Looks Can Kill You: RAMOUTAR REPORT VOLUME 11

Ok I guess I understand why you like Case 2. I do not know how he trades I'm just pointing out the humongous and misleading shortcomings of paper trading.

After all, it is not real. Case 2's emotional outbursts about papertrades are mainly due to dissapointments about his performance. You still do not know how he will react when real money is in play.

The biggest problem with simulation and paper trading, especially for NYSE & Naz is actually getting in and getting out. It's easy to paper trade a falling stock, let's say GS on Wed. But actually getting into a short with that stock is another story.
The specialists and MMs literally rob you of your profits with their abuses and that sometimes causes revenge trading. I've had to deal with that a lot more in the last 2 months and it has really hurt my trading mentality. It is very hard not to get emotional when you are literally screwed and it really is not your fault but some scumbag's who has been given too much power.
Then there is chasing the stock because you missed the entry or giving away profits because you missed the exit. Every trader gets caught up in that and sometimes it hurts and messes with your head.

I don't know what you guys trade, but I find those factors to be very important. Only live trading will show how Case two will handle entry/exit problems, slippage and NYSE/Naz abuses. But if you guys trade the more efficient trading vechiles then it's just the effect of real money vs fake money. I do notice that paper trading with ES is lot more useful than with the wonderful world of NYSE.
 
Quote from RAMOUTAR:

However, IMHO degrees regardless of where they're from, are not the indications of mastering trading skill and or its related psychology.
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absolutely not indicative of that...

Years ago... two very good friends from the MERC made.... hmmmm... 10 and 50M respectively give or take a couple; one of them never did college while the other matriculated at U of Illinois. My ex-brother-in-law however was an educated CPA for a big eight firm; left for the CME and scored big. But I think even he only went to some State U.

I'm sure many on ET know of others from the exchanges who had no "credentials" or great education and did great. In fact I'd go so far as to say, the more education and (within reason) the greater intellect/thinking one has... often the poorer is their trading over the long term.

Snobs don't do well in the markets. They always gotta be right, and in fact... they're used to that "success" feeling!

If that were not the case, then every mensa member could/would open a fund and end up in the top 5 percentile of all managers.... an unlikely situation indeed!!

Perhaps that exchange paradigm has changed over the years.

Regards,

Ice
:cool:
 
Quote from Mecro:

Ok I guess I understand why you like Case 2. I do not know how he trades I'm just pointing out the humongous and misleading shortcomings of paper trading.

After all, it is not real. Case 2's emotional outbursts about papertrades are mainly due to dissapointments about his performance. You still do not know how he will react when real money is in play.

The biggest problem with simulation and paper trading, especially for NYSE & Naz is actually getting in and getting out. It's easy to paper trade a falling stock, let's say GS on Wed. But actually getting into a short with that stock is another story.
The specialists and MMs literally rob you of your profits with their abuses and that sometimes causes revenge trading. I've had to deal with that a lot more in the last 2 months and it has really hurt my trading mentality. It is very hard not to get emotional when you are literally screwed and it really is not your fault but some scumbag's who has been given too much power.
Then there is chasing the stock because you missed the entry or giving away profits because you missed the exit. Every trader gets caught up in that and sometimes it hurts and messes with your head.

I don't know what you guys trade, but I find those factors to be very important. Only live trading will show how Case two will handle entry/exit problems, slippage and NYSE/Naz abuses. But if you guys trade the more efficient trading vechiles then it's just the effect of real money vs fake money. I do notice that paper trading with ES is lot more useful than with the wonderful world of NYSE.
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As far as the paper trade fills go, I have him using limit orders, usually marketable limit orders. I.e. KLAC 51.10 x 51.12

If the paper trade bid is in at 51.10 and the bid drops to 51.09 with .09 prints, then the .10 bid is hit, Inverse is true for an offer.

They trade Nasdaq 100 Index stocks exclusively, trading usually the same stocks that I am from my Trading Stable. No NYSE/AMEX.

