Millionaire Traders - Market Maker or Market Taker?
- Thread starter jbt
- Start date
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Book is on back order?
Boris,
I was wondering, how many of the traders in the book actually average down as you have been talking about? I highly doubt that they all do... Also, relying on a high prob method but with an inverted reward risk is likely not the way to go for most traders, there definitely are alternatives to that, great ones at that, but those take a ton of research and creativity to discover. I think one of the main problems with trading is that the trading methods taught in books and seminars are so alike that its easy to get stuck in conformity and end up with results like everyone else. I used to believe that getting a consistent 2:1 or 3:1 reward to risk was impossible, but now no longer, actually believe much better can be done with a very decent %.
I think an interesting point you make is re the interest in athletics. I think part of the reason this crops up is because of the importance of endurance like you mentioned, but also goal setting and achieving. Athletes know how to do this very well. Federer for example, if you've noticed, rarely breathes hard on the court, while he gets his opponents to huff and puff in five minutes. That's because he trains in Dubai where the heat is much higher, he's focused on his footwork and conditioning and achieving one of his goals by so doing. I think good traders should work similarly, breaking down each goal, whether it's how to think in sample sizes, or how to improve on their setups, exits etc.
Certainly not all of them averaged down. Steve Ickow for example who is one of the deadliest traders in terms day day profitability does not. But quite a lot of them did and I thought it was an interesting point given that its such a cardinal sin in trading.
As to the athletic issue - as I said it was far more the case of an athletic mindset rather than these guys doing 1000 push ups a day. Athletics demands discipline and discipline is just euphemism for absorbing pain - doing what don't want to do and isn't taking stops the quintessential exercise in absorbing pain?
By the way the book is #1 in Amazon investing thank you all. I hope you enjoy reading as much as we enjoyed writing it.
Nice interview, Boris.
About the probative approach, it is quite different than averaging down or at least that is the case with myself.
It's about scalping within scalps as I have previously mentioned it too. You enter based on the first signal and if a rapid gain is made, fine that's it but if not, as long as the signal(the original reason) has not changed the signal gets stronger and you get to scalp within the original entry based on FILO, as the situation worsens and the market goes against your position, what happens is that if the original signal is in place near the core of the DD is the best place to scalp for rapid larger gains and hence the profit is made already and you wait for the rest of the positions got bad to cover their comms and vacate them.
Now, this in my opinion is very different to averaging, which is in fact adding positions while in a loss and waiting fir the average gain to cover the total loss and some profits.
I am totally against the latter since I believe one should NEVER add to his losses(in other words add to an already losing position(which is very different from a signal that has not gone bad and it's only providing more opportunities)).
A side note for the reason why you make bigger and faster profits near the core of the loss is like, a support was about being broken, you short and the market rallies to take out the high of the previous bar but your reasons to short it still stay in tact. After the new high is made and the market points south, a great disappointment kicks in and the now the situation is a failed rally heading to take out the previous support that almost did previously and hence the bail out + the fresh shorts are what causes the rapid gains. By the time it nears the support where I had first short it, I've already made my profits at the top and am glad to scratch it +comm since the breaking of that support now also becomes doubtful since it has at best now converted to a double bottom!
Sorry for the long rant, hope it made sense(This works for me very nicely but the secret to it's success lies in the reliability and validity of the original signal).
Cy
About the probative approach, it is quite different than averaging down or at least that is the case with myself.
It's about scalping within scalps as I have previously mentioned it too. You enter based on the first signal and if a rapid gain is made, fine that's it but if not, as long as the signal(the original reason) has not changed the signal gets stronger and you get to scalp within the original entry based on FILO, as the situation worsens and the market goes against your position, what happens is that if the original signal is in place near the core of the DD is the best place to scalp for rapid larger gains and hence the profit is made already and you wait for the rest of the positions got bad to cover their comms and vacate them.
Now, this in my opinion is very different to averaging, which is in fact adding positions while in a loss and waiting fir the average gain to cover the total loss and some profits.
I am totally against the latter since I believe one should NEVER add to his losses(in other words add to an already losing position(which is very different from a signal that has not gone bad and it's only providing more opportunities)).
A side note for the reason why you make bigger and faster profits near the core of the loss is like, a support was about being broken, you short and the market rallies to take out the high of the previous bar but your reasons to short it still stay in tact. After the new high is made and the market points south, a great disappointment kicks in and the now the situation is a failed rally heading to take out the previous support that almost did previously and hence the bail out + the fresh shorts are what causes the rapid gains. By the time it nears the support where I had first short it, I've already made my profits at the top and am glad to scratch it +comm since the breaking of that support now also becomes doubtful since it has at best now converted to a double bottom!
Sorry for the long rant, hope it made sense(This works for me very nicely but the secret to it's success lies in the reliability and validity of the original signal).
Cy
i would not read a thread where the sponsor can exercise control by deleting posts he doesn't like. perhaps he doesn't like faint praise or he doesn't like comparisons to other services or books.
"if you can stand the heat stay out of the kitchen" your suggestion is a nonstarter from the word go.
Cy interesting points. First let me clarify probaive trading and averagring down are indeed two very different concepts and I did not man to confuse the two.
As part of the probative trade you can indeed average down like Chuck Hays and Roland do in the book. But it is not a requirement. Steve Ickow simply makes lots of small scratch trades to get the feel of the true order flow and he never adds to te position when it goes wrong.
As to your second point I agree wholeheartedly and as we point out in teh book the difference between averaging DOWN and averaging IN is intent. Now some of you may argue that this is just a matter of semantics, but as you so well point out it really a much more a matter of whether your signal remains valid.
Clearly staying in a loser is the worst sin a trader can make, but a very close cousin to that transgression is quiting on the trade too early. I've seen almost as much money lost through the latter method as the former.
K and I are in LA Convention center today, so fo those in SoCal please come and say hi.
Thanks again for making the book #1 on Amazon investing on Thursday (its still hangind out at top 10).
this is one of the best threads i've ever read on any site. i'll see if i can post any useful stuff, but i'm going to point a couple people i'm helping (with trading) to this thread, and actually can't wait to purchase this book to see what others are doing.
btw, boris - the response when becky asked how much the trader made? "becky, if you all on squawk box tell us your salaries last year, i'll be happy to tell you."
btw, boris - the response when becky asked how much the trader made? "becky, if you all on squawk box tell us your salaries last year, i'll be happy to tell you."