Why do 5% of Traders Win?

[NoDoji]

Quote from Lucias:

NoDoji, I'm curious do you charge for your services? Have you ever been payed by Oliver Velez? Have you ever referred anyone to him? If you do charge, are you willing to provide a track record/brokerage statements regarding your claims?

I offer no special "services", but I've offered informal "mentoring/coaching" in how to trade using price action to around 20 ET members and I have no reason to do this for income because first of all I don't offer any specialized trading methodology (like some of the ET sponsors who do charge for services), secondly, I do not have 10+ years of experience, and thirdly, it would be a huge distraction to me to have a schedule based around teaching people to trade when I'm busy trading for a living and enjoying my very flexible schedule.

I watched a free Velez webinar way back when I was a total noob (I think it was spring or summer 2008). You had to listen to 30 minutes of a "me and my program are so great" sales pitch, but then there was a very insightful lesson in a basic price action strategy that I later used when I started day trading. I've never referred anyone to him because I really know nothing about him, but the webinar was solid.

Quote from Lucias:

Again, even if you did this 1 year then that is not the same as being able to do it the next.

Each morning I have no idea if I can do this for even another day, but I'll continue doing the same thing every day until it stops working (it's been working almost 2 years now).

Mark Douglas motto: Every moment in the market is unique
Twelve-step motto: One day at a time

 

[NoDoji]

Quote from Lucias:

I have a trading method (I really do) that has generated 50%-120% per year (depending on variation), nearly every year, for the past several years. Oh, but to trade this method you'll have to risk a whole lot per trade and its very risky.
----

Now, I'm currently trading this method but I didn't to start with because I DIDNT HAVE THE MONEY. I currently offer this system at c2. Notice that there is a "hurdle" to trading this method... namely the significant risk which can be up to $2,000 per trade per contract for the highest returning variation. [/i]

This is why you can't believe it's possible to generate at least $400/day trading a single CL contract (which requires less than $5K to trade intraday), because your method has very high risk and so requires more seed capital to trade it without blowing up first.

My scalping method takes advantage of the behavior of algos (bots) because once they trigger, they tend to produce price follow-through to a certain next level. This allows for small stops and a high win rate of 60% or better.

 

[ammo]

lucias ,larry lev... is a scammer preying on noobs, to use him as a watermark or anything else is disaster,you are standing outside a concrete building and have no idea whats inside,the other folks out there with you are just as clueless,but the ones standing there the longest are giving the others advice,you need to move to a new spot

 

[dewton]

HERE IS THE SECRET:

On a long enough timeline, every single trader will lose their entire bankroll. However at any given time, some may be profitable usually by luck.

The real winners are the ones who know when to quit trading entirely once they've become profitable and dump their money into safer investments that will be able to sustain the lifestyle that they want.

Trading is a hit-and-run arena. You go in, do your best to make a killing quickly, and quit. If you keep playing, you will lose it all- guaranteed (just give it some time and it'll happen).

 

[StarDust9182]

Quote from NoDoji:

.....

Mark Douglas motto: Every moment in the market is unique
Twelve-step motto: One day at a time [/B]

Gee I like this. Alexander Elder talks about AA meetings in a similar bent.

 

[StarDust9182]

Quote from dewton:

HERE IS THE SECRET:

On a long enough timeline, every single trader will lose their entire bankroll. However at any given time, some may be profitable usually by luck.

The real winners are the ones who know when to quit trading entirely once they've become profitable and dump their money into safer investments that will be able to sustain the lifestyle that they want.

Trading is a hit-and-run arena. You go in, do your best to make a killing quickly, and quit. If you keep playing, you will lose it all- guaranteed (just give it some time and it'll happen).

Interesting comment.

I believe that the first sentence is mathematically true but the conclusion doesn't follow. What you are saying is that on a long enough time frame all systems will hit any pre-given drawdown target. Such is the nature of trading.

Every trade you make has some luck and skill mixed in. In the long run, the luck cancels out leaving only the skill left. Market feel and adaptability is essential to successful trading over decades in my view.

NoDoji has already made a good comment about the number of successive losses to destroy an account. Just remember that infinity is a very large number and one could have 100's of such accounts. (There are actually different types of infinities, I learned in school.)

 

[Lucias]

@NoDoji
This was one program. I can do about 1% per day with a max risk of 3%-5% of account. The probability of my hitting max risk is fairly low but can still damage a month of profit. This is 1k per day. This will not produce a 10x return though.. "only" 200%-300%

This is made possible by sizing larger on my best trades. This is why I don't focus on setups. I'm okay with breaking evne and then pushing my better trades. The idea is that there is no edge anyway. This method is difficult to pull off without ability to trade multiple contracts. I don't like trading higher risk methods but all traders I know do that because nothing else works.

