Does anyone here actually make money trading?

[black bear]

Practical advice

While PT may not win this year's Tact Award, I understand where he's coming from and I agree with him. One gets tired of all the hypotheticals and the backtested "results" and the extrapolations and the I read somewheres and the I know somebody whos and the pretend trading done to gain stature on a message board. Add to that the misplaced emphasis on expectancy ratios and the inevitable cry for cutting through all the bs and providing something practical and one can understand the sort of frustration exhibited by PT.

Those who are really and truly trading with real money and are not awash in a sea of denial and rationalization will understand. Or not.

Db

Hi Db,

Your status well deserved and all of your posts I have read are very good so any budding trader would do far worse than start there IMO.

Practical advice for someone who is frustrated

The market goes up and down it does honest :|

No one can predict future direction NO ONE but you can measure it.

All bars or candles /whatever are time periods where the price as been thats all.

Humans desire to control every thing, they on the whole will not except they cannot control the outcome of their selection/choice Long or Short in the market so they fill the chart or whatever up with mass"s of information to include past studies etc to keep this illusion preserved.

When you come to terms with this you will improve and be happier and have FUN.


Andy AKA

 

[dbphoenix]

Agree with you on that one DB. IMO the psychological aspect is only present when some aspect of technical understanding is not in place. It is this missing link that forces you to think and rethink and redevelop your system.

Or one can bypass psychology entirely and simply automate whatever fabulous system his computer has coughed up. Then he can spend the rest of his day filling out deposit slips

Db

 

[Profitaker]

by the 2% risk you mean per trade? If so I think thats a heck of a lot. 10 bad trades and you are 20% down. I guess for longer term trading its ok but trading 10 to 30 min candles I dont risk more than 0.3% per trade.

And if your capital is down 20% you then need to make (0.20 / (1-0.20) ) 25% just to get back to where you were. This means increasing the risk upwards from 2% per trade, when you should in fact be reducing risk. This is what you’re up against when you target pie-in-the-sky returns.

Now this is very different from:-

simply making oneself available for whatever the market is willing to provide.

And if you’ve made 100% return or more – excellent.

I’m amazed so few acknowledge, never mind appreciate, the subtle (but very significant difference) here.



Hey DB, I wouldn't say it's "frustrating", more taxing ! And yes, I failed the diplomatic course LOL.

 

[firewalker99]

Or one can bypass psychology entirely and simply automate whatever fabulous system his computer has coughed up. Then he can spend the rest of his day filling out deposit slips

Db

You mean like this guy?
http://news.bbc.co.uk/2/hi/business/7109805.stm

 

[grantx]

Nine,

Excellent post #113; compliments DBphoenix’s “simply making oneself available for whatever the market is willing to provide.” Both cut through the bs and tedium.

Grant.

 

[dbphoenix]

Practical advice for someone who is frustrated

The market goes up and down it does honest :|

No one can predict future direction NO ONE but you can measure it.

All bars or candles /whatever are time periods where the price as been thats all.

Humans desire to control every thing, they on the whole will not except they cannot control the outcome of their selection/choice Long or Short in the market so they fill the chart or whatever up with mass"s of information to include past studies etc to keep this illusion preserved.

When you come to terms with this you will improve and be happier and have FUN.


Andy AKA

All good points.

The future is unknowable (see Douglas). The best one can do is assess probabilities. Even so, one must avoid coloring them. "VSA", for example, says that under certain conditions (e.g., a "no demand" bar), lower prices will follow. That doesn't mean that price will collapse, that price will fall for days on end, that a bear market will ensue. Price may fall for only a few points, for only a few minutes. Or even less. Maybe much more. In any case, it's up to the trader to figure out what to do with all this, and I suggest that he will be in a better position to do so if he's studied price movement (i.e., watched price move) rather than focus on computerized backtests.

