Is Trading Itself a Bad Trade? I Analyzed the Industry- Prove Me Wrong

[SimpleMeLike]

Even if you were able to secure a qualified mentor, someone who trades for a living and not simply someone in the mentoring business, all you can get is ideas and direction. You will trade differently than the mentor because you ARE different. We all have different personality traits and cognitive abilities. Trade plans are like fingerprints...they look similar but they are all different. We each have to find what works for us. For those who criticize day trading, it's not for them. For many of us who do day trade, we don't want to go to bed with an open position....different strokes for different folks.

Thanks speedo,

This is very good point and I agree.

 

[cityboy12]

Again, apples and oranges. As a small retail trader, I can safely leverage a low 6 figure day trading account to low 7 figure positions multiple times a day. We become adept at navigating a jet-ski through a tight slalom course. It's an entirely different thing than a fund manager ferrying a population safely across an ocean on a ship. As far as FX (spot market)...bucket shop environment.

I agree. If you want to stay a small retail trader forever and are happy there then your strategy works. Very very high risk. Essentially, you are risking your money in full 'riding your jetski at full tilt'. Any shift in the wind direction, change in the slalom, change in rules of the slalom,mechanical issues or even driver error...using your analogy.... can set you back a lot and hurt you personally.

The risk/reward is different, of course, if you manage OPM (other people's money) on a success- fee basis (heads we win, tails you lose).

People forget that the hedge fund titans are really very risk averse with their own net-worths in general. Once they scale up, the absolute worst thing that can happen is that they blow up, they return the money and apologize. They get to keep the house in the Hamptons, the trophy wife, mistress and a good lifestyle. In fact, many go on to set up funds again. The reason why is that they transfer risk onto their clients (heads we win, tails we lose) just like I did on a smaller scale as a broker/portfolio manager. All the 'market wizards' worked that way (something nobody tells you).

Here is an example money manager apology...he is crying at the end. If you lose your money expect such an apology. However, he will never take out money from his personal account or sell his expensive watch to pay you the money back you lost. This case study is not a true hedge fund manager but a commodity options trading firm which went bust but illustrates a point.

This is what Zeno alluded to in previous posts, they can run a game called 'survivorship bias'. This is where you set up...say....5 funds. Four fail and you quickly roll them into the fifth. Now you market yourself as a genius because one of the funds had stellar returns and attract more money.

A retail day trader, riding his jetski can in fact lose his house, car, wife and yes...even his non-metaphorical jetski or mistress if he has worked hard enough to afford one. A different risk.reward equation.

Here is another example, on the retail level. A very crude and simple example....you set up 10 online investor accounts on a social investing site. You use a martingale strategy. 9 blow up (but nobody knows it was you who set them up). The 10th has a 300% return over 1 month and you loudly proclaim to the world that you are a genius/brilliant. You are a guru now and can attract dumb money, sell courses etc.

 

[SimpleMeLike]

Anyone who trades for a living has to be alert to refinements and adjustments to a trade plan given changes in market personality....range, speed price structure etc. Knowing when to stand aside has to be part of the skill set. All the best to those wanting to do this but it will likely be harder and take longer than expected.

speedo,

This is true, I trade daily and what I notice is that regardless of plan or method, there is always something on the chart at that moment in time that makes me question the setup. Like there is always something minor in the way. The setups are never easy and simple and clear and cut. So I can relate more.

 

[speedo]

I agree. If you want to stay a small retail trader forever and are happy there then your strategy works. Very very high risk. Essentially, you are risking your money in full 'riding your jetski at full tilt'. Any shift in the wind direction, change in the slalom, change in rules of the slalom,mechanical issues or even driver error...using your analogy.... can set you back a lot and hurt you personally.

The risk/reward is different, of course, if you manage OPM (other people's money) on a success- fee basis (heads we win, tails you lose).