I think I understand what you are doing and theory behind. I offer tape reading and order flow instruction in my newsletter (fee based). I'm thinking you are placing stop market orders outside of price to get entry and in-line with the current order flow. This is a method I've uesd and am working to refine. The theory behind this method is that order flow tends to be mean reverting but when its not then it can continue. I haven't been able to scalp with this method but use something similar to that.

I agree if I could scalp/get my avg risk per trade down then it could be possible. I just haven't proven any ability to scalp. Of course, If you know when to hit then you should also know when you can provide liquidity..

@ammo
That was my sentimnent.. not sure what else you are trying to say.

 

[ssrrkk]

Quote from StarDust9182:

Interesting comment.

I believe that the first sentence is mathematically true but the conclusion doesn't follow. What you are saying is that on a long enough time frame all systems will hit any pre-given drawdown target. Such is the nature of trading.

Every trade you make has some luck and skill mixed in. In the long run, the luck cancels out leaving only the skill left. Market feel and adaptability is essential to successful trading over decades in my view.

NoDoji has already made a good comment about the number of successive losses to destroy an account. Just remember that infinity is a very large number and one could have 100's of such accounts. (There are actually different types of infinities, I learned in school.)

You are absolutely right about the infinities. The fact that it goes to infinity is irrelevant; it's the rate at which it goes there that counts. If you think this way, all of engineering is like trading. When you build a building, you don't expect it to last forever. In fact, you only build it to withstand a 100-year storm, a 100-year eathquake, and a 100-year tsunami. If you extrapolate to infinity, all buildings will fall. Same with chemistry and reactions. So the answer: if you limit the rate of your drawdown, then the probability of catastrophic ruin could be made to occur only once in 100 (or 500) years. In that case, most sane people would argue you have a viable system.

 

[dewton]

Quote from ssrrkk:

You are absolutely right about the infinities. The fact that it goes to infinity is irrelevant; it's the rate at which it goes there that counts. If you think this way, all of engineering is like trading. When you build a building, you don't expect it to last forever. In fact, you only build it to withstand a 100-year storm, a 100-year eathquake, and a 100-year tsunami. If you extrapolate to infinity, all buildings will fall. Same with chemistry and reactions. So the answer: if you limit the rate of your drawdown, then the probability of catastrophic ruin could be made to occur only once in 100 (or 500) years. In that case, most sane people would argue you have a viable system.

Yes, but that does not take into account black-swan events. We don't know how *any* system will perform in the future. You may design a 100-year system only to see it fail in the 3rd year. These are all just statistical assumptions based on the past. In any case, an exit plan needs to be in place and is the only real protection against black-swan events. Know when to quit while you're ahead. All businesses need to have an exit plan, especially trading.

The past is not indicative of the future. If you have a profitable strategy now, great! But don't make the assumption that it's going to last your entire life even if you "adapt to the markets".

Trading is just a means to achieve whatever lifestyle goals you may have. The loftier the goals, the lesser the chance they will come to fruition, the longer it will take, and the greater the chance of being exposed to black-swan events or losing your entire bankroll. Quit trading once you reach a point of profitability where you know you can dump the trading account into safer investments that can sustain the lifestyle you want. Alternatively, transfer some of your trading profits towards safer assets as you make those profits. IMO trading should not be a game of "let's just try to make as much money as possible!" Sustainability is the key in this game.

I personally have moderate/reasonable goals (relative to goals of being worth hundreds of millions) that I believe are achievable. I'm all for shooting for the stars, but we haven't heard of the countless stories of those who have shot for the stars and have gotten burned in the process.

 

[StarDust9182]

Quote from ssrrkk:

You are absolutely right about the infinities. The fact that it goes to infinity is irrelevant; it's the rate at which it goes there that counts. If you think this way, all of engineering is like trading. When you build a building, you don't expect it to last forever. In fact, you only build it to withstand a 100-year storm, a 100-year eathquake, and a 100-year tsunami. If you extrapolate to infinity, all buildings will fall. Same with chemistry and reactions. So the answer: if you limit the rate of your drawdown, then the probability of catastrophic ruin could be made to occur only once in 100 (or 500) years. In that case, most sane people would argue you have a viable system.

Your comment triggered a new thought for me. The only thing a viable system has to outlast is the life of the currency that it earns. So if the drawdown system failure lifetime is less than the lifetime of the currency or the person using the system, then certain mathematical failure is a moot point. The currency or the person or the computer will fail first.