Yes, maybe it's possible to be guided. But some how our emotions prevent us from doing the right thing, instead of exit then stay and vice versa. Without under pressure we can think clearly but with the pressure of losing money we think irrationally. I think it's possible to find a system and then give the instructions to computer instead of executing your strategies by yourself since our emotions will play against us. Like the famed phrase on Wall Street Do as I say, not as I do, and generally the person is right but he's doing wrong. That's why I believe that we can tell to computer to do (do as I say) and not do by yourself (not as I do).
Superior trader, a born talent or can be taught?
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didn't mean having a master in econ was necessary but to be able to evaluate strategies and be consistent in refining your skills u need to have special qualities, not anyone is born to survive a hurricane. furthermore u still need a rare attitude indeed to be able to pin point the correct trades..many failing/failed traders have worked hard but are disorganized by nature and can't figure out where the best opportunities comes from, even tho they know everything there is to know of the mkt and tried every strategy they cud come up with. as u just said u need to be able to evaluate..a skill born from with in.
and a mentor also has proven not to be enough in the turtle experiment.
It doesn't take great survival skills to survive a hurricane, one only needs to revert back to our primal instincts. When the heard is running, you might want to run with them until you know what's going on!
As for my analysis, I have found simple to be better, and many other successful traders agree with me on this. Organization, I have so many balls in the air, I will never be caught up, I have a strategy for dealing with it, and that is asking myself the right question.
Trading comes down to asking yourself the right questions, so that you get valid analysis, then creating a strategy or plan, and then executing. Finally, you must constantly evaluate your results, and stive to improve.
While a mentor is no guarantee of success, i think your odds of making it without a mentor are significantly less. Remember this, the best of the best have coaches, and if they feel they need it, why would you ever think that you wouldn't?
Superior trader, a born talent or can be taught?
Yes and No, both.
First of all, it depends on what is being traded. Simple recognition of trends and going with the flow can be done with any instrument that moves in a single direction continually. You won't make a killing, but following the crowd is how most people evolve. Ever seen 2001: A Space Odyssey? At some point in our existence (if you believe in evolution, that is) one monkey picked up a bone and used it to beat up another monkey. This taught the other monkeys that while it doesn't exactly make perfect since, beating a rival monkey with a bone is more effective than using your hand. Hence, monkeys began using blunt objects to defend their territory.
Back in the SOES Bandits glory days, they could have trained monkeys to make their trades for them. But that was only an exploitation of a mechanical based system, not a viable long-term (short-term trades for long-term success) trading strategy.
Hedging your bets in less than a handful of extremely volatile positions is not for the faint of heart, and takes more than just mechanical decision making. You almost have to feel what's happening and react to it very quickly, if not immediately.
So I guess it's Yes and No, both. depends.
Yes and No, both.
First of all, it depends on what is being traded. Simple recognition of trends and going with the flow can be done with any instrument that moves in a single direction continually. You won't make a killing, but following the crowd is how most people evolve. Ever seen 2001: A Space Odyssey? At some point in our existence (if you believe in evolution, that is) one monkey picked up a bone and used it to beat up another monkey. This taught the other monkeys that while it doesn't exactly make perfect since, beating a rival monkey with a bone is more effective than using your hand. Hence, monkeys began using blunt objects to defend their territory.
Back in the SOES Bandits glory days, they could have trained monkeys to make their trades for them. But that was only an exploitation of a mechanical based system, not a viable long-term (short-term trades for long-term success) trading strategy.
Hedging your bets in less than a handful of extremely volatile positions is not for the faint of heart, and takes more than just mechanical decision making. You almost have to feel what's happening and react to it very quickly, if not immediately.
So I guess it's Yes and No, both. depends.
i hate to get all tautological here, but of course superior trading requires more than most people have.
if most people had it, that ability would no longer BE superior.
superior traders don't have 1) better equipment 2) better information 3) etc etc etc
we can all think of umpteen examples of people who have all of those and are NOT superior traders.
psychologists have done a lot of tests in certain personality types and how they hande information "on the fly", etc.
the same people who tend to make excellent athletes also tend to have that same kind of intuition to be excellent traders. it's a matter of just having "it". it's kind of a kinesthetic intelligence, combined with a certain self confidence, and ability to process a lot of different kinds of information in a way that is more than most people can
but since superior is, by definition, the very best - not everybody can be the very best, or it ceases to be the best
the very best are gonna be statistical outliers, just like the very best in almost every field. michael jordan worked his butt off, but he still had an immense talent. no way i could be michael jordan.
if most people had it, that ability would no longer BE superior.
superior traders don't have 1) better equipment 2) better information 3) etc etc etc
we can all think of umpteen examples of people who have all of those and are NOT superior traders.
psychologists have done a lot of tests in certain personality types and how they hande information "on the fly", etc.
the same people who tend to make excellent athletes also tend to have that same kind of intuition to be excellent traders. it's a matter of just having "it". it's kind of a kinesthetic intelligence, combined with a certain self confidence, and ability to process a lot of different kinds of information in a way that is more than most people can
but since superior is, by definition, the very best - not everybody can be the very best, or it ceases to be the best
the very best are gonna be statistical outliers, just like the very best in almost every field. michael jordan worked his butt off, but he still had an immense talent. no way i could be michael jordan.
