What would you do if you had the "holy grail"?
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Your hypothesis is self-contradictory.
If the method can be discovered by others and exploited to the point of nonviability, then it was never "infallible" in the first place. It's just another temporary anomaly that will eventually disappear.
In which case, your best bet is to milk it to the fullest before it goes away.
The funny thing is that if someone ever really found the Holy Grail, then they would actually be sentencing themselves to a life of hardship along with the rest of the world. Taken to its logical conclusion, if you never lost, or almost never lost, then eventually you would control the entire market and it would cease to exist, taking with it the entire economy. Everyone, including the owner of the HG would have nothing since money would be worthless. We would all just start over with hunting and gathering.
If I was in that position, I would trade it, even if I only had $1 to start with (no sharing whatsoever...for helping friends or family, just give them cash instead). Once I hit critical mass (enough to support my family for a long time, but not enough to start attracting unwanted attention or adversely affecting the market), I would destroy any evidence of it. That is assuming I wasn't consumed with greed by that point at which the above scenario would result.
But thanks for the heads-up to your fellow ET'ers...at least we can convert our cash to blankets or ramen noodles while it still has value.
If I was in that position, I would trade it, even if I only had $1 to start with (no sharing whatsoever...for helping friends or family, just give them cash instead). Once I hit critical mass (enough to support my family for a long time, but not enough to start attracting unwanted attention or adversely affecting the market), I would destroy any evidence of it. That is assuming I wasn't consumed with greed by that point at which the above scenario would result.
But thanks for the heads-up to your fellow ET'ers...at least we can convert our cash to blankets or ramen noodles while it still has value.
I parsed your comments below.
You may want to read some of the commonly recommended books that provide a log of how people, historically, have handed this stuff.
You may want to read some of the commonly recommended books that provide a log of how people, historically, have handed this stuff.
Quote from Error 404:
Suppose someone actually discovered a method of trading that truly is infallible?
You may want to explore how zero sum games work. Defacto, there are many grails. Tracking them is a good avocation for understanding how to play the game.
Let's use me for example. I come up with something that will make money X% of the time, but lose money ZERO percent of the time. (not conversions or stategies hedged with zeros, or anything like that....I mean a real dynamic high return kind of strategy).
you can assume if it is there to take, it is being taken. A small % of the players take out almost all of the capital coming into the market. Many many threads focus on this. You will notice almost all posts are made by puzzled losers.
Now I don't want to just give it away, because if more than a few individuals used this method, it would cease to work for me and anyone else. And of course there would be nothing in it for me.
There are myths about the financial industry. This is one of them. All of the winners in all of the markets are totally unaffected by others knowing what they do. you will see that the money players do not make much money performance wise. What they provide, however, is a magnificent shield for the small group of excellent players.
I don't want to sell it either. Pretty much for the same reason. I can't sell it to enough people at a reasonable cost. Sell it to too many people, and again, the method becomes ineffective (for several reasons).
There is a SOP for dealing with what you speak of. It does not involve selling because that is a one time event. In business, it is common practise considering a very wide array of concerns and interests to use traditionally accepted arrangements because of their know practical results that are on the record.
So I want to "share" the method. Meaning I would take "investors/partners" and share the profits. But to do this, I would have to lay out the system up front to show it is foolproof. If I do this, what is to prevent the potential investor from just doing it without me?
Personally I have made that choice. The quid pro quo for me is to extend my effect in the community and in other places.
As you would imagine the NFA regulates this. I operate under rule 2-8 (E), part a). All of this is complimented by boilerplate re money. The two arrangements I have are more or less formal. A person benefitting from profits is freed to increase the time they have to contribute to the benefit of others in their fields of expertise. This extends my effect by eliminating a personal time constraint. I multiply myself through others by creating income for others so they can contribute time at no costs. The less formal arrangement provides that others pass forward to others what I have provided to them as a condition of getting support from me. they also are committed to profit sharing with 501 (C) (3)'s.
Is there a way to protect the system? And myself?
Yes. You can imagine that the grail kind of thing usually defies recognition by people who are oriented to getting something for nothing. What a person has to "pay" for something is in terms of personal effort ("work"). The human component of making money is pervasive. It is necessary, in other words. Thus there is an automatic firewall between such people (call them "greedy", perhaps) and top quality "grail" money making methods. You will find that the less greedy more moderate people will leave you alone because they orient to the "there is no grail" myth. these lower expectations make you unattractive it turns out.
