My first post; some observations on trading.

[Dustin]

Quote from abc1:

Exactly; reversion can work. However, this is a trading technique using certain assumptions based on underlying data. Also, it can and does blow out and when it does...

To be convinced of price prediction I would like to see some evidence. Past examples are fine. Not looking for other peoples current money making ideas; just discussion on the theory.

abc1

First, you make it sound like a strategy "blowing out" is really bad. It's normal. Nearly every strategy dies at some point..this job is about adaptation. Before the strategy death you can make a lot of money and that's all that matters.

Here's a basic example (out of many) that worked for years, but no longer due to NMS. For 4 years (I wish I discovered it sooner) you could rely on the specialists to fuck the guys with big orders every day. How did you know they were gonna do it? They widened the spread before a print. Lots of prop guys knew this...I automated and perfected it. I figured out the best route (BELZ at Genesis was the fastest), the best size (1800 shares was the max on average they would fill), and the best way to stagger (it was 3 bids or offers at a certain % from Last). I had my orders in within tenths of a second that they spread. My win rate I believe was >80%. How's that for price prediction?

Do your assumptions and "underlying data" matter? It's price prediction with a high win rate.

There are still guys gaming these prints but you have to have your orders in all the time to catch prints as far as I know.

I took the time to write this because it bothers me when people think trading is luck. Accept that it isn't, then learn to trade and you can make a great living for a lifetime. Support your family, work at home, make more money than you ever dreamed of. Doesn't that sound more fun than just being skeptical?

 

[jdizzle]

Quote from abc1:

Having spent over a year lurking on this forum without posting I have now decided it is time to post.

My thoughts on trading come from experience as a trader, having seen other people trade, some reading and an open philosophical mind among other things.

For a start there are several things that hold true for 99% of traders; that is that they all are making money and lots of it, that there is a skill or secret to successful trading and above all that you must hear all about it.

The realities of trading are somewhat different. Very few make money - at least consistently. More importantly is my ultimate belief that there is no skill or secret to trading; that trading is pure chance. I have yet to meet anyone who could convince me otherwise. I have met plenty of people with varying degrees of experience, who will tell me otherwise, often giving me a despairing look or attempt to educate me with the 'facts' but to no avail. These people I call 'the believers' and it looks like there are plenty of them here.

They will point out the charts, talk about TA, resistance, support, economic indicators, their bad luck on the last trade etc. They can even read the morning newspaper informing them what happened yesterday.

The belief in 'an edge' is another of my pet favourites. True there are edges in trading but it is limited to a very small percentage of people. They include brokers, exchanges and those with insider knowledge, i.e., those who make money on every trade and those who really are trading ahead of the curve.

What a lot of people really don't understand or want to believe is that it is the future that determines what happens and very little in the past can tell you what that will be. A stock chart might show a high or a trend but it won't tell you the company is going bankrupt tomorrow, that the company's latest profit generating product has a flaw and is about to be recalled from retail, that several brokers are about to upgrade the stock (bad news for those that are shorting) etc.

While this might seem painfully obvious, very few realise the significance of it. Anyone can use plenty of information to make a trade but nobody can guarantee profit or a loss. Fate, chance or simply tomorrow's news will decide that.

ABC1

Life has a funny way of making reality out of your beliefs.

 

[abc1]

Quote from Dustin:


Here's a basic example (out of many) that worked for years, but no longer due to NMS. For 4 years (I wish I discovered it sooner) you could rely on the specialists to fuck the guys with big orders every day. How did you know they were gonna do it? They widened the spread before a print. Lots of prop guys knew this...I automated and perfected it. I figured out the best route (BELZ at Genesis was the fastest), the best size (1800 shares was the max on average they would fill), and the best way to stagger (it was 3 bids or offers at a certain % from Last). I had my orders in within tenths of a second that they spread. My win rate I believe was >80%. How's that for price prediction?

Do your assumptions and "underlying data" matter? It's price prediction with a high win rate.

There are still guys gaming these prints but you have to have your orders in all the time to catch prints as far as I know.

I took the time to write this because it bothers me when people think trading is luck. Accept that it isn't, then learn to trade and you can make a great living for a lifetime. Support your family, work at home, make more money than you ever dreamed of. Doesn't that sound more fun than just being skeptical?

I think you've missed my point a little bit here.

What you are describing is some sort of scalping method based on what sounds like knowledge of who was placing the trades.

As you appeared to know what was going to happen in advance of course that rules out luck (or chance as I prefer to use.) Your situation is most definitely not skill; more a case of maximising profits on scalping an inefficiency which probably shouldn't have been there.

Cheap money my friend.

abc1

 

[FXTraderWill]

Quote from abc1:

I think you've missed my point a little bit here.

What you are describing is some sort of scalping method based on what sounds like knowledge of who was placing the trades.

As you appeared to know what was going to happen in advance of course that rules out luck (or chance as I prefer to use.) Your situation is most definitely not skill; more a case of maximising profits on scalping an inefficiency which probably shouldn't have been there.

Cheap money my friend.

abc1

It's a simple mean reversion strategy. I have boxes testing a variation on it (it's easy to program) which is based on the same principle but designed to work in the hybrid and they look extremely promising. He doesn't "know" who is placing the trades - he just knows that a large block is about to get filled at a price from which the market has a very very high probability of mean reverting from - because that's what the setup shows him. Setups like these are more commonplace than you're aware of; unfortunately for you, you're too busy intellectualizing on ET to actually learn to find them and make $.

 

[Dustin]

Quote from abc1:

I think you've missed my point a little bit here.

