Lessons from a failed trader

[savoir]

True,but shouldnt the same be said about price data??

Let's face it,there are a handful of James Simons and everyone else...

Imho,great trading is as much an art as a science...

For all practical purposes, I don’t feel I am at a disadvantage with regard to getting price data. But my perspective is probably different than most.

I started in the 1980s using yesterday’s prices from Investor’s Daily (IBD now) and watching a 20-minute delayed ticker scroll across on a UHF TV channel. I won’t get into how orders were placed by telephone, discount commission was $100 per side, and the broker frowned upon odd lots.

When online trading became available, my wildest fantasies came true. This was when I had to manually refresh to get an updated price quote and I was limited to so many free quotes per trade. The Datek streamer was like having a private rocket ship to me.

I almost laugh out loud when traders complain about their price data being milliseconds behind HFT firms and how that’s an unfair advantage. At the fastest, my mind can process and I can act on new information about three times per second. I know this because I’ve made three moves in a second in blitz chess twice in my life as a teen (but not once as an adult). There is more to trading and chess than how fast you can move. Making the right moves wins the game.

And trading IS a game, not science. It is a game because at any given moment the outcome is uncertain. There is no mathematical precision or known probabilities regardless of the amount of backtesting or experience.

 

[heispark]

This is an era anyone can make money from stocks. It will change sooner or later and we will see people jump out of the window again....... Old Korean saying is "higher the mountain, deeper the valley".

 

[sef88]

There is no trading edge in reading financial statements prepared by others unless you have access to information prior to their public release. I know a few people who don’t know the difference between an income statement and a balance sheet whose stock portfolios grew by millions in the past 10 years. One of them topped out at 40 million buying mostly Boeing. This prolonged bull has created a lot of stock market geniuses.

What’s that old adage? Don’t confuse brains with a bull market!

Thanks for the last point as a reminder. Always be prepared for all market regimes.

 

[zghorner]

For all practical purposes, I don’t feel I am at a disadvantage with regard to getting price data. But my perspective is probably different than most.

I started in the 1980s using yesterday’s prices from Investor’s Daily (IBD now) and watching a 20-minute delayed ticker scroll across on a UHF TV channel. I won’t get into how orders were placed by telephone, discount commission was $100 per side, and the broker frowned upon odd lots.

When online trading became available, my wildest fantasies came true. This was when I had to manually refresh to get an updated price quote and I was limited to so many free quotes per trade. The Datek streamer was like having a private rocket ship to me.

I almost laugh out loud when traders complain about their price data being milliseconds behind HFT firms and how that’s an unfair advantage. At the fastest, my mind can process and I can act on new information about three times per second. I know this because I’ve made three moves in a second in blitz chess twice in my life as a teen (but not once as an adult). There is more to trading and chess than how fast you can move. Making the right moves wins the game.

And trading IS a game, not science. It is a game because at any given moment the outcome is uncertain. There is no mathematical precision or known probabilities regardless of the amount of backtesting or experience.

Incredible post thank you for typing that.

 

[taowave]

Agree with everything you said except for the last sentence..

I have traded in the pits,was the head trader of derivative and worked at a major hedge fund..

While I am not capable of developing models with "mathematical precision",I can assure you there are those who can..and do...and rarely if ever have down days

For all practical purposes, I don’t feel I am at a disadvantage with regard to getting price data. But my perspective is probably different than most.

I started in the 1980s using yesterday’s prices from Investor’s Daily (IBD now) and watching a 20-minute delayed ticker scroll across on a UHF TV channel. I won’t get into how orders were placed by telephone, discount commission was $100 per side, and the broker frowned upon odd lots.

When online trading became available, my wildest fantasies came true. This was when I had to manually refresh to get an updated price quote and I was limited to so many free quotes per trade. The Datek streamer was like having a private rocket ship to me.

I almost laugh out loud when traders complain about their price data being milliseconds behind HFT firms and how that’s an unfair advantage. At the fastest, my mind can process and I can act on new information about three times per second. I know this because I’ve made three moves in a second in blitz chess twice in my life as a teen (but not once as an adult). There is more to trading and chess than how fast you can move. Making the right moves wins the game.

And trading IS a game, not science. It is a game because at any given moment the outcome is uncertain. There is no mathematical precision or known probabilities regardless of the amount of backtesting or experience.

 

[Laissez Faire]

I have traded in the pits,was the head trader of derivative and worked at a major hedge fund..

While I am not capable of developing models with "mathematical precision",I can assure you there are those who can..and do...and rarely if ever have down days

Impressive back-ground.

Would you care to elaborate on that part regarding models? Day trading? What kind of products?

Thanks.

 

[taowave]

At the Hedge fund,it was some sort of stat arb mean reversion with a twist.

I wasn't privy to the details,but the Head of the fund told me they never had down days...the issue was they were constrained by the size they could get on.

The other guy who rarely if ever had a down day,either went to jail,or barely escaped it..I knw what he did

Impressive back-ground.

Would you care to elaborate on that part regarding models? Day trading? What kind of products?

Thanks.

 

[savoir]

While I am not capable of developing models with "mathematical precision",I can assure you there are those who can..and do...and rarely if ever have down days

Models with mathematical precision are not necessary to rarely having down days. Down days are rare if you have mad skills.

 

[Laissez Faire]

At the Hedge fund,it was some sort of stat arb mean reversion with a twist.

I wasn't privy to the details,but the Head of the fund told me they never had down days...the issue was they were constrained by the size they could get on.

The other guy who rarely if ever had a down day,either went to jail,or barely escaped it..I knw what he did

Thanks for sharing. As an outsider I'm always interested in hearing from those with industry experience.

FWIW, I don't think there should be many down days as a day trader. At least - they should be small.

 

[treeman]

There are systematic trend following funds like Man AHL, Winton, Dunn Capital, AQR. Just that they don't do it in a simplistic way. They use different systems to measure trend strengths - scaling in and out of markets.

And yes - simple buy and hold may not work. Sideway mkts happen more often than trending markets.

Note: Some screenshot that I took from Sven Carlin's youtube video.

View attachment 250500

This is a great photo, and illustrates the need to know what kind of market you are currently in. And really, it's not that hard to figure out which market is the one you're in. And there are multiple ways to do it.