Bars, candles, etc are nothing more than a chosen means of displaying price movement. They have no mystical significance in and of themselves. The "hammer" of which one is so fond exists only in the time or volume interval one has chosen. Price itself has dropped, then risen. What matters is the drop and the rise, not the choice the trader has made in displaying it.

As for filling up the charts, one does tend to plot less and less as the years go by (though this is not a given). Not only does this make price movement clearer (and decisions easier to make), it's cheaper. As for fun, depends on whether one finds more fun in watching traders parry and thrust or in watching colored lines cross and criss-cross. Each to his own.

Db

 

[dbphoenix]

For your files, PT:

Using the example of trading leveraged securties, 50% per month is very doable. Example for trading 1 ES contract:

a) 1 contract has a performance bond of $2,000 daytrading performance bond.
b) 1 contract can easily produce an average of $100 gain (that's 2pts) per day on a weekly basis.
c) so, with that $2,000, you can produce $500 per week, or $2,000 per month.
d) scalability is determined by managing the risk respresented by each contract, not by increasing the number of contracts according to the performance bond.

I especially like the "easily" part . . .

Db

 

[black bear]

Time please

All good points.

The future is unknowable (see Douglas). The best one can do is assess probabilities. Even so, one must avoid coloring them. "VSA", for example, says that under certain conditions (e.g., a "no demand" bar), lower prices will follow. That doesn't mean that price will collapse, that price will fall for days on end, that a bear market will ensue. Price may fall for only a few points, for only a few minutes. Or even less. Maybe much more. In any case, it's up to the trader to figure out what to do with all this, and I suggest that he will be in a better position to do so if he's studied price movement (i.e., watched price move) rather than focus on computerized backtests.

Bars, candles, etc are nothing more than a chosen means of displaying price movement. They have no mystical significance in and of themselves. The "hammer" of which one is so fond exists only in the time or volume interval one has chosen. Price itself has dropped, then risen. What matters is the drop and the rise, not the choice the trader has made in displaying it.

As for filling up the charts, one does tend to plot less and less as the years go by (though this is not a given). Not only does this make price movement clearer (and decisions easier to make), it's cheaper. As for fun, depends on whether one finds more fun in watching traders parry and thrust or in watching colored lines cross and criss-cross. Each to his own.

Db

Hi Db

I refer you to ~

"(i.e., watched price move)"

"As for fun, depends on whether one finds more fun in watching traders parry and thrust or in watching colored lines cross and criss-cross. Each to his own."

Top very important IMO,

the next a Pop Db,:?: or am I being a little sensative

Coloured lines, ma"s ema"s rsi, macd, oh ye and volume all bs of no importance whats so ever NONE comforts to the trader thats all, and dangerous ones if not understood.

All illusions of control to make the trader feel better and justify their selection.

The much joked about toss of a coin is just as good if one as spent enough time

"(i.e., watched price move)"

Have Fun or pack it in if your not, your wasting your most valuble asset TIME

Have Fun and mind how you go all

Andy AKA

Your a far better trader than me IMO at least thats what I feel from reading your previous posts etc so I will close with your words Db which are fine words in deed ..................

Everywhere there are people telling us that this path or that path is the one we should take. How are we to decide? Most of us end up stumbling along through a trial and error exploration of various systems, methods, techniques, and whatnot. Some of us find something that works. A great many do not, and quit in frustration, or broke. (John Forman)

 

[dbphoenix]

the next a Pop Db,:?: or am I being a little sensative
[/I]

Don't know what you mean here. Did I step on a toe?

As for my being a better trader, don't jump to any assumptions. I probably know more about how volume and price relate to each other after twenty years than someone who started just last week, but one still has to translate that into trading activity. And given how few trades I make, watching me trade must be less exciting than watching paint dry.

