Why Do People Trade when the Failure Rate is So High?
- Thread starter stockgirl
- Start date
Stockgirl created a thread to examine the trading failure rate and whether there might be a way to, in a regulatory way, the ameliorate this condition.
I propsed a solution based upon my view of how trader failure affects others, especially families. My reference was the work of Franco Modigliani who won the 1985 Nobel prize for dealing with family disruption due to unforseen difficulties.
My solution simply involved risk transference by contract to a pool whereby the intial capital was restored should a sequence of performances not ensue. A premium was paid for the transference of risk and the pool agregated capital to cover the risk. The government highly regulates this exisitng large risk transference industry.
QED.
In this thread, since stockgirl stopped participating, a lot of side topics have come up and the usual bantering has resulted.
The conveyor belt of traders beginning and coming to failure is an interesting one. There is so much unnecessary failure and, more important, the mediocre performance of those who just hang on until they leave to improve their lot with a better paying activity.
It is interesting to track the various paths to failure and to consider just what has to be done to divert a person from failure of any type. It is more interesting to track mediocre traders and consider what they could do to move to higher and higher levels of performance.
To deal with these issues, rather narrowly, a group of us are building two things in order that we may see how an overall and detailed set of diversions will work. At the same time, we are looking at how specific elements can be used to improve performance by application from level to level.
The unobtrusive monitoring system (an individualized Excel log) that is coupled to their participation on a set of websites will show every step participants are taking to divert away from failure and to better levels of performance.
We found it necessary to have a means of finding out what knowledge, skills and experience was causing screw ups. Once found they, automatically, are presented with the alternative comparitive view and if they accept it, then they are given the opportunity to move forward to higher ground.
None of this is related to or based upon the CW (Conventional wisdom) most prevelant paradigm related to speculation or gambling (the source of most failure, we believe). Our focus is on the alternative of: how markets works, their actual real potential for delivering profits, and the trader sharing responsibilities to work with the markets. We build upon success in least risk conditions that exist all the time during market operations.
Most people feel that the markets always have winners and losers. Our view is that is not a good idea to be a loser if there is another choice available especially with due consideration to family reponsibilities.
As more and more people turn their attention to what the markets continually offer, it will probably turn out that the emphasis will be on "extraction" efforts most closely tied to effectivenss and efficiency.
It is tough decision to adopt a quant and qual viewpoint of examining the markets from a performance viewpoint rather than a risk viewpoint. It is very different path than the usual path for a person to move, in real time trading, from probability of trades to extraction of measured potential.
Think of how many traders start down the road with an entry and exit type orientation. Think of how difficult it is to be able to look at the markets to see linking one trade with another and doing it. Were that to occur, how would the trader practice? What would be the modus of doing observations? When a person is doing simultaneous entries and exits what is he doing at that time to succeed? What does he do when he is not, at the moment, doing simultaneous entries and exits?
It is anything but predicting and dealing with protection. It is more the examining of aspects of the market that may be treated in a conditional manner (all aspects may be treated this way). Data sets result and their combinations are finite. Correspondingly, each has a specific associated conclusion. Any conclusion can be used to make an appropriate decision (there are five decisions that traders use). The two most frequent do not demand an action. Another two that do demand action are used rarely. The remaining decision is the only one that deals with manifesting "success" for that period of time.
Failure comes from not collecting data sets.
Failure comes from not being able to "know" what conclusion is appropriate for a given element of the finite number of data sets.
FAILURE COMES FROM NOT MAKNG A DECISION REGARDING A KNOWN CONCLUSION
FAILURE COMES FROM NOT ACTING ON DECISIONS THAT HAVE BEEN MADE.
FAILURE, MOST OF ALL, COMES FROM NOT FOLLOWING AN INTELLECTUAL ROUTINE THAT ALLOWS A PERSON TO COLLECT DATA SETS, DRAW CORRECT CONCLUSIONS FOR THE DATA SET, MAKE PROPER DECISIONS FROM THE ONE CONCLUSION ON THE TABLE, AND TAKE ACTION WHEN IT IS CALLED FOR
NOT FOLLOWING A COMPREHENSIVE ROUTINE IS HAS A COMMON SUBSTITUTE. The common substitute is only doing monitoring and analysis and repeating monitoring and analysis. Often a sigle element is involved in monitoring instead of a data set that sufficiently characterizes the market activity. This where the common discussions of "reacting to the markets" comes from. "Reactions" are often strongly related to price only monitoring. Where does "protection" come from for these people? they need to tranfer their risk to a place for a premium until they either perform of give control of their capital to a pool that performs for them.
