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karoshiman
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Posts posted by karoshiman
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2) Far from being "abstract," a goal of making a living is very concrete, so long as one knows what it really costs to finance one's living. There is nothing abstract about a goal of generating a minumum of $70K per year in short-term trading profits in order to fund one's existence.
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That's right, the goal itself is crystal clear. The requirements are not. I was referring to the requirements and "what it means" to achieve that goal. I was not clear in my wording. Sorry, my bad.
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5) What good would understand "x different methodologies" do me? I would think I only need one.
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Yes, the problem is, you don't know which one. And you don't know whether you have to "invent" a methodology for yourself in order to achieve that goal (that includes also the intelligent tweaking of existing ones).
And that's also the point with reading many books, etc. You have to gain a lot of knowledge in order to be able to create a customized method which suits YOUR psychology.
Just think of the goal of becoming a surgeon or a pilot. Irrespective of the fact that you have to get degrees etc. in order to be able to work as one, no one expects that they have the abilities to work as one after only six months of studying. But so many people expect exactly that from trading.
If it helps, read "Traders" by Mark Fenton-O'Creevy, Nigel Nicholson, Emma Soane, and Paul Willman. It's a book about institutional traders, their mindset and the management of them. There you can read that starting traders have to learn for 6 months along experienced traders before being allowed to take their first trade and then only with strong supervision. And you can read also that trader managers state that it takes at least 2-3 years for their traders to be ready to trade completely on their own. They have to work with different experienced traders in order to see different trading styles.
And remember, that these are traders
1) who were smart enough to be recruited by the banks
2) who work in professional environments with many resources they can make use of
3) who are pointed into the right direction right from the start.
At least points 2) and 3) are not available for most retail traders.
In my opinion, the mindset, that making a living in trading is achievable easily is exactly the reason why most retail traders fail. This includes those who do not put enough time and effort into it, but also those who give up after six months as they could not reach their goal.
Anyway, I wish you good luck with your goal.
PS: I should note that I've underestimated trading as well and thought that it should be manageable to make a living after six to nine months... now I know better... at least for myself. I've needed about 17 months working full-time on my trading, which is still very fast from my current point of view. But the costs for this were several blown up trading accounts and a lot of pain I've went through (live trading right from the start). I sincerely wish anyone to achieve their goals faster and with much less pain.
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Though I like the idea of a dead line in order to have some pressure, it is also important that the goal one sets for him- or herself is somewhat realistic.
In addition, a newbie has - by definition - no knowledge about what is required for a trader in order to be able to make a living from trading. Hence, this goal is too abstract and not suitable for an aspiring trader to set a fixed time limit for achieving it. A better goal would be a process goal, e.g. to try to understand x different methodologies in y months or to work through 10 trading books in z months, etc.
Furthermore, one should always be careful who the person is who "sells" the idea that one can make a living in x months and what the interest of that person is.
Just my
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As for the multiple occasions when he lost what he made, those had to do with a lack of discipline more than a lack of knowledge or understanding.
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Sure, but then we have to discuss what we are talking about in this thread. OP mentioned "making a living"... To me, this requires definitely discipline in ones trading. If you are talking about knowledge or understanding, then I can teach anyone my method and the logic behind it in a day or a few days, depending on their previous knowledge on trading... but really "internalizing" (not the same as understanding) such method is a different thing to me.
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What he did not say in the same breath, and what those quoting him may have forgotten, is that it was only a matter of months after he had started as a quotation boy in a broker's office that he himself was able to read the tape quite well, amassing a fortune of "$1000" very quickly.
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Yes, but that was in the bucket shops which did not take his orders anymore as they regularly lost money on him. Hence, he could not "make a living" based on this business model anymore and had to move to the real deal... the "regular" stock market... and there he failed many times and it took him years to figure out how he has to play the stock market... ... and that is one of the most successful traders of all time... though he failed even after making his millions...
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It's amazing how many people think that you have to "get it" in trading after six months... how many people think the same when it comes to other professions?
