What's wrong with the big boys?

L

LoosenUp

Hi,

I am a net profitable trader and is getting better. What I do is very simple but it does take some serious thinking and observations. I am trying to learn many things now to improve on my performance. I am trying to pick up programming to code my system ( have not started yet ) and do away with the "discipline" problem that pops up every once in a while. I am going to learn more about options on top of what I already know. There are many more things I want to learn and so little time. BUT WITHOUT DOING ALL THIS, I am already profitable. So, I cannot understand why so many hedge funds or so called big boys find it so difficult to maintain a consistently profitable record. I know size do pose problems but even if you look at the smaller ones, they are not doing very well overall. With their financial muscle, they should be able to codify any profitable systems and thus have no "dsicipline" problems or employ the best discretionary traders, they should be able to work out all kinds of correlations or autocorrelations(whatever), intermarket relationships etc etc. They can employ the best brains in quants or programming and possibly the best traders. They should be doing a lot better than what we see. What is happening here? Am I missing something? In fact, I am perplexed to be able to extract money from the market given their advantage over me. Your opinions please.
 
How long have you been trading for? If you just started, say, at March '03, you probably have a system tailored for a bull market and when the impending bear market arrives, your ass will be dog meat. I think Richard Dennis' experiences exemplifies my point.
 
Quote from LoosenUp:

Hi,

I am a net profitable trader and is getting better. What I do is very simple but it does take some serious thinking and observations. I am trying to learn many things now to improve on my performance. I am trying to pick up programming to code my system ( have not started yet ) and do away with the "discipline" problem that pops up every once in a while. I am going to learn more about options on top of what I already know. There are many more things I want to learn and so little time. BUT WITHOUT DOING ALL THIS, I am already profitable. So, I cannot understand why so many hedge funds or so called big boys find it so difficult to maintain a consistently profitable record. I know size do pose problems but even if you look at the smaller ones, they are not doing very well overall. With their financial muscle, they should be able to codify any profitable systems and thus have no "dsicipline" problems or employ the best discretionary traders, they should be able to work out all kinds of correlations or autocorrelations(whatever), intermarket relationships etc etc. They can employ the best brains in quants or programming and possibly the best traders. They should be doing a lot better than what we see. What is happening here? Am I missing something? In fact, I am perplexed to be able to extract money from the market given their advantage over me. Your opinions please.
More...

Fooled by Randomness. Nassim Taleb.

Ikspec
 
Quote from LoosenUp:

Hi,

I am a net profitable trader and is getting better. What I do is very simple but it does take some serious thinking and observations. I am trying to learn many things now to improve on my performance. I am trying to pick up programming to code my system ( have not started yet ) and do away with the "discipline" problem that pops up every once in a while. I am going to learn more about options on top of what I already know. There are many more things I want to learn and so little time. BUT WITHOUT DOING ALL THIS, I am already profitable. So, I cannot understand why so many hedge funds or so called big boys find it so difficult to maintain a consistently profitable record. I know size do pose problems but even if you look at the smaller ones, they are not doing very well overall. With their financial muscle, they should be able to codify any profitable systems and thus have no "dsicipline" problems or employ the best discretionary traders, they should be able to work out all kinds of correlations or autocorrelations(whatever), intermarket relationships etc etc. They can employ the best brains in quants or programming and possibly the best traders. They should be doing a lot better than what we see. What is happening here? Am I missing something? In fact, I am perplexed to be able to extract money from the market given their advantage over me. Your opinions please.
More...

yeah i think your a fool. i am net profitable too ever month but market is thin. what size do you trade? i want you to buy a 75 dollar stock and buy 5000 shares. you will see the specialist work you over good. you will see that he knows who you are and that he is almost focused on you.
 
Quote from brokerboy:

yeah i think your a fool. i am net profitable too ever month but market is thin. what size do you trade? i want you to buy a 75 dollar stock and buy 5000 shares. you will see the specialist work you over good. you will see that he knows who you are and that he is almost focused on you.
More...