Whitster (and everyone)
My experience is different.
I know some great traders. Every one of them has the whole package. The best office equipment, the best charting package, the best contacts, a winner's attitude, great skills, all of it. Who knows if they have natural ability? It doesn't matter to them or to me. All that matters is they know how to maintain that edge, and they keep on winning. When things don't go their way, they do whatever it takes to get back on track. They go in to work every day expecting to win.
As regards, the question "born" or "taught" all I know is that my own teacher taught several of them. He never talked about them but I am sure that he was a big part of their success. He was that good at teaching his craft. As I remember it, his motto on this subject was simple.
"Always go first class"
Make of it what you will.
Good luck everybody
Steve
My experience is different.
I know some great traders. Every one of them has the whole package. The best office equipment, the best charting package, the best contacts, a winner's attitude, great skills, all of it. Who knows if they have natural ability? It doesn't matter to them or to me. All that matters is they know how to maintain that edge, and they keep on winning. When things don't go their way, they do whatever it takes to get back on track. They go in to work every day expecting to win.
As regards, the question "born" or "taught" all I know is that my own teacher taught several of them. He never talked about them but I am sure that he was a big part of their success. He was that good at teaching his craft. As I remember it, his motto on this subject was simple.
"Always go first class"
Make of it what you will.
Good luck everybody
Steve
Thanks a lot Steve, nice explanation and very encouraging for everyone. Just to make thing clear and simple since among of us got confused with the term Superior trader that is borrowed from The New Market Wizards. Let define superior trader as a successful trader, a trader can be successful without having an outstanding talent like Jesse Livermore.
its a combination of both nature and nurture - few if any are "born" traders..and those with so much natural talent can pretty much be good at whatever it is they do
personality plays a large part in trading - the biggest part being in exiting a position. Anyone can enter a trade - little or no guts are involved there - difference comes in how and why you choose your exit - and that is an amalgamation of experience, education, personality, and ofcourse natural "gut" feeling. Aggressive traders might hold in a technical pullback and not get twitched out - they will ofcourse run the risk of large drawdowns and losses and are emotionally prepared to endure them. Passive or risk-averse traders will refused to get twitched out and have quick exits - again a product of their environment or personality. Both styles can be successful - the least successful are ofcourse "cowboys". We always hear of one-hit wonders who made a million one yr but never hear of them losing 2 million the next year.
The best example I can think of - at the risk of upsetting majority of the Elitetrader participants - is Jim Cramer. Out of a 200mio hedge fund he lost 90mio in a span of 6-8 months in 1999 to memory (could be '98 dont quote me), but instead of shutting down the fund and being the "joke" of the street he came back in made 150mio the following 6-8 months. Whatever disregard one may have for his fluffy tv show today - to pull off a feat like this requires alot more than just a harvard MBA and GS experience. Most people I know would have committed suicide.
when i used to be a currency trader with a bank, the best traders in the market werent those with MBA's and quant PHD's but street-smart and hungry kids who could quickly isolate the trades where they were about to do well or get in trouble, (typically overly educated people have rarely done well in trading because they fall victim to analysis/paralysis - ofcourse there are exceptions). But I disagree that any single person can be picked off the street and simply "taught" the ways and means of buying low and selling high if he lacks a natural conviction toward the job
The best trading systems developed will only work so well as long as your personality fuses well with the system - and same system can work rather disagreably with someone with the exact same background but a different personality
personality plays a large part in trading - the biggest part being in exiting a position. Anyone can enter a trade - little or no guts are involved there - difference comes in how and why you choose your exit - and that is an amalgamation of experience, education, personality, and ofcourse natural "gut" feeling. Aggressive traders might hold in a technical pullback and not get twitched out - they will ofcourse run the risk of large drawdowns and losses and are emotionally prepared to endure them. Passive or risk-averse traders will refused to get twitched out and have quick exits - again a product of their environment or personality. Both styles can be successful - the least successful are ofcourse "cowboys". We always hear of one-hit wonders who made a million one yr but never hear of them losing 2 million the next year.
The best example I can think of - at the risk of upsetting majority of the Elitetrader participants - is Jim Cramer. Out of a 200mio hedge fund he lost 90mio in a span of 6-8 months in 1999 to memory (could be '98 dont quote me), but instead of shutting down the fund and being the "joke" of the street he came back in made 150mio the following 6-8 months. Whatever disregard one may have for his fluffy tv show today - to pull off a feat like this requires alot more than just a harvard MBA and GS experience. Most people I know would have committed suicide.
when i used to be a currency trader with a bank, the best traders in the market werent those with MBA's and quant PHD's but street-smart and hungry kids who could quickly isolate the trades where they were about to do well or get in trouble, (typically overly educated people have rarely done well in trading because they fall victim to analysis/paralysis - ofcourse there are exceptions). But I disagree that any single person can be picked off the street and simply "taught" the ways and means of buying low and selling high if he lacks a natural conviction toward the job
The best trading systems developed will only work so well as long as your personality fuses well with the system - and same system can work rather disagreably with someone with the exact same background but a different personality