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That would depend on the trader. But if those who take years -- if ever -- to learn how to trade were to deduct all the time they've wasted on indicators and systems and courses and books and gurus and trading rooms and dvds and software and programs and manuals and newsletters, I doubt that the actual amount of time they spent on learning how to trade would come to much more than six months.Db
Agree... but learning how the technicals work... and internalizing these and being able to apply these consistently are a different pair of shoes...
Through my trading journey I've spent also a lot of time on the useless stuff you mention, but I guess this is part of the journey in order to arrive at the desired destination. At the end, these technicals must fit the psychology of the trader... hence, they are probably more or less different for any two traders... and hence, everyone must travel this journey and take dead ends at times... there are no short cuts from my point of view...
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... that nobody can go from zero to making a living at this game in 6 months ...
How can one "make a living" in this game in 6 months?
You can earn a massive amount of money in this game in 6 months, but that does not prove that you are able to "make a living" over a period of 5, 10 or 20 years...
Don't say it's impossible to have internalized all aspects of the game - whether technical or psychological - in 6 months, but it seems not very likely. From all the various market wizard profiles I've read, I think there were just 1 or 2 who claimed that they have never experienced any huge losses... most of them blew their account at least once, either at the beginning of their career or later. Some had huge winnings in the beginning, but had their "lessons learned" later...
Ah... I did not feel any hatred toward these 1 or 2 market wizards... just a little envy
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Haven't read the document, just the statements here.
Don't think you can gather their motivational level from their payment only. Sure, there was some basic motivation to succeed, hence, the payment. But was that motivation enough to do more than the educator told them to do? I guess not...
Anyway, I have to admit that I am surprise as well that none of them was able to make a $ 2k profit in a year...
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... just skimmed some of the material in this thread coming in to post and there's a lot of quality thinking...... wish I could think at all
... and not sure this is on topic ... maybe diff kind of Bigger Picture
Chart Of The Year: The Fed Has Doubled The S&P Admits... The Fed | ZeroHedge
Good time to start thinking about shorting 24h prior to FOMC announcements, I guess... ;-)
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Other alternatives include Goldman (for those who can meet the minimums) and the bigger banks (don't know that they offer brokerage services, but I am going to check it out now)..in those cases if there were fraud, presumably the firm would have sufficient capital to indemnify losses and they would be motivated to do rather than see their rep damaged.
Hi Steve,
I was thinking the same, but from their websites I've got the impression that they provide "retail" services only to "whales" ("prime services"... no fee & margin table provided... you've got to contact a "financial advisor", etc.)... that would also be in line with my experience from a corporate perspective... they are not interested in small transactions... they leave these for others...
Regards,
k
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gosu, karoshiman
Landser, you couldn't say it with a better picture!
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To get at least a $925 profit with options one way would be with a Put with a delta of -1.00 On 6/15 the July monthly SPX 1445 Puts with a delta of -1 were asking 104.30. The same contracts were bid at 120.30 on 6/21, a difference of $16. If you bought one contract, if would cost $10,430, and you would sell it at $12,030, a $1600 profit. Lower strike prices would come closer to $925, 1380 would be close.If you are using options as a proxy for futures, you would want to minimize theta decay, the part of the option that reduces the extrinsic value over time. Deeper in the money puts or further out in time will do that, but the price of the investment goes up as does the spread.
Hi Bradhouser,
Interesting info. Where did you get the bid/ask info from?
I use Tradestation and as far as I understand I can only see the actually traded prices for the past. The put you mentioned was traded only with 3 contracts in June (if I've found the one you are talking about).
It would be interesting to see the lowest bid of that put during that time period BHS mentions (probably on June 20th), as he is interested in reducing his drawdown (and I am now interested, too
).Thanks in advance.
Regards,
k
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I am not a big fan of sim trading. But in this case, I highly recommend to sim trade options for a while parallel to your current trading and see how prices react and get a feel for it.
This sounds like it might be a good idea, as it I think it is this practical understanding that is lacking (I have already read about the theory of options pricing), and obviously I can't afford to gain this experience with real money. Any suggestions on where to start with a sim account, given that I typically only trade one or two times per month?