People forget that the hedge fund titans are really very risk averse with their own net-worths in general. Once they scale up, the absolute worst thing that can happen is that they blow up, they return the money and apologize. They get to keep the house in the Hamptons, the trophy wife, mistress and a good lifestyle. In fact, many go on to set up funds again. The reason why is that they transfer risk onto their clients (heads we win, tails we lose) just like I did on a smaller scale as a broker/portfolio manager. All the 'market wizards' worked that way (something nobody tells you).

Here is an example money manager apology...he is crying at the end. If you lose your money expect such an apology. However, he will never take out money from his personal account or sell his expensive watch to pay you the money back you lost. This case study is not a true hedge fund manager but a commodity options trading firm which went bust but illustrates a point.

This is what Zeno alluded to in previous posts, they can run a game called 'survivorship bias'. This is where you set up...say....5 funds. Four fail and you quickly roll them into the fifth. Now you market yourself as a genius because one of the funds had stellar returns and attract more money.

A retail day trader, riding his jetski can in fact lose his house, car, wife and yes...even his non-metaphorical jetski or mistress if he has worked hard enough to afford one. A different risk.reward equation.

Here is another example, on the retail level. A very crude and simple example....you set up 10 online investor accounts on a social investing site. You use a martingale strategy. 9 blow up (but nobody knows it was you who set them up). The 10th has a 300% return over 1 month and you loudly proclaim to the world that you are a genius/brilliant. You are a guru now and can attract dumb money, sell courses etc.

Re day trading, you are not risking "all" on any given trade, you are risking X dollars/ticks on any given trade. Some trades work and some don't hence stops. Can you risk it all? Sure but prudent traders manage risk/reward, that's an essential piece of the skill set.

 

[speedo]

speedo,

This is true, I trade daily and what I notice is that regardless of plan or method, there is always something on the chart at that moment in time that makes me question the setup. Like there is always something minor in the way. The setups are never easy and simple and clear and cut. So I can relate more.

There is an old adage...when in doubt stay out. A trade signal should be clearly defined and clearly seen. I don't want to have to figure out the meaning of life every time I take a trade.

 

[SimpleMeLike]

I agree. If you want to stay a small retail trader forever and are happy there then your strategy works. Very very high risk. Essentially, you are risking your money in full 'riding your jetski at full tilt'. Any shift in the wind direction, change in the slalom, change in rules of the slalom,mechanical issues or even driver error...using your analogy.... can set you back a lot and hurt you personally.

The risk/reward is different, of course, if you manage OPM (other people's money) on a success- fee basis (heads we win, tails you lose).

People forget that the hedge fund titans are really very risk averse with their own net-worths in general. Once they scale up, the absolute worst thing that can happen is that they blow up, they return the money and apologize. They get to keep the house in the Hamptons, the trophy wife, mistress and a good lifestyle. In fact, many go on to set up funds again. The reason why is that they transfer risk onto their clients (heads we win, tails we lose) just like I did on a smaller scale as a broker/portfolio manager. All the 'market wizards' worked that way (something nobody tells you).

Here is an example money manager apology...he is crying at the end. If you lose your money expect such an apology. However, he will never take out money from his personal account or sell his expensive watch to pay you the money back you lost. This case study is not a true hedge fund manager but a commodity options trading firm which went bust but illustrates a point.

This is what Zeno alluded to in previous posts, they can run a game called 'survivorship bias'. This is where you set up...say....5 funds. Four fail and you quickly roll them into the fifth. Now you market yourself as a genius because one of the funds had stellar returns and attract more money.

A retail day trader, riding his jetski can in fact lose his house, car, wife and yes...even his non-metaphorical jetski or mistress if he has worked hard enough to afford one. A different risk.reward equation.

Here is another example, on the retail level. A very crude and simple example....you set up 10 online investor accounts on a social investing site. You use a martingale strategy. 9 blow up (but nobody knows it was you who set them up). The 10th has a 300% return over 1 month and you loudly proclaim to the world that you are a genius/brilliant. You are a guru now and can attract dumb money, sell courses etc.

cityboy12,

That is a pretty disturbing video, how is it possible this man lost all his clients money.