But then, I'm not in it for the action

Db

 

[jase243]

MitchT, so many people probably fail or don't make much money because they like money and are to greedy. Don't get me wrong as I like money to, don't we all. But what some people most likely do is when they purchase shares and they loose value then they will leave them in, in hope that they will go back up and then make them some money instead of cutting your loses. Another thing is that they don't plan enough before hand when making an investment and just put money into something that they don't even know much about. Also when someones investment grows, they leave it in, in the hope that it will keep growing which is the wrong thing you should do, you should always lock in profits by getting some of it out and if not all of it once you have made a percentage of your investment back. When investing real money, don't worry about trying to get more, just worry about making smaller profits rather than being greedy and trying to get larger profits.

 

[Depth Trade]

Yeah, I'm making money.

I'm up %7.5 since last night long usd/jpy from 107,40 risk being %1.0


DT

 

[black bear]

Watching paint

Don't know what you mean here. Did I step on a toe?

As for my being a better trader, don't jump to any assumptions. I probably know more about how volume and price relate to each other after twenty years than someone who started just last week, but one still has to translate that into trading activity. And given how few trades I make, watching me trade must be less exciting than watching paint dry.

But then, I'm not in it for the action

Db

Db

No, not at all, and I have never assumed anything in my life so off the hook there

Just a simple trader who executes a simple plan from 8am -1pm or 2pm most days in one market with a lot still to learn.

But not from you my friend

Depends who your with and what you have just painted, can be real good Fun just watching, same as trading that bit in fact

You have done all the hard work, its working out and you get to watch it dry, just before the paint goes off you whip the masking paper off, admire your work for a second then onto the next job.

Just a second, thats important to

Good luck on your next trade Db

Andy AKA

 

[nine]

Will going for a 100% return pa per se ruin a trader? Per se, maybe not. But doing so puts the cart before the horse, and that can lead to problems.

I would agree with this point 100%. Every day I trade with the goals of execution excellence, clear perception, and maintaining a good state.

The market will take care of the days p&l and my money management takes care of risk of ruin and how much my effectiveness and the market's largess will contribute to the account. After-market testing takes care of any small alterations my strategy requires to change as the market changes.

Thank you Grant and Andy.

This is also why I put up my earlier quote in the thread:

Traders Prayer

Step One: Unconscious Incompetence.

This is the first step you take when starting to look into trading. you know that its a good way of making money because you've heard so many things about it and heard of so many millionaires.

Unfortunately, just like when you first desire to drive a car you think it will be easy - after all, how hard can it be?? - price either moves up or down - what's the big secret to that then - lets get cracking! Unfortunately, just as when you first take your place in front of a steering wheel you find very quickly that you haven't got the first clue about what you're trying to do. you take lots of trades and lots of risks. when you enter a trade it turns against you so you reverse and it turns again .. and again, and again. You try to turn around your losses by doubling up every time you trade - sometimes you'll get away with it but more often than not you will come away scathed and bruised Well this is stage one - you are totally oblivious to your incompetence at trading.Stage one can last for a week or two of trading but the market is usually swift and you move onto stage two.

Stage Two - Conscious Incompetence

Stage two is where you realize that there is more work involved in this and that you might actually have to work a few things out. You consciously realize that you are an incompetent trader - you don't have the skills or the insight to turn a regular profit. During this phase you will buy systems and e-books galore, read websites based everywhere from Russia to the Ukraine. and begin your search for the holy grail.

During this time you will be a system whore - you will flick from method to method day by day and week by week never sticking with one long enough to actually see if it does work. every time you came upon a new indicator you'll be ecstatic that this is the one that will make all the difference. You will test out automated systems on Meta-trader, you'll play with moving averages, Fibonacci lines, support & resistance, Pivots, Fractals, Divergence, DMI, ADX, and a hundred other things all in the vein hope that your 'magic system' starts today. you'll be a top and bottom picker, trying to find the exact point of reversal with your indicators and you'll find yourself chasing losing trades and even adding to them cos you are so sure you are right.

