THE MARKET WIZARD THREAD

nitro · May 24, 2003

Quote from candletrader:

This thread has already touched on Mark Weinstein's claim to have never had a losing week... as I previously stated, the Mark Weinstein interview kinda lacked credibility... even Schwager conceded that Weinstein's spiel sounded preposterous...

I thought I would bring up another stat, this time from the New Market Wizards book and in the Linda Bradford Raschke chapter...

The question and answer:

What percentage of your trades are profitable?
About 70 percent.

... evoked a further question from Schwager:

Is your average winner also larger than your average loser?
On my short-term trades, on a per contract basis, my average win is about $450, and my average loss is about $200.

So, if I am reading this right, Linda is hitting 2:1 with 70%... anyone dig this?

Brother candle,

Take the average of the following numbers: 50, 45, 40, 20, -10. Take note of what it is. Now, the average of these numbers: 1000, 50, 45, 40, 20, -10. One number and the average is thrown off by several hundred percent. In other words, the average _BY_ITSELF_ is worthless measure.

Making statements about averages is nearly worthless in order to derive any conclusions without further statistics like standard deviation etc. In fact, I would not trust ANY statistical statement unless it was in a VERY clear form with all the proper measures and the methods that were used, etc.

A better measure in this case is a moving median, but all stats have some weakness. That is why usually stats are given with other meausres and the probability distributions they are assuming...

nitro

jem · May 24, 2003

Concerning LBR's room I also have a question. I read a note on her website written by a respected newsletter and systems author who was tracking her stats and made a statement about something like 80-90 percent winning trades, I do not remember the number exactly but I said hey that is worth 350 a month. All I know is that I lost money taking a majority of the trades she announced. Now she out traded me on some of those trades and I would bet that most of the trades I did not take were winners---- and I missed a killer trend day. But I am not even sure on the trades she announced over the last six months she made money. (not including last month as I quit)

I was too busy trading stocks to keep her stats. No way was she over 80 percent correct. I am just wondering if she was profitable. I know some of her stuff did not work as well in a momentumless market. I also know that a group of fromer floor traders use her trades off the ticks and they have said it does not work as well as it use to. Does anyone have the stats on her room. Even a private mail would be nice regarding this subject.

I am just wondering if I should have made money taking most of her trades or not. I am not here to rip her as I did get a bit of a worthwhile education.

stocon · May 24, 2003

Quote from EqtTrdr:

I would have to say "Waxie", Michael Parness

Kachingo$$

candletrader · May 25, 2003

Vishnu:
Yup, the reason I started this thread was because I had just had a relook at the Wizards series...

alfonso:
I agree, it does sound like bullshit... and I agree with you on your skepticism vis-a-vis her chatroom

nitro:
I agree with you on your point about averages... I suppose much boils down to how many trades the average was spread over... if spread over a large number of trades, then 2:1 with 70% would not be inordinately influenced by a handful of big home runs... in which case, something is very fishy, since she is getting a scalping % hit rate combined with a trend trading reward:risk ratio...

jem:
Interesting thoughts on her chatroom... informally audited real-time, in-the-flesh calls have a tendency to separate the snake oilers from the more professional chatroom outfits...

stocon:
Waxie rocks!

(nice sign off... I think)

If Chartwiz is around, maybe he can clarify some of this... I still do respect Linda for trading well through some major life trials and tribulations... however, there are enough doubts creeping in for me to register my most inspirational wizards as Seykota (for his generalized philosophies and outlook on life on trading), Hite (for his consistency and risk appreciation) and Baldwin (since I can relate to how he trades and I was inspired by his elimination of fear)... Linda used to be up there with them, but there are just too many doubts about her creeping in... perhaps Chartwiz would like to add some timely comments or maybe even Linda herself (if she lurks these boards)

jbtrader23 · May 26, 2003

The Market Wizard books are incredible. I've re read them many many many times. But a key lesson was overlooked (i.e. in the Baldwin example).

