No one on EliteTrader will beat the market… here is why

tigerwu and tom_ma8, very good and thoughtful observations, thank you for your input.

Profitable trading is indeed a constant search of an edge, and unless you are a very, very flexible and creative and observant and emotionally stable individual, and your costs are not greater than the added return you can generate, you are better off being a passive investor. As a passive investor (for the moment) you can beat at least 90% of all other investors (mainly because of their trading costs). And that's not bad. I choose however to aim at the top 10% and I am willing to take the risk to actually underperform the passive investors if it turns out that I am not the kind of individual I described above. So far my experience has been positive, so I guess I should continue to pursuit the active investing (trading) path.

But if I did not know much about investing and I wanted to put my savings to work, it would be very difficult for me to spot the exceptionally talented individual who can beat 90% of all other investors. If I had to choose among the 50,000+ traders on EliteTrader to manage my money, I'd be much better off to just put all my money into a broadly diversified portfolio consisting of a couple of ETFs :cool:
 
When you have a definable edge, trade and trade big. When you don't, stay out of the market and stay in cash.

I am not a big believer of "stock will always outperform cash" theory. Stock market has a higher risk adjusted return. This mean the return is higher and the volatility of the return is higher. There's a high correlation between market return and your ability to stay in the market. Let's say you are fully invested and now we go into a 10y recession. Would you be able to avoid distress selling?

Also by cash I mean a stable monetary unit. At this point in time, I don't know if USD is the best choice either.....
 
i think it's all about money management.
that's it.

you can use non-perfect (always) system (mechanical or your own informed judgement) in non-perfect world, and you could be wrong in more than 40% of cases, and, still, using money management, you win.

and i'm not telling you you should win ONLY in the long run.
each month, each week, and, may be not each day.

importantly, don't try to predict the market and be right.

be wrong, admit it, often, and go out in time! it's your money.

gosh, i am glad the majority of ppl believe in very sofisticated trading, bunch of indicators, perfect systems, holy grail, etc.

good source of food for such dumb asses like me :)

the worst thing is stupid "revenge".
market is very cold thing, and we're too emotional.

all other players play you, me, us, not the market.

money management matters.
and it's not that hard. be a robot.


Quote from Brandonf:

Getting it is not nearly as important as keeping it is. I have a young friend (23 year old)who started trading about 9 months ago and had taken $10,000 up to $110,000. In the last two days he lost it all. He had just quit his job about 4 weeks ago because he could tell he was "born to trade", he could just feel it and the results he was getting obviously showed that to be true. Ego and poor risk managment is a killer. The sad thing is that his is not really a unique story, it happens to varying degree's every single day, and it happens to guys who've been around for 20/30 years too. You never "have it" in the market. You always have to be learning and open to new info or your days are number IMO.
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Not everyone can be a winner in this game...

But is it very possible to bring home 2-10k a month? sure.

But then we reach that target and we want 1k per day...pretty soon we're trying wayyy to hard...and trading SHOULD be effortless, right?

Every trader here is beating the market :D just ask..nobody want's to admit to losing, but in order to win you must lose...but not lose your shirt.
 
I need to write a book, i'm gonna call the book....


The Trilogy.


Believe it or not, it's about trading. Within this book i have to explain how buyers, sellers and value all interact with each other.

Where should i start?
 
Truth is unattainable in this world. So be prepared to prove yourself wrong at all times. Read some of the philosophical works by Karl Popper. Basically no one has a monopoly on truth and the only way we gain knowledge is by doing and making mistakes. There's no shame as long as you learn something from your mistakes. If you enter every trade knowing what the risks are and where you can be proven wrong, you will be the most consistent trader around.
 
keeping a diary/journal/log of my trades and, importantly, tracking my initial trading plans and recording real emotions/stream of consciousness during real executions helped me a lot.
i actually found out something useful about myself that i did not initially know at all -- after all, you cannot be in the game, and do some cold heart-searching at the same time. more, even if you had the ideal perfect system, you're not perfect, and even just trading your f*king plan is really, really VERY difficult sometimes.

Quote from tigerwu:

Truth is unattainable in this world. So be prepared to prove yourself wrong at all times. Read some of the philosophical works by Karl Popper. Basically no one has a monopoly on truth and the only way we gain knowledge is by doing and making mistakes. There's no shame as long as you learn something from your mistakes. If you enter every trade knowing what the risks are and where you can be proven wrong, you will be the most consistent trader around.
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what if it gonna be rather out of your personal experience, without any attempt to generalize anything and/or giving any definitions ? :)

it can make it more interesting, at least, it could be considered like some sort of novel and not a f*king manual nobody believes in and/or read in these days :)

plus, now all publishers are more interested in wall street media exposure, scandals, etc., and there is the real demand for this stuff, and it's very popular. ppl buy fair tales of any kind, of wonderful and of ugly.
no wonder, it's all about money, too, for publishers, and the same process of doing money repeats itself all the time, everywhere, anytime on different levels of support and resistance :)

some publishers believe that real truth is kinda boring, hardly readable, poorly sellable, less profitable etc. :)

bottomline -- make it hot!
it's all about money, after all (if you intend to sell your book, of course) ;)


Quote from Dackster:

I need to write a book, i'm gonna call the book....


The Trilogy.


Believe it or not, it's about trading. Within this book i have to explain how buyers, sellers and value all interact with each other.

Where should i start?
More...
 
Quote from neutrino:

I didn't want to spark a discussion for arguments' sake. My point is very simple - regardless of your intelligence and past success, you must avoid competition as much as possible. The Don't get me wrong - I love trading and I do it full time with my own capital and lately with some institutional money,
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Why the negative view of a positive expectancy as regards to trading the market. The addition of Institutional money have a bearing? Also see you mentioned the avoidance of competition - would this have anything to do with the addition of Institutional funds?
You have "beaten" the markets for 5 years, have a good holiday and look forward to 5 more.
 
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