The only problem that we run into is on mkt orders (while paper trading), I use my or Case Two's live fills on market order executions as Case One's execution price on these fear/greed orders. I'm also able to monitor when Case Two pulled the trigger, a hh:mm:ss:ms time stamp.

There is no way to tell how someone will fare in live trading based on their paper trading. The only things I look for are the habits they form while paper trading.

Slippage is another component all together, maybe in another thread. The only time I felt I have been robbed by MMs is when I used an "infamous" ECN and bid/offered in front of them as they locked me and or traded through me.

NYSE & AMEX, I have very little interest in those exchanges. The old-boy network has opposed the new technology, and have tacked on addtional fees to MOO, MOC, and limit orders <5 mins.

The market is filled with thieves. If you drive through a neighborhood that has a rate of auto theft, and you park your unalarmed car there, you have no one else but yourself to blame if it's stolen.

I usually stay away from exchanges, IMHO they have not adopted a true "level playing field". If I drive into that neighborhood (exchange), I use an alarm, steering column lock, LoJack and mace :)
 
Quote from RAMOUTAR:

Mecro's post in bold followed by my replies.

Please explain why you find Case Two to become an outstanding trader. If he gets mad over papertrades, thats a sure sign of failure. And after all, it PAPER TRADING. Trading becomes quite different when you rely on it for income, let alone trade with REAL money. Oh and there is also the reality of actually getting filled and dealing with MM/specialist abuses. It's a different world.

In my experience, 90% of papertraders do not take this stage of development seriously. ie:
- using more exposure than their leverage will allow
- disobeying EST and then becoming so discretionary that they start gambling
- walking away from open positions
- putting on a trade just to see "what would happen
- becoming complacent and making too much money trading
- going out of their stable
- there's thousands more....

One of the main reasons why 4 year experienced mediocre traders today outperform newer talented traders is the money in the bank.

The reason why experienced trader outperform newer traders is their experience. Many of the newer traders (last 1-3 years) have caught a Stage One and Two, many of them are pulling their hair out in this wild Stage Three, and spend more time trying to find the answer "why the market is...", instead of trading the market. There is a very fine line between an analyst and an ANAL-YST. :)

It's quite easy to be less emotional if you pocketed a few million during the monkey trading years.

I know of a trader who turned $5K in 1995 to $1MM plus. He's been very emotional and has had a very tough time trading experiencing major drawdowns. He's human like the rest of us, and he's tweaking his strategy to evolve. He's getting back on track.

It's very very hard to trade and take hits in a bad streak when you rely on your trading profits for income in this crappy market environment. It's hard to take off 2 weeks to recoup from a bad streak when you would normally use to that time to produce money.

Yes. As I said in earlier in this thread..."dealt with psychological pressures of generating trading profits to pay for food, a medical plan, utilities, a tuition, mortgage, car(s), and a Sunday night at the movies." When the trading losses and losing streak consume your confidence then it's time to take a break. See Report #9

I have seen and been with A LOT of papertraders. Here's some advice for papertraders:

1) Remember "Karate Kid"? "Wax on wax off." The protege couldn't figure out the purpose of this, and didn't know he was performing all of the unrelated chores for his mentor. He realized it when he fought, "wax on wax off" was a fighting tactic. You're practicing the mechanics of opening and closing positions...the actions should be instinctive and congnitive.

2) Trade within your intended capital. Otherwise your just fooling yourself

3) It is 'very" essential to draw out as many emotions and personal shortcomings when trading, whether you get upset, slam a desk when you're having a bad day, or doing the "peacock strut" (as I call it) when you have a successful and profitable trade.

4) Cases One and Two (my personal proteges) follow me in many of my trades, and they are permitted to only they understand the EST & R/R/R and it fits in their Personal Trading Plan. One day a couple of weeks ago, Case Two became very nauseous as I scaled into a trade that was moving against me (the play pulled into a prime zone where I could increase my position. I was sure he needed a paper lunch bag to catch the imminent projectile. While he was uncomfortable, I was quite pleased with his response. That is a feeling that most "paper traders" don't get.