What you are describing is some sort of scalping method based on what sounds like knowledge of who was placing the trades.

"More importantly is my ultimate belief that there is no skill or secret to trading; that trading is pure chance."

That's what you said in the first post. Was my example not "trading" to you? Is trading to you only picking a direction, and hoping for the best?

I think you get my point. Anyhow these days I just trade off charts...pure direction. That counts as "trading" right?

I just looked at the June-Sept stats...56% win rate with winners 1.6 bigger than losers with 1011 stocks traded. Is that a big enough sample size? That can't be just luck right?

After what everyone has told you, if you still think trading is just luck you may as well quit because your time can be better focused elsewhere. Not being mean, just honest.

 

[sunggong]

Quote from Dustin:

After what everyone has told you, if you still think trading is just luck you may as well quit because your time can be better focused elsewhere. Not being mean, just honest.

Give up, man.

No matter what you say, abc1 won't believe you.

His belief on daytrading is already set. He believes it's all "luck and chance."

If he's been in the market for 10 years, as he claims, and still came to this idiotic conclusion, then it's crystal clear to me that this guy does NOT and will NEVER understand how the market works.

 

[Don Bright]

Quote from abc1:

Exactly; reversion can work. However, this is a trading technique using certain assumptions based on underlying data. Also, it can and does blow out and when it does...

To be convinced of price prediction I would like to see some evidence. Past examples are fine. Not looking for other peoples current money making ideas; just discussion on the theory.

abc1

Just a comment on "reversion to fair value" - in my context, yes it does happen, every day. We use Prem/Disc to FV of the futures, and I defy anyone to say that it doesn't happen every day. And, of course, all reverts to fair value on expiration day, LOL.

And, since there is no FV on a stock......how could there be?

Don

 

[abc1]

Quote from Dustin:

"More importantly is my ultimate belief that there is no skill or secret to trading; that trading is pure chance."

That's what you said in the first post. Was my example not "trading" to you? Is trading to you only picking a direction, and hoping for the best?

I just looked at the June-Sept stats...56% win rate with winners 1.6 bigger than losers with 1011 stocks traded. Is that a big enough sample size? That can't be just luck right?

I've elaborated on that point in this thread. To clarify; there is no way of knowing what will happen once a position is open (trading insider information and price manipulation are exceptions) so therefore skill is not involved post trade. Pre-trade anyone can use a wide variety of information to decide on a position; from flipping a coin to various types of analysis but to say how much this affects the outcome is very difficult to prove.

56% win rate is hardly that significant over any number of trades. Winners 1.6% larger than losers is irrelevant unless you are looking at your P/L.

Also if you are suggesting that 56% is skill; then you are telling me that you are 44% non-skilled trader. And why are your winners only 1.6% larger than your losers ? Approximately you take profit on $0.16 and a loss on $0.1 (or some equivalent) for each trade.

That’s not that impressive at all. Certainly not good enough to claim skill.

The sort of success that would even hint at skill is much higher than your results.

abc1

 

[pattersb]

Quote from abc1:

I've elaborated on that point in this thread. To clarify; there is no way of knowing what will happen once a position is open (trading insider information and price manipulation are exceptions) so therefore skill is not involved post trade. Pre-trade anyone can use a wide variety of information to decide on a position; from flipping a coin to various types of analysis but to say how much this affects the outcome is very difficult to prove.

56% win rate is hardly that significant over any number of trades. Winners 1.6% larger than losers is irrelevant unless you are looking at your P/L.

Also if you are suggesting that 56% is skill; then you are telling me that you are 44% non-skilled trader. And why are your winners only 1.6% larger than your losers ? Approximately you take profit on $0.16 and a loss on $0.1 (or some equivalent) for each trade.

That’s not that impressive at all. Certainly not good enough to claim skill.

The sort of success that would even hint at skill is much higher than your results.

abc1

If you randomly select 100 people and ask them to hit a baseball pitched by a Major league pitcher, what would their expected hitting percentage be? How about if you narrowed the list down to those who could stand on two legs, and didn't suffer from arthritis?

Statistics are often times worthless. Can you actually quantify what makes one batter better than another?

I've lost far more than I've made trading this past year, but there have been a number times when I KNEW, intuitively, I was on the right side of the trade, and in every single instance, I won big.

And then there were the countless other instances when I was unsure and simply threw money at a chart moving up and down ... and lost, and lost, and lost ... that's what amateurs do.

 

[Dustin]

Quote from abc1:

I've elaborated on that point in this thread. To clarify; there is no way of knowing what will happen once a position is open (trading insider information and price manipulation are exceptions) so therefore skill is not involved post trade. Pre-trade anyone can use a wide variety of information to decide on a position; from flipping a coin to various types of analysis but to say how much this affects the outcome is very difficult to prove.

56% win rate is hardly that significant over any number of trades. Winners 1.6% larger than losers is irrelevant unless you are looking at your P/L.

Also if you are suggesting that 56% is skill; then you are telling me that you are 44% non-skilled trader. And why are your winners only 1.6% larger than your losers ? Approximately you take profit on $0.16 and a loss on $0.1 (or some equivalent) for each trade.

That�s not that impressive at all. Certainly not good enough to claim skill.

The sort of success that would even hint at skill is much higher than your results.

abc1

It's 1.6X times the losers, not a percentage.

"The sort of success that would even hint at skill is much higher than your results."

You're right...during the sample period I only made $248k and I've only been doing this for 11 years full time. You fail to realize the power of the stats.

Anyway if you have any specific questions I'll answer them, but I'm going to stop trying to change your mind about this.