Hello!
I am an experienced and lonesome "Trader" (I hate this word).
Due to the ESMA insanity, I am even a declared and elective Professional Trader for retaining useful margin rates on my positions.
Using maximum leverage for unhedged positions is Gambling.
Using as much leverage as suitable for hedged positions is Capitalism.
Commanding Minimum leverage without distinction is Communism.
As I have already expressed in my username, I do not trade, I arbitrage.
Starting with closely hedged pair trades and ending with fully fledged Arbitrage, like
long and short positons in spread bets, Futures or cfds and selling the position intrinsic
Risk as a variance swap via Options.
I have started with selling ETF-Twins, came into spread bets and currently my main activity is to arb
swap free accounts.
I can claim, that I am experienced (in the total sense; I have learned a lot of ways to lose Money, and in the mean time
I have a few ways to earn some Money) and successfull. If your broker starts to ask for your tax number, you know, that you have made it.
I do not like the term Trader, as it is synonymous for Loser. Trade means open Position, and open Position means loss. Just look at the obligatory stats of the brokers (the ONE and ONLY good idea of ESMA). If there are only 65% losing Clients, the broker is already an outstanding exception.
Yes, Risk Management, Keep your bets small (sophisticated losers even aplly Kelly) and NEVER forget your STOP LOSS,
your guaranteed SLIPPAGE LOSS.
As Long as you trade opposed to your broker, you will lose. Not permanently but ultimately. It is the same as with a bookie,
as Long as you place your wins with him, he finally will win.
THe art and the source of success is to try to imitate a bookie or a broker. Brokers and especially bookies are normally on the short side, their Clients are usually Long. Even if a "Trader" bets against a stock, he does not simply short it, or short a call, no normally he buys a put.
The first step to success is to think short. Always look for an opportunity to short. If you do so, you will find out, that is much more riskier than going simply Long. As soon as you have understood this, and you have found ways how to hedge your outright short, you entered the road to success. Normally such hedges are not supported by your broker, or you even want to hide it from your broker, so it normally means addictional Costs (trading, margin and Money Management Costs).
At that stage you learn to calculate your potential Profits and especially your direct and your contingent Costs.
While you have had several positions in any quarter before, after this stage, there might be quarters without positions. Of Course mainly depending on the number of strategies you apply. If have at least3 Arbitrage strategies, there should be almost any quarter a signal in one of your accounts.
And if you are still in the early part of this stage, you will try to Transfer as many funds as quick as possible to one account, that has the Arbitrage Signal.
Your way of worrying will Change as well. While at the start you will nerved by the markets going up, when they should go down and vice versa. Later you will get nervous when volatility dies in the market. And finally your greatest fear will be your broker closing your account or changing trading conditions that way that your ARBs are getting unprofitable.
The good thing with ARBs is, you have no market Risk. You have your Costs, you have all other Business risks of this planet, but you have no market induced downside Risk.
The bad thing, it is really hard to find and to Keep them. The more "Trader" detect the opportunity, the higher the Chance that it dies. It is actually not a question of the number ARBers (I would like to introduce this term) but simply a Question of the size of the Money that flows into the ARB.
I have even arbed single brokers, so my Profit was definitely the loss of the broker. Such a Situation does really not exist for a very Long time. In my case 7 months. Other brokers, if big enough, still stand the pain, as long as I do not exaggerate it too much.
Using 2 or more brokers is the standard model, but needs expert and quick Money/margin Management.
So, that is enough about me.
I am happy to discuss any aspect of PROFESSIONAL and EXPERIENCED trading, but I have no idea what SMA or EMA might be the better indicator ….
cheers