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Hi BHS,
I trade with Tradestation. They have a sim account, but I am not sure whether you can access this without a real money account. Check it out. However, it should be possible to trade also options at their sim accounts as Tradestation offers options trading for real money accounts.
Regarding info on options, did you check this site?
Options Trading Explained - Free Online Guide to Trading Options
They have a lot of info about options in a very compact form.
There I've found also this link where you can calculate the required margins:
Regards,
k
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Hi BHS,
I am wondering what your intentions are in the first place.
If I understand you correctly, you try to use options for your current directional trading strategy in order to reduce adverse excursions.
From my point of view, this can only be achieved by using out of money options (long put with your example) as they have no intrinsic value and don't fluctuate so much together with the underlying instrument.
However, this comes with a price... they do not much move either, when the underlying instrument moves to your favor. So, you have to expect a very strong move to be able to benefit from it.
The other possibility would be a sell call. But if that option is in the money, you have the same problem with the adverse excursion. If it is out of money, then you have the same problem as with the long put.
Also, you have to consider that you add a further layer of complexity to your trading, which comes from the option pricing itself. Siuya mentioned the different elements of options prices. Depending on which expiration date you choose, the respective option could be relatively illiquid leaving room for manipulation.
There is a reason why option strategies exist... because options are mostly used for very specific trading purposes other than pure directional trading, which can be done with futures as well and with a lot less complexity.
I am not a big fan of sim trading. But in this case, I highly recommend to sim trade options for a while parallel to your current trading and see how prices react and get a feel for it.
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My issue is this: If a fellow wants to learn how to drive a car, ride a horse, learn karate, become a doctor and so on, he will find that all trainers/instructors have some kind of professional qualification, or are a member of some professional recognised body.
If a fellow wants to invest his money and he seeks the advise of a professional, then that person too must be qualified to give financial advise.
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I think one should distinguish regulation - which to me is imposed by the resp. state - and certification systems, which are often also self-imposed by industries.
For instance, in your aforementioned examples, there is (at least in Germany, where I'm from) regulation on driving a car or becoming a doctor, but there is to my knowledge no regulation on who is allowed to teach riding horses or karate. I don't know anything about riding horses, but in karate, the teacher will very probably have a black belt as this is industry standard. But I don't think that any laws require this to be the case (haven't researched it though).
The reason for this could be, that with driving a car or working as a doctor, other people's life's depend on your actions. Whereas in horse riding and karate you will very probably hurt yourself the most, if you are not properly educated.
It's similar with trading as an individual on your own account. You will not hurt anybody else but yourself, if you are not educated properly (by someone else or by yourself, i.e. by going through the pain). And with advisors giving advise to other people on their investments or trades, there are industry self-imposed certification systems, like with CTA's for example. As it's not the life of people that is dependent on proper trading, but only money, that could be a reason for the lack of interest by states to regulate.
However, coming back to your question, from a trader's perspective I would welcome some kind of certification system in order to maybe increase the level of education for newbies. But which part of the industry should drive such implementation? I mean, who is interested to educate a huge number of people with relatively small aggregate amount of money to become better in trading? I don't see anyone...
Another problem is that trading is a very individual endeavor. The right method for one person, might not work for another due to different personalities. That makes teaching so difficult or leads to many disappointments (also due to weak expectation management). The right teacher would be someone who is able to build together with his student the right method for him. That's a very complex and time-consuming task and requires a lot from both teacher and student. I haven't seen anyone who is providing such service (would probably be also a very expensive service...).
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CAN ANYONE POST A LINK TO ANY RESEARCH THAT PROVES, SCIENTIFICALLY, THAT TA HAS ANY USE IN PREDICTING FUTURE PRICES?although i'd say tarding is more about managing probability than prediction, that staement again would suggest ta shouldnt be the core of any strategy
Nobody said that TA is suitable to predict future prices... would be great, if it would be so...
You jump in into the discussion with some bold statements, which are only backed by your statement that you know 100+ professional traders who do not use TA in their trading and now you want from us scientific research?
