There is a garden variety of arbitrage or quasi-arbitrage trades where you are a guaranteed winner if you do everything correctly. However, most people that have no losing months simply trade more frequently and their win rates are relatively low. An average HFT strategy has win rates of 51-55% and PnL/tradevalue of fraction of a tick. However, do that a thousand time a day and you would rarely have a losing day.
Traders That Beat The System.
- Thread starter BearTrades
- Start date
Fair enough, he did say trader though, so I assumed he meant an individual with a reasonable and realistic way of basically never losing. It's possible I assumed wrong and if so he can correct me on that.
But as far as I know having an HFT with 100% win rate requires multi people with a lot of resources, not just capital. What's the odds of someone having the programming skill, funds, the know how and the strategy all wrapped into one trader? I guess it's possible.
I was just giving a real life example of someone I know and they basically never have a losing day. But your point is taken and I don't necessarily disagree with it.
There are plenty of small capacity constrained trades that are sure winners. The trick is that they are usually small, require manual tinkering and specialized knowledge.
Mark Weinstein.
what are his other names he ever used in this forum?
Losing trades are not the problem provided losers are exited aggressively, traders need some very large winners many fold of the avg losers. Most retail traders have small winners & much larger losers.
Retail traders do what is comfortable which is why they are so darn predictable & easy for HFTs & pro mouse traders to pick off. You have to be a good loser first before you can expect to be a winner.
Once you get this there may be some hope - but your still going to have to do what virtually no retail traders are willing to do, it will not be easy.
"Across different traders and trading firms, 90% of all profits were attributable to 10% of all trades, it follows that a large percentage of trades have to be scratched. A cardinal skill in trading is recognizing that a trade is wrong before it hurts the P/L. The best traders are black belts in cutting loses or scratching out" . Dr. Steenbarger
Technology edge is a mirage - large firms spent hundreds of millions to dominate the top of the order book in futures & equities. The first in line often gets clobbered the worst. "Wise men say, that only fools rush in" Elvis Presley
Retail traders do what is comfortable which is why they are so darn predictable & easy for HFTs & pro mouse traders to pick off. You have to be a good loser first before you can expect to be a winner.
Once you get this there may be some hope - but your still going to have to do what virtually no retail traders are willing to do, it will not be easy.
"Across different traders and trading firms, 90% of all profits were attributable to 10% of all trades, it follows that a large percentage of trades have to be scratched. A cardinal skill in trading is recognizing that a trade is wrong before it hurts the P/L. The best traders are black belts in cutting loses or scratching out" . Dr. Steenbarger
Technology edge is a mirage - large firms spent hundreds of millions to dominate the top of the order book in futures & equities. The first in line often gets clobbered the worst. "Wise men say, that only fools rush in" Elvis Presley
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I think this conversation is getting over my head and level of comprehension. All I was attempting to do was tell the OP it's possible as I know a trader who averages 2 losing days per year. Anything else I bow out and will concede to your points.
Hey man, just out of curiosity .. what is the sample size / # of trades he puts on over a 12 month cycle?
Having zero losses is far from a profit maximizing strategy. It simply means you are not taking many trades with a positive expectation.
For poker players out there...if you are never caught bluffing, it means you are not bluffing enough. (And if you don't play poker, you will probably misunderstand the last sentence.)
For poker players out there...if you are never caught bluffing, it means you are not bluffing enough. (And if you don't play poker, you will probably misunderstand the last sentence.)
No losses every single trade is impossible. However no losses every single day is very much achievable if the person's trading strategy has a high number of trades per day, every day. The trading strategy has to be robust and with a high positive expectancy(heavily skewed to the win rate).