Any thoughts?
BTW, many of you have read my trading posts. Those who have know I have ground it out for a lot of years (since 1988). While people were boasting about making 5% a day, etc., I always claimed to be content to make one tenth of one percent per day on average. Look it up on the ET search.
I HAVE found it!!! Now I just don't know what to do with it. I have always traded "prop". I cannot do this on that basis.
I can patiently build up an account with this technique, but that seems slow and tedious. And the truth is, I would like to retire soon, and have some others do the actual trading.
Thoughts? Interest? Any contract lawyers who know if a "non-disclosure" agreement would be enforceable?
PMs welcome. I will answer any I sense as being serious and sincere. And certainly any open discussion would interest me.
With respect to all of the above, do your homework and find out where you fit into the spectrum. Financial industry professional administrators who deal with NFA stuff will be able to give you perspective. Were you a scientist, etc, You would recognize where you are relative to going down the road. Harrytrader has a set of five symbols for that. Your are on the left most symbol with four more to go as you tell us.
Peace,
RS
That's why the holy grail doesn't exist; there's no 'logical conclusion' to take it to.
Certain "what ifs" are not be possible without violating basic principles of reality. You couldn't travel back in time and change the course of history, for example, because in doing so you would fundamentally alter or erase your existence, not to mention altering or erasing the existence of hundreds of millions of other people who already exist.
Similarly, there can't be a holy grail of trading because the market is self aware (in the sense that it's nothing more than a collective of self aware participants). You couldn't keep winning without being noticed, you couldn't get others to keep playing if you never lost, and there would be no way to account for the distorting effects of your own actions.
The holy grail would have to either be based on a scientific principle, in which case it would be discovered and disseminated fairly quickly, or it would have to be based on some kind of personal omniscience or super powers, in which case you might as well get a red cape and start calling yourself Clark Kent.
One benefit of applying philosophy to markets is understanding why certain propositions aren't worth entertaining for more than 30 seconds.
I would probably continue the search...
Yes, it's true as foolish as it sounds. I have vowed to post what is real for me, not what sounds good.
Michael B.
Yes, it's true as foolish as it sounds. I have vowed to post what is real for me, not what sounds good.
Michael B.
Thanks...excellent information. I was not aware of the verification process as you explained it. However since the system has limitations as to size, a 2% management fee would be inadequate.
The 0.1% return I referred to was not about this method at all. That was in reference to what I considered acceptable (for me) returns on average trading over the years. I would expect this technique to return at least 100% annually.
As to some of the other responses: there are limitations as to how this system could work. I do not have the capital myself to really make the system effective for me. On the other hand, there is a very finite amount of this that can be done. I could not "trade my way to a track record" and then easily raise unlimited funds. Because unlimited funds just wouldn't work. I am not looking to become the new Peter Lynch.
As for building up my own account and trading it, yes, that can be done. However who knows if the rules of the game will change before I can accumulate enough capital to really make it worthwhile?
I feel that a maximum of $2mm would be tradeable. One $mm would work as well (or even less). But I have no idea how long the strategy would be viable. (It would not stop working....it just MAY stop being able to be implemented due to potential rule changes).
So if I could comfortably pick up 100% return on that kind of money immediately it would seem to make more sense than to wait it out and see it (the ability to implement the system) possibly disappear.
BTW, there would be no backtesting or track record needed to prove the strategy would work. Anyone with any sense of logic would see in a 10 minute sitting that this could not fail.
Which is why I referred in the first post to conversions. While as customers, we cannot get them executed (without legging in) it is obvious to virtually all traders that it is a riskless transaction. Or a credit butterfly spread. Or box spread. Or any number of strategies that have worked for market makers over the years, but are unavailable to customers (due to haircut vs. margin, execution, decimalization, ECNs, and of course commissions, etc.).
THIS strategy would work for any retail customer. Perhaps I am missing something. I don't rule that out with absolute certainty. I am not that arrogant. I know from past experience that sometimes you just do not see something because it is too simple. I have been awake all night thinking this through. The adrenaline has been keeping me awake, and maybe I just am really something. But I sincerely don't think that is the case.
In any event, I will say this. First off, the strategy requires very specific set ups. So perhaps 4 to 6 per month would be the maximum number of trades. It is conceivable that I could go zero for 6. (meaning I may not make anything in that month, but I could not lose anything).