You'll go into the live chat room and see other traders making pips and you want to know why it's not you - you'll ask a million questions, some of which are so dumb that looking back you feel a bit silly. You'll then reach the point where you think all the ones who are calling pips after pips are liars - they cant be making that amount cos you've studied and you don't make that, you know as much as they do and they must be lying. but they're in there day after day and their account just grows whilst yours falls. You will be like a teenager - the traders that make money will freely give you advice but you're stubborn and think that you know best - you take no notice and over leverage your account even though everyone says you are mad to - but you know better. You'll consider following the calls that others make but even then it wont work so you try paying for signals from someone else - they don't work for you either.

This phase can last ages and ages - in fact in reality it can last well over a year - My own period lasted about 18 months. Eventually you do begin to come out of this phase. You've probably committed more time and money than you ever thought you would, lost 2 or 3 loaded accounts and all but given up maybe 3 or 4 times.



Then comes stage 3 Stage 3 -

The Eureka Moment Towards the end of stage two you begin to realize that it's not the system that is making the difference.

You realize that its actually possible to make money with a simple moving average and nothing else IF you can get your head and money management right You start to read books on the psychology of trading and identify with the characters portrayed in those books. Finally comes the eureka moment.

The eureka moment causes a new connection to be made in your brain. You suddenly realize that neither you, nor anyone else can accurately predict what the market will do in the next ten seconds, never mind the next 20 mins. You start to work just one system that you mould to your own way of trading, you're starting to get happy and you define your risk threshold. You start to take every trade that your 'edge' shows has a good probability of winning with.

When the trade turns bad you don't get angry or even because you know in your head that as you couldn't possibly predict it it isn't your fault - as soon as you realize that the trade is bad you close it .

The next trade will have higher odds of success cos you know your simple system works. You have realized in an instant that the trading game is about one thing - consistency of your 'edge' and your discipline to take all the trades no matter what. You learn about proper money management and leverage - risk of account etc etc - and this time it actually soaks in and you think back to those who advised the same thing a year ago with a smile

You weren't ready then, but you are now. The eureka moment came the moment that you truly accepted that you cannot predict the market.

Then comes stage four Stage 4 -

Conscious Competence Ok, now you are making trades whenever your system tells you to. You take losses just as easily as you take wins You now let your winners run to their conclusion fully accepting the risk and knowing that your system makes more money than it loses and when you're on a loser you close it swiftly with little pain to your account

You are now at a point where you break even most of the time - day in day out, you will have weeks where you make 100 pips a weeks where you lose 100 pips - generally you are breaking even and not losing money.

You are now conscious of the fact that you are making calls that are generally good and you are getting respect from other traders as you chat the day away. You still have to work at it and think about your trades but as this continues you begin to make more money than you lose consistently. You'll start the day on a 20 pip win, take a 35 pip loss and have no feelings that you've given those pips back because you know that it will come back again. You will now begin to make consistent pips week in and week out 25 pips one week, 50 the next and so on. This lasts about 6 months

Then comes Stage Five Stage Five - Unconscious Competence Now were cooking - just like driving a car, every day you get in your seat and trade - you do everything now on an unconscious level.

You are running on autopilot. You start to pick the really big trades and getting 100 pips in a day is becoming quite normal to you. This is trading utopia - you have mastered your emotions and you are now a trader with a rapidly growing account. You're a star in the trading chat room and people listen to what you say. you recognize yourself in their questions from about two years ago.

You pass on your advice but you know most of it is futile cos they're teenagers - some of them will get to where you are - some will do it fast and others will be slower - literally dozens and dozens will never get past stage two but a few will. Trading is no longer exciting - in fact it's probably boring you to bits - like everything in life when you get good at it or do it for your job - it gets boring - you're doing your job and that's that.

You can now say with your head held high "I'm a currency trader."

 

[andrewbee]

Or one can bypass psychology entirely and simply automate whatever fabulous system his computer has coughed up. Then he can spend the rest of his day filling out deposit slips

Db

You say that like its's a bad thing.