Failure get a foothold occurs very early in a beginning trader's life especially if he is not following a routine and if he is not able to see what provides the data sets of the markets activity.
Most traders never get to see the market in the first place. If they are seeing anything, there is little chance the data they monitor is suitable for "extracting" the optimum from the markets.
Families of most traders are swinging in the wind as you can see.
You can regard this as a reasoned and comprehensive view of the topic. Everyone is at choice: to get shaped up or to fail.
I propsed a solution based upon my view of how trader failure affects others, especially families. My reference was the work of Franco Modigliani who won the 1985 Nobel prize for dealing with family disruption due to unforseen difficulties.
My solution simply involved risk transference by contract to a pool whereby the intial capital was restored should a sequence of performances not ensue. A premium was paid for the transference of risk and the pool agregated capital to cover the risk. The government highly regulates this exisitng large risk transference industry.
QED.
In this thread, since stockgirl stopped participating, a lot of side topics have come up and the usual bantering has resulted.
The conveyor belt of traders beginning and coming to failure is an interesting one. There is so much unnecessary failure and, more important, the mediocre performance of those who just hang on until they leave to improve their lot with a better paying activity.
It is interesting to track the various paths to failure and to consider just what has to be done to divert a person from failure of any type. It is more interesting to track mediocre traders and consider what they could do to move to higher and higher levels of performance.
To deal with these issues, rather narrowly, a group of us are building two things in order that we may see how an overall and detailed set of diversions will work. At the same time, we are looking at how specific elements can be used to improve performance by application from level to level.
The unobtrusive monitoring system (an individualized Excel log) that is coupled to their participation on a set of websites will show every step participants are taking to divert away from failure and to better levels of performance.
We found it necessary to have a means of finding out what knowledge, skills and experience was causing screw ups. Once found they, automatically, are presented with the alternative comparitive view and if they accept it, then they are given the opportunity to move forward to higher ground.
None of this is related to or based upon the CW (Conventional wisdom) most prevelant paradigm related to speculation or gambling (the source of most failure, we believe). Our focus is on the alternative of: how markets works, their actual real potential for delivering profits, and the trader sharing responsibilities to work with the markets. We build upon success in least risk conditions that exist all the time during market operations.
Most people feel that the markets always have winners and losers. Our view is that is not a good idea to be a loser if there is another choice available especially with due consideration to family reponsibilities.
As more and more people turn their attention to what the markets continually offer, it will probably turn out that the emphasis will be on "extraction" efforts most closely tied to effectivenss and efficiency.
It is tough decision to adopt a quant and qual viewpoint of examining the markets from a performance viewpoint rather than a risk viewpoint. It is very different path than the usual path for a person to move, in real time trading, from probability of trades to extraction of measured potential.
Think of how many traders start down the road with an entry and exit type orientation. Think of how difficult it is to be able to look at the markets to see linking one trade with another and doing it. Were that to occur, how would the trader practice? What would be the modus of doing observations? When a person is doing simultaneous entries and exits what is he doing at that time to succeed? What does he do when he is not, at the moment, doing simultaneous entries and exits?
It is anything but predicting and dealing with protection. It is more the examining of aspects of the market that may be treated in a conditional manner (all aspects may be treated this way). Data sets result and their combinations are finite. Correspondingly, each has a specific associated conclusion. Any conclusion can be used to make an appropriate decision (there are five decisions that traders use). The two most frequent do not demand an action. Another two that do demand action are used rarely. The remaining decision is the only one that deals with manifesting "success" for that period of time.
Failure comes from not collecting data sets.
Failure comes from not being able to "know" what conclusion is appropriate for a given element of the finite number of data sets.
