The sad truth about trading is

[Index piker]

Quote from Swan Noir:

Churchill actually passed many belittling comments about Hitler during the war. And still won the debate ... lol.

Of course you are correct that personal attacks are, as general rule, to be avoided. But how should we handle someone whose point is absurd and who has already lost the debate but is having a hard time seeing how lame his points are?

Please advise.

1) Well first of all Hitler and Churchill were not in a debate they were at war.

2) I don't characterize the generic traders position on this as "absurd" which is what you ascribe to my position.
Only that they have adopted an overly exaggerated optimism for success(outperforming passive returns) in light of the facts.

Sure it's good to be confident but your chances are like muzzle-loaders vs repeaters.
The best you can hope for is to get rich once and quit before the law of averages catches up with you.

 

[knightrader]

Quote from ammo:

if you just trade the higher probability trades, touching s/r,either getting out or getting in at these spots, you raise your odds and profits greatly

Exactly what i mean by simplicity.Also helps if you have more than a clue as to wether s/r is likely to hold or get broken ,but not essential.
Most people find it hard to sit tight and let the winner run-human nature is to grab a profit.In exactly the same way as most people cannot bear an awkward silence and feel they have to say something...winners aren't afraid of awkward silences.
Most people cannot cut and run from a losing trade,again human nature.Exactly the same way as they find it difficult to cut and run from a personal relationship that is detrimental to them.Some people stay married to the wrong person for years,or are mates with the wrong people for years.Being married to the wrong position can blow your account eventually...

 

[Index piker]

Quote from lurefo:

Disagree. While I know that many guys here are either paper traders (Roman Candle, etc..) or losing/mediocre traders (Mandelbrotset, etc..), I am not sure they would benefit from adopting a less active type of investment. They will still have to take decisions, and it is likely that what currently prevents them from being profitable (usually their ego - check their numerous posts thru ET in which they give trading lessons to others while they are hardly, if not at all, profitable), will still prevent them from making money regardless of the type of investment they choose.


I agree on this point, you get more free time for other activities.

The downside is that your profit potential - % wise - is much much smaller than what you can get in trading.

Keep in mind that most people come to trading because they don't have enough capital to live off passive investment returns. So, they would probably better stop trading/investing entirely.

I agree and understand the motivations for swinging at the fences, but I contend these people would be better off passively investing in riskier asset classes. small cap, emerging, frontier markets.

 

[crash n burn]

Quote from Index piker:


The best you can hope for is to get rich once and quit before the law of averages catches up with you.

seasoned traders know that and aim at it

for instance, trading a solid plan for 2 years with an expectation of deriving 1000% per annum, would yield 100,000% the original capital. this is where of most bright successful traders retire and adopt passive strategies. anyone can do it and despite being extremely difficult there is no way it can be done elsewhere.

 

[jjs235]

Or you could have the law of averages aka the law of large numbers on your side. Along with geometric averages of course!

Index piker I totally see where you are coming from. I have a financial engineering degree from one of the Ivies and most of my professors would agree with you. I also am a CFA pending work experience, and many of my CFA buddies would agree with you surprisingly. My favorite indexing website by the way is www.ifa.com and I suggest everyone interested in investing read the twelve steps to investing. Although you can obviously index at a lower cost than IFA through DFA funds.

All of that being said, what I do isn't investing (like you). It is trading!!! As far as efficient markets go, someone has to make them efficient. That is what we do. What I do is not luck, I know of ways to make returns that would baffle you (not only in their expected value, but also in their 99.9% confidence interval). The catch is that it is with smaller amounts of money. Say $100,000 - $1,000,000 per trade, so guess what? Mutual funds and the like that all of the studies you've read have been done on are way too big for this type of trading. For them, markets are efficient. For the general public markets are efficient, because most aren't clever enough!

 

[RangeBar]

Quote from talontrading:

I could write a profitable trading system on the back of a cocktail napkin but not 1 in 1000 people would be able to apply it.

Do you think you could write something up for trading the ES? I'm striving to get 5 pts. per day, preferably in 3 trades or less. I'll supply the cocktail napkin(s) AND give you 10% of profits in first year. No bullshit.

 

[talontrading]

I am assuming you mean an ES daytrading system. I have done that profitably (in fact, it's how I really learned to trade)... look at things like opening gaps, what happens at the high and low of the day depending on the time of day (more likely to fail midday, don't fade highs and lows in the last hour instead go with), and buying pullbacks in established trends. OR... you can learn to read the orderbook and scalp ticks... taking .75 profit and risking .25 or .50.

However, I believe that kind of trading is the hardest of anything to do. I would rather see you daytrade mid-price NYSE listed stocks than ES because I think you have more of a chance. Any kind of daytrading is the hardest psychologically and emotionally. In my opinion this arena offers great learning opportunities because you get many "at bats" during the day and thus many more learning opportunities. However, without mentorship and guidance I think your chances are very slim and you would be better served learning to trade slightly longer timeframes.

only my opinion based on my own experience. I struggled with ES for years, went to a longer timeframe and found success then came back to intraday ES and really kicked some ass, but it was a long journey.

I already posted a system that made my account a lot of money this year so please look at that.

Quote from RangeBar:

Do you think you could write something up for trading the ES? I'm striving to get 5 pts. per day, preferably in 3 trades or less. I'll supply the cocktail napkin(s) AND give you 10% of profits in first year. No bullshit.

 

[RangeBar]

Quote from talontrading:

I am assuming you mean an ES daytrading system. I have done that profitably (in fact, it's how I really learned to trade)... look at things like opening gaps, what happens at the high and low of the day depending on the time of day (more likely to fail midday, don't fade highs and lows in the last hour instead go with), and buying pullbacks in established trends. OR... you can learn to read the orderbook and scalp ticks... taking .75 profit and risking .25 or .50.

However, I believe that kind of trading is the hardest of anything to do. I would rather see you daytrade mid-price NYSE listed stocks than ES because I think you have more of a chance. Any kind of daytrading is the hardest psychologically and emotionally. In my opinion this arena offers great learning opportunities because you get many "at bats" during the day and thus many more learning opportunities. However, without mentorship and guidance I think your chances are very slim and you would be better served learning to trade slightly longer timeframes.

only my opinion based on my own experience. I struggled with ES for years, went to a longer timeframe and found success then came back to intraday ES and really kicked some ass, but it was a long journey.

I already posted a system that made my account a lot of money this year so please look at that.

Thanks for your thoughts. A couple of things you spoke of were readily recognized from my own experiences.

 

[trendo]

Quote from talontrading:

Ok... as promised... here is a system that has an edge. I know this because 1) I backtested it rigorously and 2) i have used it for quite a while and made a good return with it.

How long did you use that system and what was your return?
thx

 

[talontrading]

Several years and the return was very impressive. My exact numbers won't really matter to you because financing/margin requirements will differ... small differences in execution will add up... and we did some things a little differently at times. all in all, it has been a nice chunk of change.

most stock traders i know who trade intermediate timeframes already do something very similar to this. it's one of the best documented "inefficiencies" out there, and it continues to work year after year.

do the work yourself. you can backtest it pretty easily and see if it works or not.

Quote from trendo:

How long did you use that system and what was your return?
thx