The ACD Method

I remember he did a trade on wheat and corn distinctly I forget what it was exacly but he wasn't punting on direction. I agree with what you are saying though.
 
Quote from kinggyppo:

yes you have a link for that?
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I'll dig around and look. It was on CNBC's website at one time. I swear if I were smarter and little more tech savy I would learn to copy these videos when they are up so I could keep them in inventory. They seem to disappear so fast.
 
Quote from Maverick74:

I'll dig around and look. It was on CNBC's website at one time. I swear if I were smarter and little more tech savy I would learn to copy these videos when they are up so I could keep them in inventory. They seem to disappear so fast.
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Ya and you would think somebody out there has done that. I remember searching for it a while back and had no luck finding it.
 
Quote from Maverick74:

Would have loved to see that. I can tell you from the 50 or so prop firms in Chicago, they are all spread shops or HFT. The professional trading community just does not engage that much in directional trading or scalping. A big part of that is because they have other edges to exploit. It's also much easier to leverage spreading strategies vs directional trades. There is a video that Fisher did in Vegas last year where he spoke about spreading. That was the conference he did with Dr. J.
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Not sure why majority of the hedge funds, mutual funds, money managers etc..have very little to show for 2011 if spreads etc.. were best game in town. Just thinking loud. Not saying scalping is the answer. Any form of trading is tough. If all the firms are doing it, where would retail trader have an edge?

I tried to read up on spreads last night ( first time ever) and had a headache after 1 hour. Need to keep at it.
 
Quote from mfbreakout:

Not sure why majority of the hedge funds, mutual funds, money managers etc..have very little to show for 2011 if spreads etc.. were best game in town. Just thinking loud. Not saying scalping is the answer. Any form of trading is tough. If all the firms are doing it, where would retail trader have an edge?

I tried to read up on spreads last night ( first time ever) and had a headache after 1 hour. Need to keep at it.
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Well, that is precisely why most hedge funds and mutual funds had an awful year this year. Anyone who was just long risk assets or made global macro directional calls did not fare very well.

The nice thing about spreads is that there are a million combinations to exploit. There are a ways a retail trader can exploit areas that prop firms can't.
 
Quote from Maverick74:

I'm dead serious. Look, what kills most guys is leverage. The reason why retail guys actually have a "slightly" higher success rate is that most of them are not using the same leverage as prop guys. Leverage speeds up the game very fast. Very few people can trade at that speed over the long term.

Another problem for most of them is over trading. Over trading with leverage not a good formula. Most of them also lacked discipline. Most of them were just in this game for the quick money, not because they had a real passion for trading. You would be amazed at how many people came into my office and the first thing they told me is that they were passionate about trading and passion was one thing they actually didn't have. At the end of the day, most people lie to themselves as much as they lie to others.

Another factor was directional trading. The market neutral guys tend to survive in this game. Even Fisher himself started saying this recently that they were spreading everything. Just punting on direction each and every day over and over is a tough gig. Directional trading is pretty simple and straightforward if one is not using leverage. But directional trading with leverage is a whole other beast.
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Thanks Mav for re-confirming that 98% prop. guys blew up....Wow!!!

About doing directional trading, in my experience out of 250 trading days in a year, on around 15-25 trading days, a good directional trader will be able to forecast and pin the move completely with a success rate of >90%. Some days are plain obvious. On around 15-25 more days, you can be fairly certain like >75% certain about the direction of markets. It is my view that: if a trader has the discipline to just trade these 30-50 days in a year and just observe the market rest of the time (or trade with 1/20th of the size to keep himself prepared for other days), even trading with large leverage the trader will not only make 'big bucks' but will also have a consistently growing and smooth pnl curve. Unfortunately, very few guys have such discipline!

Another reason I would reckon why prop traders blow up more than retail is probably because they are under pressure to perform with a small account size (trading being their main income).

Follow up question: In your experience, how many guys after blowing up 2-4 times, again decided to come back and became successful ? At least a lot of market wizards will fall into that category. Disclaimer: I have blown up more than once primarily due to overtrading, overleverage and initially due to no experience, and am taking another go at the markets now. So, far still alive after 21 weeks. So, I relate to everything you have been saying very well.
 
Quote from Shanb:

Hedge fund performance has really been quite abysmal this year, just came across this:

http://www.zerohedge.com/news/chart...ck-record-and-mid-november-performance-update
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and they have all the MONEY, TOOLS and TALENT- and still such a lousy year.

Proves to show- retail trader do have some advantages- main being they can get in and out of the market rather easily vs somebody trying to allocate $1 Billion or so and making directional bets.

Day traders do not ( or should not be making) directional bets. Does not mean it is easy. Forecasting is a bad WORD in day trading.

70% of the days I am both long and short intra day. Only 30% of the time ( on trending days) either long or short all day long.


and do not trade CL with indicators- at 99.90 all moving averages and indicators were pointing up and at 99.34 all were pointing down ward pressure.
 
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