Please explain why you find Case Two to become an outstanding trader.

He is displaying many of the counterproductive emotions and making all of the mistakes that most "live" traders have succumbed to. We not only do post-mortems on the trades, but discuss the trading demons he reacted to that day. He keeps a trading diary and is very in tune with his shortcomings as a trader, and is managing them. For that reason I believe he will be an outstanding trader. I would be proud to have him as one of my colleagues and member of my trading clan if stays in this trend.

Again just my opinions. :)
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I couldn't agree with you more. I found the same thing when I was paper trading. Any chance that you can make that presentation on the QCOM trade avalable to all of us? I understand you have a link to it. It would just make things easier.

Hey Baron. mods- can Jai post the link here?
 
Quote from RAMOUTAR:

As a reminder I don't have any real trading experience with the emini's. Your suspicion is correct, I have a predetermined entry, stop and target for every trade. I've sent you a PM with more information.
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Thanks Jai for your reply.

I haven't received a PM from you, by the way.

Thanks.

-- M
 
Paper trade or backtest on scalp style is useless as the predominant factor is EXECUTION CONDTIONS in REAL. Whereas on swing style execution conditions are not more predominant. In fact that could be the operational definition separating scalp from swing. You can even guess that for eliminating free lunch, the market organisers are adjusting the margin, fees, tax etc...

Quote from RAMOUTAR:

As far as the paper trade fills go, I have him using limit orders, usually marketable limit orders. I.e. KLAC 51.10 x 51.12

If the paper trade bid is in at 51.10 and the bid drops to 51.09 with .09 prints, then the .10 bid is hit, Inverse is true for an offer.

They trade Nasdaq 100 Index stocks exclusively, trading usually the same stocks that I am from my Trading Stable. No NYSE/AMEX.

The only problem that we run into is on mkt orders (while paper trading), I use my or Case Two's live fills on market order executions as Case One's execution price on these fear/greed orders. I'm also able to monitor when Case Two pulled the trigger, a hh:mm:ss:ms time stamp.

There is no way to tell how someone will fare in live trading based on their paper trading. The only things I look for are the habits they form while paper trading.

Slippage is another component all together, maybe in another thread. The only time I felt I have been robbed by MMs is when I used an "infamous" ECN and bid/offered in front of them as they locked me and or traded through me.

NYSE & AMEX, I have very little interest in those exchanges. The old-boy network has opposed the new technology, and have tacked on addtional fees to MOO, MOC, and limit orders <5 mins.

The market is filled with thieves. If you drive through a neighborhood that has a rate of auto theft, and you park your unalarmed car there, you have no one else but yourself to blame if it's stolen.

I usually stay away from exchanges, IMHO they have not adopted a true "level playing field". If I drive into that neighborhood (exchange), I use an alarm, steering column lock, LoJack and mace :)
More...
 
Quote from mmm:

If one's methodology is to exit on trailing stops, how can one calculate the risk:reward ratio, since the reward is unknown?

Thanks.

-- mmm
More...

I trade the eminis too so, FWIW, here's what I do: Before I pull the trigger, I calculate EST. I usually use stop limits to get me in and I'm normally scalping for about two points/trade with the ES (multiple contracts). I mostly trade retracements so my initial target is the previous swing high (on a 3m or 5m chart, whatever time frame presents the setup the best). To make a long story short, my target is the absolute minimum that I expect to gain. I also use a very discretionary "time stop." If it ain't moving, I'm out of there. If my trade gets to my initial target, I'll take profits on part of my postition. If things are really going my way (rare, but it happens; especially on the short side) I'll trail a stop on the remainder of the position using the value of the ABL (average bar length). With this method, I get my cake and eat it too. I lock in a profit on the original target plus I remain in the game for additional ticks if the trading gods are with me. I never let a profit turn into a loss (nothing gets my goat more than this). Of course, this method wouldn't work with one contract.

Hope this helps.

Uni
 
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