FAILURE COMES FROM NOT MAKNG A DECISION REGARDING A KNOWN CONCLUSION
FAILURE COMES FROM NOT ACTING ON DECISIONS THAT HAVE BEEN MADE.
FAILURE, MOST OF ALL, COMES FROM NOT FOLLOWING AN INTELLECTUAL ROUTINE THAT ALLOWS A PERSON TO COLLECT DATA SETS, DRAW CORRECT CONCLUSIONS FOR THE DATA SET, MAKE PROPER DECISIONS FROM THE ONE CONCLUSION ON THE TABLE, AND TAKE ACTION WHEN IT IS CALLED FOR
NOT FOLLOWING A COMPREHENSIVE ROUTINE IS HAS A COMMON SUBSTITUTE. The common substitute is only doing monitoring and analysis and repeating monitoring and analysis. Often a sigle element is involved in monitoring instead of a data set that sufficiently characterizes the market activity. This where the common discussions of "reacting to the markets" comes from. "Reactions" are often strongly related to price only monitoring. Where does "protection" come from for these people? they need to tranfer their risk to a place for a premium until they either perform of give control of their capital to a pool that performs for them.
Failure get a foothold occurs very early in a beginning trader's life especially if he is not following a routine and if he is not able to see what provides the data sets of the markets activity.
Most traders never get to see the market in the first place. If they are seeing anything, there is little chance the data they monitor is suitable for "extracting" the optimum from the markets.
Families of most traders are swinging in the wind as you can see.
You can regard this as a reasoned and comprehensive view of the topic. Everyone is at choice: to get shaped up or to fail.
I was a bit harsh in my sarcasm, forgive me.
I just find it rather pointless to debate if women leaving the home are causes of inflation with someone who claims universal suffraged "fucked up" a lot of things. It seems you have your cart is before the horse, ethically speaking.
My point was to ferret out the fact that you have only ideas that come from a mixture of your own sentiment and some abstract theories. You could argue the incremental increase (not catastrophic) of labor supply over the decades depressed wages, but you'd have to do real research that balanced economic factors and political events like war and industrialization into the equation.
It's easier to assume you haven't done this and that you are a young guy, possibly without much college experience, who has some rather backwards social views. If you hold such views, you should be prepared to be challenged with a little less chartiy.
Apologies to ET for going off topic also.
LMAO! Now that's the best answer of all.
Self-confident. People think they are better than they in reality are. People think they perform better than their peers. Before entering to Wall Street, the trader will classify himself among the 5% winners, not among the 95% losers. The self-confident could lead to over-confident when having primary success and that is devastating.
Why do traders fail, try this.
I will send everybody here a disassembled automatic transmission from a 7 series BMW, and I will even send it in a box, with the repair manual.
You will have to repair and assemble it. The repair will pay you 27 hours at $40.00 per hour. Now I will charge you $30.00 each time you assemble and or disassemble the transmission. And this will be your only income, nobody is paying you to train.
Remember now, you do not get payed until the transmission is properly repaired. How many will take me up on this?
But because people see traders sitting in front of a a computer screen and they have 25k or so to open an account they think it is easy. The tech guy thinks, "oh computers I can do that", the professor thinks "I have a phd, I am smarter than all of those reactionaries on wall street" and Fredo thinks "I am smart I can take care of things. "
Now there is no way anybody would say.
Muffy "Oh Chad dahling, the transmission has just failed in my bimmier could you repair it, I need to go to gucci's for a new handbag tomorrow"
Chad " Why yes Muffy my little crepe, let me get my Armani coveralls, and my ergonomically designed air tools and we will have you back on the road before you can say The Hamptons.
You know what, some times the successful traders are the most unlikely. They usually have a high level of intuitive intellect, and a very strong ability to put their trading into perspective. As one famous CME trader told me once, "if you are in a trade and you have set your stop and take profit, as a professional, you should be able to walk away, and not even think of the trade, staring at the screen will not change the outcome". That is the perspective that all traders must have, and few achive.
Anyway my thoughts from the VIPERPIT
The Ever Grateful To Don For His Input VIPER
I will send everybody here a disassembled automatic transmission from a 7 series BMW, and I will even send it in a box, with the repair manual.
