Righteous Drawdowns

[Wide Tailz]

If everyone cut losses there would be no Market. We would all fold and leave the table at the first sign of a bad hand. Likewise if everyone traded the same signal it would be pandemonium as price oscillated violently. Have you ever wondered who drives the price further after the signal has been left behind?

If The Market was just a game it would truly be zero sum, but in our case The Market serves so many hedgers, producers, business entrepreneurs and savers / investors that civilization would be set back several hundred years if it failed. Jim Rogers explained why futures Markets were invented, to save farmers from having to bring their harvest to town to attract bids, and to allow them to buy seeds in the first place. Speculators are the lenders, like a bank.

Another gentleman by the name of Stewart Thomson claimed many times in his letters that wealthy banking families have a particular way of trading, not involving any kind of signal like we discuss on this board. It is to traders like these who boldly buy levels regardless of price trajectory and sell them again in small size to provide for those in need, I salute you. The Market rewards those who provide for its customers....

 

[Handle123]

Would you agree the exchanges, who allows the market to interact, allows members who provide more of the volume to have an advantage over non-members? The market in months or even years, goes up much more than goes down, and yet very few people are consistent enough to do better than the Indexes. Not many Buffets or Simons running around.

https://observer.com/2013/11/the-only-three-types-of-people-who-make-money-in-the-stock-market/

 

[southall]

Have you ever wondered who drives the price further after the signal has been left behind?

Fear and greed drive prices.

Have seen the Stock Market move when the VIX is above 30?, then you can see the fear for sure. The intra day price moves are insane.

Also Greed is sometimes just another form of Fear. The fear of missing out. That is what caused people to buy BitCoin above $10,000

 

[SimpleMeLike]

https://observer.com/2013/11/the-only-three-types-of-people-who-make-money-in-the-stock-market/

Handle123,

Great article.

Questions for you:

1. The article says Noone makes money in stock market except for buy and hold forever people, cheaters, and HFT traders.

So why does www.elitetrader.com exist if the article says day trader can't do it? Why does the two words day trader even exist? If Noone makes, money then what are we doing here?

FYI I am firm beliver in buy and hold forever, thank you Vanguard SP500 index

Thanks

 

[murray t turtle]

Would you agree the exchanges, who allows the market to interact, allows members who provide more of the volume to have an advantage over non-members? The market in months or even years, goes up much more than goes down, and yet very few people are consistent enough to do better than the Indexes. Not many Buffets or Simons running around.

https://observer.com/2013/11/the-only-three-types-of-people-who-make-money-in-the-stock-market/

%%
Mostly true.Partly because a good benchmark like S&P 500 has some good stockpickers+ they kick l out stuff like GE+ no commissions /slippage are figured LOL

 

[Wide Tailz]

Would you agree the exchanges, who allows the market to interact, allows members who provide more of the volume to have an advantage over non-members?

I've heard this is true but only in the form of cash rebates for providing liquidity. If the exchange also gives priority to its most helpful allies, I know what I'm doing with my capital if it ever gets into the 8 figures.

No joke, you can test many ideas for slinging billions on normal stocks, by slinging ten thousands on penny stocks. Not many penny stocks are worthy of this but when you find one it's amazing (and lot of fun) how the stock reacts to your resting limit orders....

 

[murray t turtle]

I've heard this is true but only in the form of cash rebates for providing liquidity. If the exchange also gives priority to its most helpful allies, I know what I'm doing with my capital if it ever gets into the 8 figures.

No joke, you can test many ideas for slinging billions on normal stocks, by slinging ten thousands on penny stocks. Not many penny stocks are worthy of this but when you find one it's amazing (and lot of fun) how the stock reacts to your resting limit orders....

%%
Tim Sykes did real well with penny stocks , in college; millionaire. If one is going to take extreme risk =college could be a good time to do it ; may get time to recoVer from huge drawDowns or bloW ups..

 

[Wide Tailz]

Few playerz will buy penny stocks if they gyrate wildly and there is no way to buy / sell without drastically moving the price. What a prime environment for a service provider to enter The Market and stabilize the stock, for a small fee, with the expected reward coming at the risk of having to hold inventory that could never be "marked to market" except for in very limited windows of demand. We all remember Hank Paulsen explaining this same dynamic before congress as he was asking for more capital to hold the banking system together. Same with Obama and GM. Both cases worked out because they were very strong hands. LTCM had the opposite outcome because they were at the mercy of banks. Rule number 1: NO MARGIN for this business model. Most penny stocks are not marginable anyhow.

 

[ironchef]

%%
Mostly true.Partly because a good benchmark like S&P 500 has some good stockpickers+ they kick l out stuff like GE+ no commissions /slippage are figured LOL

S&P 500 didn't kick out GE, DOW did.

But, it is still true that SP500 is self selecting and so there is an up bias: If the company does so bad to be kicked out because market cap falls below threshold, it is like a stop loss. Am I making any sense? Not a prediction.

 

[ironchef]

Handle123,

Great article.

Questions for you:

1. The article says Noone makes money in stock market except for buy and hold forever people, cheaters, and HFT traders.

So why does www.elitetrader.com exist if the article says day trader can't do it? Why does the two words day trader even exist? If Noone makes, money then what are we doing here?

FYI I am firm beliver in buy and hold forever, thank you Vanguard SP500 index

Thanks

There is another way to make money: Be lucky. Luck plays more in our trading successes than many realized. There is no certainty, it is all probability. There are some skills needed but for example, luck is timing, be in the right place at the right time.