The Bad Trader?

Quote from K-Rock:

If you don’t have any constructive/serious comments please don’t post on this thread. :mad:
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Sure no problem. Here's your "constructive" comment.

Thinking, hoping, wishing, observing from day to day, isnt the way you determine whether or not you have a tradable edge.

Doesn't mean you wont make money. Just means you may not have (likely you dont have) a true statistical edge. Instead you may have what is called a historical tendency.

If you want to move up to the next step and do this in a professional way, you need to learn what a statistical edge is, and then test for it. Some resources are available to you online here. Using Search function, check out posts by Acrary. Also a good idea to learn to use a Monte Carlo engine. I use @Risk.

I hope that was constructive enough for you.

Merry Christmas

Steve
 
Quote from balda:

You might want to talk to this guy

http://www.elitetrader.com/vb/showthread.php?s=&threadid=58649

I am sure he never made a losing trade. The master of tops and bottoms.

The link above should be in a hall of shame.
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I skimmed through the thread you suggested and it was an interesting read and I will continue to follow it. My strategy is somewhat similar; however, I’m flat by close of business. Additionally, my targets are dynamic. It takes a lot of patience, capital, and guts to swing trade this way. I wouldn’t be so quick to prejudge his methods. If he has the guts and capital to continue to ride it out, maybe 6 months from now things might be quite different.
 
Quote from steve46:

Sure no problem. Here's your "constructive" comment.

Thinking, hoping, wishing, observing from day to day, isnt the way you determine whether or not you have a tradable edge.

Doesn't mean you wont make money. Just means you may not have (likely you dont have) a true statistical edge. Instead you may have what is called a historical tendency.

If you want to move up to the next step and do this in a professional way, you need to learn what a statistical edge is, and then test for it. Some resources are available to you online here. Using Search function, check out posts by Acrary. Also a good idea to learn to use a Monte Carlo engine. I use @Risk.

I hope that was constructive enough for you.

Merry Christmas

Steve
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Thanks!
 
Glad to help. By the way, @Risk is a product by Palisade.

www.palisade.com

They put out a variety of Monte Carlo Engines. If you are lucky, you can find the student version. It is available as a DVD that is part of a book. Unforunately I do not remember the name. If you find it, you can load it and use it for free provided you identify yourself as a student. The standard/professional versions are expensive.

Good luck
Steve
 
Recently, I came across a very successful counter trend day trader that averages about 500 ES e-mini contracts per trade (his daily goal is about $100K), uses wide stops, and is not afraid to average up or down; however, his method is proprietary. He turned a small account (less than $50K) to a million in about 9 months. Therefore I know it can be done, but the key is learning how to best mange those infrequent strong trending days when there are no significant pullbacks or else the truisms will kick in. This is my challenge.
 
Quote from steve46:

Just means you may not have (likely you dont have) a true statistical edge. Instead you may have what is called a historical tendency.

If you want to move up to the next step and do this in a professional way, you need to learn what a statistical edge is, and then test for it.

Merry Christmas

Steve
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Good points! In your words could you define the differences between statistical edge and historical tendency.

Merry Christmas to you as well!
 
Hey Thanks,

I only have a few moments here, so I want to say just a couple of things.

first it is possible for a historical tendency to also show statistical significance. In my opinion, the statistical tests that you could do are to show you what the limits of your edge are. For instance, is the edge stable over time or does it appear and disappear at random intervals. Is it related to an understandable human process (like traders going to lunch). If you don't know why an edge exists, you are at a disadvantage. Is your edge related to some aspect of market structure (bookkeeping, computer processes, exchange rules, etc.)

One example is the margin system over at NYSE. If you have a moment, go back and look at your historical charts for the major integrated oils. Some months ago, when we had a real rush up in these issues, you saw retail traders streaming into that market. They tried to jump on the bandwagon and they took (in some instances) significant risks to hold positions. Quite often they were undercapitalized. When things reversed, many were left with positions that had to be liquidated, and if you look at the charts over that time, you will see that at lunch hour (NY) the margin desks were releasing the broker instructions to liquidate and all the oils would take a dip. Is this a statistical edge. Nope, but it is one that many sharp folks saw and profited from (until the retail folks got flushed out of that market).

One of the things that you can learn from this is that there are significant edges (that are not statistically significant) but that one can find and make good money with.

I hope this helps.

Steve
 
Quote from K-Rock:



I’m curious if one could trade this way successfully (without getting into my specific method) or is it just a matter of time before the truisms kick in and I blow up my account?
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K-Rock

There is only ONE truism when it comes to trading the markets.

How much money you MAKE and KEEP

ET is great for some resources like books, hardware and software (like charting packages) but do NOT ask for advise on trading because you will never get a RIGHT answer in here.
 
FYI

on picking bottoms and tops

• "Don't bottom fish" - Peter Lynch.
• "Don't try to buy at the bottom or sell at the top" - Bernard Baruch
• "Maybe the trend is your friend for a few minutes in Chicago, but for the most part it is rarely a way to get rich" - Jim Rogers.
• "I believe the very best money is made at the market turns. Everyone says you get killed trying to pick tops and bottoms and you make all your money by playing the trend in the middle. Well for twelve years I have been missing the meat in the middle but I have made a lot of money at tops and bottoms." - Paul Tudor Jones.


So here we have a group of guys who have collectively taken billions of dollars out of the market and they don't agree on one thing regarding how to make money. Not one. So what is a person to do?

See the following link for more info:

http://64.233.187.104/search?q=cach...re_Traders.htm+picking+tops+and+bottoms&hl=en
 
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