You will have to repair and assemble it. The repair will pay you 27 hours at $40.00 per hour. Now I will charge you $30.00 each time you assemble and or disassemble the transmission. And this will be your only income, nobody is paying you to train.
Remember now, you do not get payed until the transmission is properly repaired. How many will take me up on this?
But because people see traders sitting in front of a a computer screen and they have 25k or so to open an account they think it is easy. The tech guy thinks, "oh computers I can do that", the professor thinks "I have a phd, I am smarter than all of those reactionaries on wall street" and Fredo thinks "I am smart I can take care of things. "
Now there is no way anybody would say.
Muffy "Oh Chad dahling, the transmission has just failed in my bimmier could you repair it, I need to go to gucci's for a new handbag tomorrow"
Chad " Why yes Muffy my little crepe, let me get my Armani coveralls, and my ergonomically designed air tools and we will have you back on the road before you can say The Hamptons.
You know what, some times the successful traders are the most unlikely. They usually have a high level of intuitive intellect, and a very strong ability to put their trading into perspective. As one famous CME trader told me once, "if you are in a trade and you have set your stop and take profit, as a professional, you should be able to walk away, and not even think of the trade, staring at the screen will not change the outcome". That is the perspective that all traders must have, and few achive.
Anyway my thoughts from the VIPERPIT
The Ever Grateful To Don For His Input VIPER
Quote from Dogballoon:
I was a bit harsh in my sarcasm, forgive me.
I just find it rather pointless to debate if women leaving the home are causes of inflation with someone who claims universal suffrage "fucked up" a lot of things. It seems you have your cart is before the horse, ethically speaking.
This is the problem. You haven't listened to a word I've said. All you done it waited for your turn to speak.
I never said: universal suffrage "fucked up" a lot of things.
I already explained this. I WAS QUOTING SOMEONE ELSE!!!!!!!!!!!
And once again you attack the person instead of their argument., i.e. "It's easier to assume you haven't done this and that you are a young guy, possibly without much college experience, who has some rather backwards social views."
I told you I dont have experience in economics earlier, and now you use it to discredit me. You may be older, (which I doubt) but experience cannot be measured in years.
I worked as a paralegal for 4 years and found that a "YOUNG PERSON" with no "EXPERIENCE" or training could help me more than the unionized workers who had 25 years of so called "EXPERIENCE" After 6 months all of us paralegals started bringing our questions to him, even though he was just a kid who read government procedural books on law.
Grow up for Christ's sake!
oh and p.s. you USA constitution spitting on dogmatist.
I'd say that this trend toward less liberty and greater consolidation of power in the hands of the few is going to continue in every technologically advanced country, regardless of the political party in power.
The more citizens of any country become categorized and monitored -- whether it be according to their credit, consumption habits, taxes, entertainment tastes, speeding, potential risk factor for crime/terrorism -- the more they become objects of anyone who has the capability of analyzing, archiving, and tailor fitting their actions toward you according to that data. Your awareness and inability to escape this monitoring will have an unconscious effect on your behavior as well.
Advertisers, corporations, law enforcement agencies, politicians all would find such data useful. As technology advances, this degree of monitoring will only increase. The more rationalized a society's citizens, the more pacified they are, and the less able they will be to enjoy any degree of liberty that was a reality in the past civilizations.
You are a collaborator (like most of those who lack courage and think of themselves above all else.) Instead of wiping your ass with your country's flag why don't you use the constitution, at least then you could make a point without standing up for your beliefs.
<i>Quote:
I had exactly the same reaction regarding Stockgirl's comment.It's absolutely true Universal Suffrage Movement fucked up lots of things(there is a good article on the subject on www.mises.org)</i>
I am not going to waste much time on this, though it's worth a moment to make a point to you about intellectual honesty. Tell me who you were quoting. Where is this quote?
In terms of absolute dollars yes...but not in terms of % what they make not even close. That Heinz woman made 10 million and paid 1 million in taxes. That's just BULLSHIT! Mean while, hard working middle class families pay in 25 to 50% of what they earn, struggle to make ends meet, and at the end of the year, they have a few thousand bucks, and 15k in equity in their homes.