when profitable over long periods of time.

Don't agree with the above at all. Golf can be seen as similar to trading. Each week a different course is played. One week it can be tight and shorter, next week longer and more wide open. Some players excel in certain playing conditions, not unlike the market. A guy can miss the 36 hole cut one week and finish in the top 10 the following week. Golf is an individual game against the course just as trading is a "game" against the market. You can be wrong in trading 50% or more of the time and make a living. Same in golf .. a pro can miss a lot of cuts and retain his tour card with some top 10's and/or a win in some given event. Golf, like trading, also has a psychological aspects in achieving success. In BOTH professions it takes a LOT of determination, effort and focus.

To suggest someone can do everything right and fail just doesn't make sense. If you're doing EVERYTHING right in trading you will make some $$$. You may be doing only some things right and lose $$$. Same with golf ... a player can be so very close to where he wants to be but needs to fine tune his swing. Same with trading.

And yes, trading results can show variability. But skilled traders, just like skilled PGA pros, maintain some consistency over the longer term and thus they're successful. And it takes CONSTANT effort to keep your "game" on top to where you're successful.

It isn't a result of "chance" as you state above re: financial theory predicts.

 

[spect8or]

Quote from cashmoney69:

Do you mean consistency as in profitability? , or consistant in how they trade (strategy)?. What are the variables that lead to the inconsistantcy?

Consistency as in achieving the same profitability every time period ($X a day/week/month or hell even year).

 

[spect8or]

Quote from DHOHHI:



To suggest someone can do everything right and fail just doesn't make sense. If you're doing EVERYTHING right in trading you will make some $$$. You may be doing only some things right and lose $$$. Same with golf ... a player can be so very close to where he wants to be but needs to fine tune his swing. Same with trading.

I was talking with respect to backtested trading systems. But yes, it's quite true that one can trade a 'robust' system properly (ie adhere to its rules, completely) and still lose money. As long as such a trader doesn't lose everything, and his system truly is robust (and markets aren't completely random), he should eventually come back into profitability. But how many could tolerate the drawdowns or the length of time being in drawdown? Not many. (And that includes traders who understand that there was always a possibility of such occurring. But such a trader is still faced with the uncertainty about the robustness of his system. Such doubts can cause him to junk it, too.)