Why Johnny cant trade..........

[ElCubano]

Stating that intermidiate timeframes are where you will find more success as a tader than shorter timeframe ( intraday )....

I understand where you are coming from Candletrader...this link is floating around here somewhere....maybe it is easier to align yourself with a longer timeframe.....

 

[candletrader]

Originally posted by 2Good2Care


No it is a FACT as evidenced by another fact that 90% of new traders fail. These new traders invariably choose to attempt to trade these shorter time frames (slot machine attitude) that are inherently more difficult to trade for whatever reason (whether it's "improperly aligned psyche" as you admit, whatever that is, or other factors)

You actually support MY position, not the other way around.

Please explain how I am supporting your position.... my position is not making a case for scalping or for holding longer.... you are making a case for holding longer... I am making a case for the alignment of individual personality traits with trading style, be it scalping or holding longer... a scalping mentality cannot hold stuff effectively, and a holding mentality cannot scalp stuff effectively... you would make a poor scalper, but you probably would outtrade a top scalper trying to hold longer in accordance with your style... so tell me, dear good2care, how I am supporting your position...

 

[AAAintheBeltway]

The OldTrader packs a lot of wisdom in his posts. I don't mind knocking out some 1 and 2 point ES trades. On decent size they add up. But you better have a really good handle on what you're doing, because you can trash a lot of them with one or two bad trades.

 

[dbphoenix]

Originally posted by AAAintheBeltway
The OldTrader packs a lot of wisdom in his posts. I don't mind knocking out some 1 and 2 point ES trades. On decent size they add up. But you better have a really good handle on what you're doing, because you can trash a lot of them with one or two bad trades.

It's wisdom only if it's true. I've followed one message board or another since 1995 - though they were considerably different back then - and I've never understood why so many people get so angry if someone proposes the idea that there might be another way, that one can make money doing something that is "commonly" considered to be a waste of time.

If it is a "fact" that short-term trading is inherently more likely to lose money than long-term trading, barring all other considerations, then what about those long-term investors who insist that it is a "fact" that trading of any kind is a losing proposition? Which facts are better facts? Or is does any of this qualify as fact at all?

--Db

 

[daniel_m]

Originally posted by 2Good2Care

No it is a FACT as evidenced by another fact that 90% of new traders fail. These new traders invariably choose to attempt to trade these shorter time frames (slot machine attitude) that are inherently more difficult to trade for whatever reason (whether it's "improperly aligned psyche" as you admit, whatever that is, or other factors)

if that infamous 90% do in fact unanimously choose to trade shorter time frames (which could mean a thousand different things, but i'll assume you are referring to 1min charts), then your statement that the reason johnny fails is because he attempts to trade these time frames might gain more validity.

do you have any statistics to support the idea that johnny exclusively attempts to trade the 1min timeframe? (which is old trader's contention, btw)

if you did, we could compare the failure rates of 1min johnnies and longer term johnnies and perhaps then be able to categorically state that trading one time frame over another is inherently harder.

to me, common sense does suggest that a newbie taking on big size trying to capture 1tick profits is going to be more susceptible to "big hit/deer in the headlights" losses, simply because of the speed with which things can move at that timeframe. this kind of johnny also has a lot less time to reflect on his trading than a longer term johnny, so he's probably a lot more likely to compound his errors by repeating them before being able to step back and critically evaluate his performance. however i don't think these explanations (and others relating to timeframe) are good enough to be able to conclusively state that the sole reason johnny fails is because he chooses to trade short (1min) timeframes.

 

[AAAintheBeltway]

Originally posted by dbphoenix


It's wisdom only if it's true. I've followed one message board or another since 1995 - though they were considerably different back then - and I've never understood why so many people get so angry if someone proposes the idea that there might be another way, that one can make money doing something that is "commonly" considered to be a waste of time.

If it is a "fact" that short-term trading is inherently more likely to lose money than long-term trading, barring all other considerations, then what about those long-term investors who insist that it is a "fact" that trading of any kind is a losing proposition? Which facts are better facts? Or is does any of this qualify as fact at all?

--Db

Well, sorry but I don't think OT or I are getting angry. We are offering our opinions based on some experience. If you are doing well scalping, that's great. I have said elsewhere that I have revisited some of my methods in the wake of globex. When you had to call the floor to put on a trade, trading for a point or two was just not feasible. With globex, it clearly is feasible but for me, it's a sideshow. I feel the real money is made on big moves, and a newbie is making a big mistake if he sets his sights on small profits. Everyone thinks they have to trade 12 times a day. Why? Do you think Larry Williams did that when he turned 10k into a mill in a year?

