Does trading require talent?

[tune]

I know a lady who gets called "gifted" many times a day. It is an insult to her work. And a barrier.

 

[Profitaker]

Though no definitions of success have been provided, a simple one could just be to make money.

If the risk free interest rate is 5.75% and you made an annual profit of 5%, would you say that was a success ? I wouldn't.

 

[Paul71]

If the risk free interest rate is 5.75% and you made an annual profit of 5%, would you say that was a success ? I wouldn't.

Phew! Thanks, PT. I thought i was going mad!

That's a basis for 'success', sorted out.

 

[dbphoenix]

Well if that's the case then outperforming the 95% that fail should be easy then :cheesy:

Actually, it's more like 55-60%.

Db

 

[new_trader]

Actually, it's more like 55-60%.

Db

How do you define failure?

 

[dbphoenix]

How do you define failure?

The authors of the study defined it as losing money.

 

[new_trader]

The authors of the study defined it as losing money.

I get the impression you don't entirely agree? I suppose it could include people who have given up because they couldn't/didn't make as much as they wanted or thought was possible.

 

[dbphoenix]

I get the impression you don't entirely agree? I suppose it could include people who have given up because they couldn't/didn't make as much as they wanted or thought was possible.

No, I'm telling you how the authors of the study defined it, not how I might define it. Otherwise, one might jump to the conclusion that I made the figure up.

But this has all been addressed before. Have you forgotten so quickly?

Db

 

[BSD]

LOL !

Great video this:

You spin me round

Reminds me of sthg.

 

[the blades]

If the risk free interest rate is 5.75% and you made an annual profit of 5%, would you say that was a success ? I wouldn't.

no, obviously I'd say making money was the level of outperformance of that rate. But the exact definition of success wouldn't alter the point I was making - which is that trading is a competition where only a few will win, playing instruments or amateur sport isn't like that.

UTB

 

[Paul71]

If the risk free interest rate is 5.75% and you made an annual profit of 5%, would you say that was a success ? I wouldn't.

Just some further thought,...

Trader X, has £6k base capital. The best risk free interest rate he can get is 10%. He also pays £600 per annum for his charting package. Let's discount internet fees for the moment, he would have an internet connection if he were a trader or not.

Would you say £1200 (20% return), is a minimum for success?

Any thoughts?

Regards,

 

[Profitaker]

The Blades - Gotcha.

 

[new_trader]

No, I'm telling you how the authors of the study defined it, not how I might define it. Otherwise, one might jump to the conclusion that I made the figure up.

But this has all been addressed before. Have you forgotten so quickly?

Db

More than likely. There isn't much here worth remembering

 

[Profitaker]

Trader X, has £6k base capital. The best risk free interest rate he can get is 10%. He also pays £600 per annum for his charting package. Let's discount internet fees for the moment, he would have an internet connection if he were a trader or not.

Would you say £1200 (20% return), is a minimum for success?

Any thoughts?

Regards,

I would say not. He could end up with the same net return (£ 600) by taking the risk free interest rate. So what did he gain for taking on risk throughout the year ? Nothing.

 

[the blades]

I would say not. He could end up with the same net return (£ 600) by taking the risk free interest rate. So what did he gain for taking on risk throughout the year ? Nothing.

well, he gained the knowledge of where to find a risk free rate of 10%

Any suggestions?

UTB

 

[fifty2aces]

Just some further thought,...

Trader X, has £6k base capital. The best risk free interest rate he can get is 10%. He also pays £600 per annum for his charting package. Let's discount internet fees for the moment, he would have an internet connection if he were a trader or not.

Would you say £1200 (20% return), is a minimum for success?

Any thoughts?

Regards,

Well, if he made £1200 gross, he only really made £600 when you consider the money spent on software. I'd say that risking his money, and putting in a lot of effort, just to get the same result he could have got by putting the money in the bank (and less money than he could've got by leaving the money in the bank and spending his time working instead of trading), would mean that 20% wouldn't be enough to be successful.

Obviously it's a little more compley than that - if he had a larger account, he could produce a larger absolute return, while keeping his expenses the same. Also, just because he isn't successful, doesn't mean he shouldn't keep trading - more practice will probably give him better results, so in the long run, it might be worth trading "unsuccessfully".

 

[Profitaker]

well, he gained the knowledge of where to find a risk free rate of 10%

Any suggestions?

UTB

Yes. Remortgage everything to the absolute hilt at base +1, hand it over to the muppets giving 10% riskless, sit back, and make a big fat riskless arb of 3.25% :cheesy:

 

[JTrader]

What are your thoughts/opinions/views?

A bit of a pointless question really IMO - yes - obviously. :| .

 

[Paul71]

Just some further thought,...

Trader X, has £6k base capital. The best risk free interest rate he can get is 10%. He also pays £600 per annum for his charting package. Let's discount internet fees for the moment, he would have an internet connection if he were a trader or not.

Would you say £1200 (20% return), is a minimum for success?

Any thoughts?

Regards,

Is this the minimum of unsuccessfulness?

 

[Paul71]

Just some further thought,...

Trader X, has £6k base capital. The best risk free interest rate he can get is 10%. He also pays £600 per annum for his charting package. Let's discount internet fees for the moment, he would have an internet connection if he were a trader or not.

Would you say £1200 (20% return), is a minimum for success?

Any thoughts?

Regards,

So if he risks gross 10% of his base capital per annum, on a modest Risk:Reward ratio of 1:2 with 100% accuracy he will cover his chart subscription and interest payments.

Is true risk management and success based on the guaranteed 10% interest rate?

Any thoughts?