Namely that after you make a fortune (in excess of a million lets say), it is absolutely essential to protect yourself from disaster. From Donald Trump nearly going bust to traders that wipe out. If I had just made a million or two million, the first thing I'd do is take $250,000 and put it where I cant touch it. Put it in gold in a safe deposit box, put it in T bills offshore.....do something that can protect your future. If you're smart enough to make $30 million you should be smart enough to not go bust.

murray t turtle · May 26, 2003

Excellant reread & read of William Eckhardt Trading Company.
Excellant,compared to S&P 500 and SPY.

And just to remind us how hard and humbling trading can be,compare Bill Eckhardt performance to the SPY in APR/03.

Interesting no one admits to disbelieving Mark Weinstein's painful $600k soybean limit down loss.Mark Weinstein is a great read & reread. I am somewhat skeptical , like Schwager that his sucess was the result of ''good markets''

Sarting capital of Rich Dennis [Bill Eckhardt friend]=$400.

Starting capital of Bruce Kovner [book friend]====$3000.

Starting capital of Michael Masters[average hold time =2-4 weeks]======================================10 shares
@$7k each

howellpar · May 26, 2003

Quote from jbtrader23:

The Market Wizard books are incredible. I've re read them many many many times. But a key lesson was overlooked (i.e. in the Baldwin example).

Namely that after you make a fortune (in excess of a million lets say), it is absolutely essential to protect yourself from disaster. From Donald Trump nearly going bust to traders that wipe out. If I had just made a million or two million, the first thing I'd do is take $250,000 and put it where I cant touch it. Put it in gold in a safe deposit box, put it in T bills offshore.....do something that can protect your future. If you're smart enough to make $30 million you should be smart enough to not go bust.

Boy, this one hurts!! Only because it's so very true.

TWICE in my life at 27 and again at 43, I had over a million dollars in cash, real money, in my account(s). At 27 I made the mistake of trying to turn a $1,000,000 into $5,000,000 (what I thought was a 'true' fortune) by buying back into the business that had enriched me. Bankruptcy followed within 5 years.

At 43, I had accumulated almost $2.0m (including a house I'd paid off in previous years). LOST EVERY penny, including the house, through ARROGANT trading (I had the money, it can only increase!), lawyers (business partner 'checked-out') and self-indulgence.

Once we earn back some portion of a small fortune, it (along with the stake from which I trade now) will be (and is) protected from me, my stupidity and the market!

As a bumper sticker in Houston read many years ago:

"Please God, just one more boom. I won't piss it away this time!"

Good-Luck. Read the books (Elder as well Schwager, LeFevre as well as Cramer, etc.) and trade small, protect what you have, and honor the stops!!

nitro · May 26, 2003

Quote from howellpar:

Boy, this one hurts!! Only because it's so very true.

TWICE in my life at 27 and again at 43, I had over a million dollars in cash, real money, in my account(s). At 27 I made the mistake of trying to turn a $1,000,000 into $5,000,000 (what I thought was a 'true' fortune) by buying back into the business that had enriched me. Bankruptcy followed within 5 years.

At 43, I had accumulated almost $2.0m (including a house I'd paid off in previous years). LOST EVERY penny, including the house, through ARROGANT trading (I had the money, it can only increase!), lawyers (business partner 'checked-out') and self-indulgence.

Once we earn back some portion of a small fortune, it (along with the stake from which I trade now) will be (and is) protected from me, my stupidity and the market!

As a bumper sticker in Houston read many years ago:

"Please God, just one more boom. I won't piss it away this time!"

Good-Luck. Read the books (Elder as well Schwager, LeFevre as well as Cramer, etc.) and trade small, protect what you have, and honor the stops!!

People like you always come back, unless you get too old to try again.

Anyone that can make a million twice can do it once more. I bet this time you keep it. Just ask Bob B.

nitro

howellpar · May 26, 2003

Yeah, I've compared a few notes with Bob. Wish I were as smart as him!!

Don't have much choice, as to 'coming back', bout have to!!

Thanks for the help, hope you do it even bigger

JT47319 · May 26, 2003

I believe Jesse Livermore, in R.o.S.O., put some cash in his wife's and son's trust with explict orders to his lawyer to NEVER allow him to touch it. After going bust so many times, he wanted to be sure his wife and son would always be provided for.