By the way, it's interesting to see that you weakened your initial statement that TA just does not work and hence, professional traders does not use it (they just look at charts from time to time... as a guide)... to: they use it but it's more about the extent of the use of TA between professionals and retail traders.
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errr who's 'we'? do you mean the royal 'we'? it wasnt you, it was bluehorseshoe. is that another alias you use maybe?Sorry, my bad. Thought you were referring with "you" in your earlier post to all of us taking part in the discussion. Overlooked that you were replying to a post of BlueHorseShoe.
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plus what about Mr Tudor Jones - he may not have been exclusively TA but I think his history showed he placed a fair bit of emphasis on it.
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Yes, and many of the other Wizards. But it might have also been the case that they all wanted to mislead us retail traders...
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im sure there are some who do make money. for example, electronic local seems legit. his use of ta is probably one of the most simple approaches ive seen - but its clear he has kind of reverse engineered and reinvented the wheel in to something else. you can tell a LOT of work went into discovering what hes done - work most just couldnt be fagged with. very innovative. still, ive never met him.
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First thing I've noticed on his chart (very first video on the site on Crude):
- CCI indicator
- 2 MA's
- Fibs
- all of it in a Renko chart
Very innovative...
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a guess that cta's dont use TA?
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You said, you guess we are talking about CTA's, but we didn't.
TA is the use of ohlc bars in various forms and volume data, and extrapolating other information from that data such as indicators.
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That's your definition.
as soul trader pointed out in the first post, he has found ta just dont work.
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As far as I understand his post, he says, it does not work intraday but it does on daily charts.
So, what does work in your opinion? You mentioned already MP. What else are the professional traders you have met using?
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cta's (who i guess your talking about) may use market info, but it aint trend lines, ma's, rsi and other such bs.
It's a guess, not more.
Nobody talked here about trend lines, MA's, RSI, etc.
The thread title is about "technical analysis", which is - to my understanding - defined as ANY technique that uses market information (price and volume) for the purpose of identifying trading opportunities (as opposed to fundamental analysis). As Kiwi said, Market Profile is also technical analysis.
And if you are using trend lines and MA's to hunt for stops, then you are using technical analysis too. Nobody stated here HOW to use technical analysis best.
The thread is also not about rule-based versus discretionary trading.
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they may use a chart as a guide from time to time, but they dont base their trading from one.
What does that mean?
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that reminds of some guy in Australia years ago (details are hazy and this was told to me so who knows...but general jist is the same) - he had sold his company for 30mil or so....was so adamant that the stock market was going to crash he ploughed a large proportion of his money into put options over the index. Told everyone on TV that was what he had done......lost the lot - that was in September 1987)One month to the October crash is pretty close... how do you say in English... a miss is as good as a mile?
Are New Traders Who Are Successful Hated ?
in Beginners Forum
Posted
Yes, but I had to reduce my expenses considerably as my capital base suffered a lot during my 17 months "learning period", i.e. I was drawing from my savings during that time for living expenses and my trading.
But I have to say, that I have not yet proved to be able to make a living long-term as I am not yet profitable for years (see my earlier post). My approach has to prove itself in various phases of the market. Only then can I make a statement like this.
However, how long I or anybody else has needed to become profitable is irrelevant for someone else, as people and their requirements and possibilities differ very probably. All I've wanted to say is that one should be realistic in setting goals in trading and don't underestimate what it takes in time and effort to get where you want to be.
It has been difficult for me, as it took me some time to build a customized method which meets my risk/return parameters, in which I believe 100% and which suits my personality best. There is so much BS out there, as you have already mentioned. And in fact, like BlueHorseShoe mentioned, in today's world, there is actually too much information, so that it's difficult for a newbie to distinguish good from bad.
What we have not yet discussed is the requirements one has for making a living. If you can make a living by getting a return of 8% p.a. then you can achieve your goal maybe easier/faster than someone who needs a return of 20-30% p.a. or even more on a consistent basis to be able to make a living. That should be considered as well.