Even on the CME floor there is a huge turnover every year of locals, and most of them are poorly financed scalpers. It's just an inherently tough way to trade.

This guy Quah has a lot of people excited about his system. He just posted numbers for the first month, and as I recall his average trade is $7. That doesn't interest me, I don't care how many times a day you can do it, because you are not making enough to compensate you for the risk.

 

[candletrader]

Again, I re-iterate my view that it is not the timeframe / trading style which accounts for failure, but a misalignment of timeframe / trading style with an individual trader's psychological traits... a top scalper does not a top trend trader make... a top trend trader does not a top scalper make... however, a scalping mentality is a pre-requisite for becoming a top scalper.... likewise for trend-trading psychological traits vis-a-vis success at trend trading...

 

[dbphoenix]

Originally posted by AAAintheBeltway


Well, sorry but I don't think OT or I are getting angry. We are offering our opinions based on some experience. If you are doing well scalping, that's great.

I didn't say anyone in particular was getting angry, though this sort of discussion does tend to generate heat. And, again, neither candletrader nor I are saying that scalping is the preferred strategy. Nor are we saying that long-term investing is the preferred strategy. The point is that no given strategy has inherent value. The value is to be found in determining that strategy for which one is best-suited.

Again, this is not about scalping vs long-term investing. It's about finding whatever strategy is best for oneself. If Johnny can't trade, it's more likely that he's chosen a strategy that is inappropriate for him, not because he's made some choice that is wrong in the absolute. And there is always the possibility that he can't trade because he shouldn't be in the market at all. But that has nothing to do with timeframe.

--Db

 

[Quah]

Originally posted by AAAintheBeltway


This guy Quah has a lot of people excited about his system. He just posted numbers for the first month, and as I recall his average trade is $7. That doesn't interest me, I don't care how many times a day you can do it, because you are not making enough to compensate you for the risk.

Hey, I'll take my (net) $7/contract/trade (on ES) on the average 14 trades that require me to work for less than 45 minutes total on average, at the exact same times everyday vs. sitting here all day waiting for "the big move" and hoping I catch it.

But that's just me - and I'm sure there are other ways to go about making money doing this. Even if Larry Williams would do it another way.

 

[OldTrader]

You guys have been busy with this posting thing today! I gather none of you are scalping?

Let me see if I can clarify a few points. First, I spent some time years ago as a local on one the floors. I can tell you that I was a very active scalper at that time. I can also tell you that plenty of guys were carried out of the pit with no money left in their pockets. And these guys were probably better capitalized than some of the people currently trying to daytrade on Globex.

But some things have changed. With the advent of Globex and the improved trading platforms versus let's say the telephone, it's possible that some people can scalp. I made that point right at the beginning of my post. I also said that most can't do it. Nothing said so far changes my mind regarding that.

You know, the fact that someone might be "tempermentally suited" for scalping doesn't necessarily mean they'll be successful at it. Maybe the point here is that people need to learn to trade differently, not trade according to their temperment. Or perhaps if they can't shift their temperment, perhaps they shouldn't be traders at all.

My belief is that most of the newbie traders are undercapitalized, and therefore scalping is appealing because it seems like the risk is less. I think this is a false idea. Being undercapitalized is a risk, in and of itself. But let me describe a typical floor operation. The market runs down, the big locals get long, and now start pushing toward the highs. If they can get to the highs they know that there will be 1) stop orders from the shortsellers and 2) buy orders from the momentum traders. If they can push the market into the highs (or any other widely noticed peak), they will be able to unload all the contracts they could ever dream of unloading.

Notice this method of trading is completely different than our average scalper. He's going to be buying at that high. The guy on the floor has some significant advantages. He KNOWS who is doing what. He HEARS it all around him. What do you see on Globex? Market depth, that may be phoney? Who just traded that 50 lot you saw go by. Do you think that might be important to your scalping activity? What type of buying occurs at the new highs? Was it one of the locals buying a couple of contracts to send the print out over the quote screens? Or was it something more significant?

The ADVANTAGE of being off the floor is that you can monitor signficant information that the floor trader can't. But you'll never match him in terms of speed or knowledge of the paper. You can't.

So why not USE your advantage? Why not sit back, and wait for your opportunities. Why not STUDY what causes the market to make a decent move. And by the way, I'm not talking about LONG TERM, I'm talking about bigger moves in the short term...thats all.

The big money has always been made sitting with a position and letter the market work for you. Globex didn't change that. Let me know when you see a scalper on the Forbers 400 list. Until then, why not learn how to sit with a position at least for a little while....yesterday you could have bought it and sat an hour and made a large 20+ point move. Why be a "short stroker"?

OldTrader