 

[smallfil]

speedo,

This is true, I trade daily and what I notice is that regardless of plan or method, there is always something on the chart at that moment in time that makes me question the setup. Like there is always something minor in the way. The setups are never easy and simple and clear and cut. So I can relate more.

Setups no matter how good has a so called failure rate. Thomas Bulkowski in one of his books backtested numerous trade patterns. A lot of times, it worked 50% of the time which means you would lose 50% of the time. That does not mean you will not make monies if your average win is several times larger than your average loss. You will make monies and lots of it!

 

[destriero]

I agree. If you want to stay a small retail trader forever and are happy there then your strategy works. Very very high risk. Essentially, you are risking your money in full 'riding your jetski at full tilt'. Any shift in the wind direction, change in the slalom, change in rules of the slalom,mechanical issues or even driver error...using your analogy.... can set you back a lot and hurt you personally.

The risk/reward is different, of course, if you manage OPM (other people's money) on a success- fee basis (heads we win, tails you lose).

People forget that the hedge fund titans are really very risk averse with their own net-worths in general. Once they scale up, the absolute worst thing that can happen is that they blow up, they return the money and apologize. They get to keep the house in the Hamptons, the trophy wife, mistress and a good lifestyle. In fact, many go on to set up funds again. The reason why is that they transfer risk onto their clients (heads we win, tails we lose) just like I did on a smaller scale as a broker/portfolio manager. All the 'market wizards' worked that way (something nobody tells you).

Here is an example money manager apology...he is crying at the end. If you lose your money expect such an apology. However, he will never take out money from his personal account or sell his expensive watch to pay you the money back you lost. This case study is not a true hedge fund manager but a commodity options trading firm which went bust but illustrates a point.

This is what Zeno alluded to in previous posts, they can run a game called 'survivorship bias'. This is where you set up...say....5 funds. Four fail and you quickly roll them into the fifth. Now you market yourself as a genius because one of the funds had stellar returns and attract more money.

A retail day trader, riding his jetski can in fact lose his house, car, wife and yes...even his non-metaphorical jetski or mistress if he has worked hard enough to afford one. A different risk.reward equation.

Here is another example, on the retail level. A very crude and simple example....you set up 10 online investor accounts on a social investing site. You use a martingale strategy. 9 blow up (but nobody knows it was you who set them up). The 10th has a 300% return over 1 month and you loudly proclaim to the world that you are a genius/brilliant. You are a guru now and can attract dumb money, sell courses etc.

Name one regulated entity that has opened funds and “rolled them” into the successful fund. Your level of knowledge is laughable. And a “commodity option trading firm” is a CTA or CPO.

 

[SimpleMeLike]

There is an old adage...when in doubt stay out. A trade signal should be clearly defined and clearly seen. I don't want to have to figure out the meaning of life every time I take a trade.

speedo,

Thanks and I agree with that. I problem I run into alot is there is always a minor trend line or support or resistance (maybe from noise) I draw throughout the day, that get in the way of my signal. This cause me hesitation and 2nd guessing my setup. Should a trader know when to ignore the noise on the chart that is in the way of his/her signal? In my journal i take screen shots of these occurrences and review them and record the results if I had taken the setup and ignore these noises.

 

[speedo]

speedo,

Thanks and I agree with that. I problem I run into alot is there is always a minor trend line or support or resistance (maybe from noise) I draw throughout the day, that get in the way of my signal. This cause me hesitation and 2nd guessing my setup. Should a trader know when to ignore the noise on the chart that is in the way of his/her signal? In my journal i take screen shots of these occurrences and review them and record the results if I had taken the setup and ignore these noises.

I use three time frames, from top down in terms of importance. Each plays a role in defining my setups.