 

[Dinos]

Make money trading - YES

In short, plain and simple, a very big yes, I trade a few systems, long & short term position trading and day trading, each has its own strategy and successful. Day trading imo = exitement of the chase, the stalking, the aim and the hit, in and out, points in the bag. I have being trading 12 years 7 years full time, why am I successful, simple a well exucuted system for each, each plan traded with discipline and without emotion, excellent risk and money management, distachment from others points of view, trade what I see not not I think and ultimately trade ONLY with the trend, if I get the entry point wrong, I have a good chance of getting out unscathed, trade against the trend, I have a great chance of getting stuffed!. Trading doen't have to be difficult, traders make it difficult. .

A fool and his money are easily parted, thats why I still have have my pot!!

 

[BSD]

Firewalker, thanks for this link:

..."Hedge funds and banks now offer talented mathematicians the chance to earn the sort of money more usually associated with top professional footballers and rock stars.

"My model is one of those which prints money," says maths graduate William Hooper from the comfort of his luxury home in Hampstead, one of London's most desirable suburbs.

The mathematical model he has designed to trade currencies does not of course literally print money but it has made huge sums for both him and the bank where he works.
He will not reveal exactly how much he earns but he says that so-called algorithmic traders are usually paid about 20% of the money their model makes and the typical algorithmic trader will make his employer about US $10-20 million a year.

Those prepared to take bigger risks, he says, can make billions.

His website shows him enjoying the high life in the company of beautiful girlfriends.

He says he enjoys spending his money on hi tech gadgets, art and champagne and, as his model does all the trading, he has plenty of time to work out in the gym and to go on adventure holidays.

"It's a nice way to trade," he says."...

Googled around, but can't seem to find his web site touted in the article ?!

Might be having a blonde moment, but do you or anybody else have it handy ?

Thanks.

 

[firewalker99]

Firewalker, thanks for this link:

..."Hedge funds and banks now offer talented mathematicians the chance to earn the sort of money more usually associated with top professional footballers and rock stars.
...

Googled around, but can't seem to find his web site touted in the article ?!

Might be having a blonde moment, but do you or anybody else have it handy ?

Thanks.

You were looking for those "...enjoying the high life in the company of beautiful girlfriends" right?

Sorry, didn't find it either... Did come across the following article :
http://www.jesse-livermore.com/blog/pretty-girls-you-are-bad-trades/

 

[Citizen2007]

Firewalker, thanks for this link:

..."Hedge funds and banks now offer talented mathematicians the chance to earn the sort of money more usually associated with top professional footballers and rock stars.

"My model is one of those which prints money," says maths graduate William Hooper from the comfort of his luxury home in Hampstead, one of London's most desirable suburbs.

The mathematical model he has designed to trade currencies does not of course literally print money but it has made huge sums for both him and the bank where he works.
He will not reveal exactly how much he earns but he says that so-called algorithmic traders are usually paid about 20% of the money their model makes and the typical algorithmic trader will make his employer about US $10-20 million a year.

Those prepared to take bigger risks, he says, can make billions.

His website shows him enjoying the high life in the company of beautiful girlfriends.

He says he enjoys spending his money on hi tech gadgets, art and champagne and, as his model does all the trading, he has plenty of time to work out in the gym and to go on adventure holidays.

"It's a nice way to trade," he says."...

Googled around, but can't seem to find his web site touted in the article ?!

Might be having a blonde moment, but do you or anybody else have it handy ?

Thanks.

He works for Winton Capital Management

http://www.wintoncapital.com/

Not sure if thats what your looking for.

 

[Citizen2007]

The radio4 broadcast about quant trading . Interview with William Hooper.

Here is the link.

http://news.bbc.co.uk/1/hi/programmes/more_or_less/7112919.stm#

 

[BSD]

You were looking for those "...enjoying the high life in the company of beautiful girlfriends" right?

Sorry, didn't find it either... Did come across the following article :
http://www.jesse-livermore.com/blog/pretty-girls-you-are-bad-trades/

Yeah, thats the part I was looking for

PS: That Craigslist entry plus reply was pretty hilarious, haha.

Thanks guys for your digging and the links

Good trading