The second thing I will say is this. If I do find a flaw in the system, I will post the entire thing here and at least attempt to demonstrate my logic. And perhaps if I am wrong, I might be close enough that someone else can patch the flaw. In which case I would settle for an "attaboy" and be done with it.
As for those who do not know what I am talking about when I spoke of the credit butterfly spreads, box spreads, and conversions, well, know that I was a MM on the CBOE, and yes, these things are sure money when you can do them. They are so "sure" that haircut (close to, but not exactly what customers know of as margin) is zero. Because when you cannot lose, there is no need to have a capital requirement. Guys like Metooxx and Don Bright can attest to this (as I am sure many others can as well).
There are "sure thing" strategies. It is no myth. This particular strategy has only one flaw that I can see, and that is that it has to be done at a low enough level to stay "below radar" as to not be recognized and thus rendered ineffective, and it can not be done on a small scale (as I said) because it takes advantage of a situation that may not continue to exist indefinitely.
I appreciate all the feedback guys.
Peace,
RSCongrats RS
Michael B.
Michael B.
Quote from Error 404:
Thanks...excellent information. I was not aware of the verification process as you explained it. However since the system has limitations as to size, a 2% management fee would be inadequate.
The 0.1% return I referred to was not about this method at all. That was in reference to what I considered acceptable (for me) returns on average trading over the years. I would expect this technique to return at least 100% annually.
As to some of the other responses: there are limitations as to how this system could work. I do not have the capital myself to really make the system effective for me. On the other hand, there is a very finite amount of this that can be done. I could not "trade my way to a track record" and then easily raise unlimited funds. Because unlimited funds just wouldn't work. I am not looking to become the new Peter Lynch.
As for building up my own account and trading it, yes, that can be done. However who knows if the rules of the game will change before I can accumulate enough capital to really make it worthwhile?
I feel that a maximum of $2mm would be tradeable. One $mm would work as well (or even less). But I have no idea how long the strategy would be viable. (It would not stop working....it just MAY stop being able to be implemented due to potential rule changes).
So if I could comfortably pick up 100% return on that kind of money immediately it would seem to make more sense than to wait it out and see it (the ability to implement the system) possibly disappear.
BTW, there would be no backtesting or track record needed to prove the strategy would work. Anyone with any sense of logic would see in a 10 minute sitting that this could not fail.
Which is why I referred in the first post to conversions. While as customers, we cannot get them executed (without legging in) it is obvious to virtually all traders that it is a riskless transaction. Or a credit butterfly spread. Or box spread. Or any number of strategies that have worked for market makers over the years, but are unavailable to customers (due to haircut vs. margin, execution, decimalization, ECNs, and of course commissions, etc.).
THIS strategy would work for any retail customer. Perhaps I am missing something. I don't rule that out with absolute certainty. I am not that arrogant. I know from past experience that sometimes you just do not see something because it is too simple. I have been awake all night thinking this through. The adrenaline has been keeping me awake, and maybe I just am really something. But I sincerely don't think that is the case.
In any event, I will say this. First off, the strategy requires very specific set ups. So perhaps 4 to 6 per month would be the maximum number of trades. It is conceivable that I could go zero for 6. (meaning I may not make anything in that month, but I could not lose anything).
The second thing I will say is this. If I do find a flaw in the system, I will post the entire thing here and at least attempt to demonstrate my logic. And perhaps if I am wrong, I might be close enough that someone else can patch the flaw. In which case I would settle for an "attaboy" and be done with it.
As for those who do not know what I am talking about when I spoke of the credit butterfly spreads, box spreads, and conversions, well, know that I was a MM on the CBOE, and yes, these things are sure money when you can do them. They are so "sure" that haircut (close to, but not exactly what customers know of as margin) is zero. Because when you cannot lose, there is no need to have a capital requirement. Guys like Metooxx and Don Bright can attest to this (as I am sure many others can as well).
There are "sure thing" strategies. It is no myth. This particular strategy has only one flaw that I can see, and that is that it has to be done at a low enough level to stay "below radar" as to not be recognized and thus rendered ineffective, and it can not be done on a small scale (as I said) because it takes advantage of a situation that may not continue to exist indefinitely.
I appreciate all the feedback guys.
Peace,