[Fudomyo]

Originally Posted by mslk »

here is a great rebuttal of the article points from the guy at T3Live



-mslk

I agree with this rebuttal. I would add that the markets are tougher since the 2008 crash for a number of reasons. The market has been thinner, and without the larger block traders counterbalancing moves, price action has become more erratic. (yes, this is partially due to HST as well) but with so many participants sidelined or heavily invested in bonds or black swan funds this year, trading conditions have not been optimal.

Also, many traders become good at one thing during a long market phase where conditions remained constant. When conditions changed, many traders couldn't adapt.

This has been true since the inception of the markets. Livermore was a great plunger but lost money in accumulation phases or rallies. Rally traders have had a tough go at it since the crash. A lot of people in general could make money in an easy trending market, but now profitability requires a higher level of skill.

Personally, my profits are down this year, but abiding to the basic rules of capital preservation are necessary when conditions are choppy. The wait time between trades has increased, but there are still plenty of good trades to be had. Just not as many until market conditions improve again. Some people don't understand this.

For instance, ML Global. Corzine was playing by an old rulebook in a treacherous market. Leveraging 40% in the currencies market during a period of heavy Central Bank intervention was suicidal. On the flipside you had someone like Bill Gross, who bet wrong on inflation and missed the Bond move, but still managed to squeak out a 1% profit overall for PIMCO.
He was criticized for making a bad bet, but the firm didn't take a loss.

The markets are cyclical. When conditions improve, many of the lazy people and cowboys (who should have never been trading in the first place) will be gone, but sophisticated traders who have honed their edge through this time will reap the rewards.

It's been a great opportunity and challenge for anyone willing to step up their game.