Its sad that people always get uneasy when some traders say they are profitable. I am not asking a question about whether my profitability is sustainable. Lets just assume that I am profitable and I am trading futures, not stocks. Will somebody with some knowledge of the inner workings of the big boys answer my question at the beginning of this thread, please. My question is simply: If I alone can trade profitably after researching on my own, why is it that there are so many funds that have so many resources not able to turn in consistent profitable track records. I understand that certain stocks might have liquidity problems but there are so many other instruments that are very scaleable. Basically, how do the big funds trade? Are they mostly trading on some automated mechanical trading or do they employ good traders to trade for them? In any case, how can they not find a consistent profitable system, just one, and turn in consistent results? I am simply very surprised. I am not trying to be arrogant. Some of them have such huge drawdowns that I wonder what kind of systems they trade. But, at least they still end up profitable. The rest just bleed right from the start.
 
Until you show us some stats that show you have a stable
system that has been trading as long as some of these funds
you are simply comparing apples and oranges.

Maybe you found something that works for a small portfolio
for a very short period of time? How do you know?
Maybe you're just fooling yourself by using a sample set that
is too small?

Maybe you're surprised simply because you dont yet grasp
how difficult this game is?

When your system stops working and you take a huge hit
you wont find it so surprising any more.

Its simply not fair to compare their performance with yours
if your performance has not yet been objectively quantified
as theirs has.

When you can produce an audited trading record that shows
returns that clobbers theirs, over a period of YEARS,
*THEN* you can act surprised.


peace

axeman
 
Why don't you mention how long you've been net profitable, what kind of size, and what kind of risks you're taking?
Without mentioning these, but pointing out others have crappy returns is kind of silly... (and what kind of responses do you expect to get?)

You're not asking if your profitability is sustainable
BUT you're asking why many funds don't have consistent records?
Why not? (i.e. why not ask whether your profitability is sustainable. if it's not, that would just be another example of a "fund" that doesn't have "consistent records")
You ask "how can they not find a consistent profitable system" as if you've found one, but you don't know if it is or not.... what????

You might be "the next genius" that has found some great "system"/"edge" that exploits some "inefficiency" but I guess we can only know this after you've had a long term consistent record.

Oh, and to reply about your "who are these big funds"? I assume it varies widely. But it does come down to, there being real people behind these "big fund masks" (even if automated, someone designed it, not God or a Psychic or Batman), and people are not infallible, yada yada...
 
Thanks everybody for taking the time to answer. Sorry if I have portray myself to be arrogant. I am not. In fact, I am insecure. And you guys are right. I am not sure how long my edge will last. But what I am trading is the best so far as far as my own development is concerned. The equity curve is very smooth with minimal drawdown for a period of 2 years of backtested result and already is trading profitably for almost 1 year now. And for those who argue that this is not long a period of time, all I can say is that you are probably right but it is currently doing fine. Every month is profitable real-time on real accounts. That is why I am sort of curious why big firms with more resources cannot find something as reliable. There are so many instruments out there with so many kind of strategies that an individual trader will never have the time to study them all. But the big boys have the resources to do as much as they want.

If they truly have an edge, they will be profitable right off the blocks, just like any good system. If your edge is good enough, you will seldom see a losing month, provided it trades quite frequently over the month. I will begin to doubt my current system even if it had a single losing month because mathematically, it is quite impossible with such an edge. That is why I begin to question what are these people in big firms doing. Are they mere programmers crunching numbers so that they never get a good trading system? Maybe some found something valuable during the course of their work and decide to keep it for themselves and trade privately? From the beginning, I really question my ability to make money from the market because even Soros manage to only return an average of about 30% over a long term. Who am I to be able to consistently beat that? Later, I find that it is absolutely possible, ESPECIALLY if it is a relatively small account. Now, if I can do it? Why not the big boys? And I am not asking them to be able to generate average 30% over the long term, maybe just 10-15% will do, given their size. BUT THE FACT IS MANY CANNOT EVEN DO THAT!! And this is my question. What is it that we individual traders can do that the big funds cannot? Do others have such experience of doubt?

Thanks. Others who have PM me please direct the questions to this board so everybody can participate. And please do not question my track record or whatever again. You can assume that I am not profitable if you like but please answer my question, if you can.

Again, thank you.
 
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