Why do they do it?

DionysusToast said:
Is this unsustainable or do you just not have the mental fortitude to replicate this with larger sums? Serious question.
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Hello Dionysus Toast,

That's an excellent question.

My personal view is that this is sustainable (depending on your edge and presuming no outliers) but I personally do not have the mental fortitude to replicate it with larger sums.

The more my account grows, the less risk I take.

The funny thing is, £1,000 - £10,000 is exactly the same percentage return as £100,000 - £1,000,000.

However, I have no problem losing 10% of £10,000 in a single trade but I don't have the stomach for dropping £10,000 in one at this point in my career.

It doesn't make theoretical sense since the risk is the same in percentage. But we are human. And most people don't think in percentages, they think in terms of money.

I will have to drag Bison into this as he made an excellent post on this over here:
http://www.trade2win.com/boards/psy...-trading-but-not-money-why-4.html#post1412240

The reason I have always been able to run up small sums of money is because I find that only with a relatively small amount of money am I in the right frame of mind - that "zen like state" where the focus becomes not on the money but on beating the game.

When you have next to nothing, you play the game to get a high score.

When you have a high score, you just want to protect it.

The reason Bison, despite largely trading my calls, under my tuition, outperformed me so dramatically was that when I was taking my foot off the gas pedal at £10,000 (and withdrawing my initial stake plus profit), he was going all in on every hand the market dealt him.

I've repeated this same story with mind numbing regularity to a number of my students but when I was in prop, I sat next to a trader who was averaging $400,000 a week in the ES. He had come from nothing and had an account in the millions in just a few years.

I wanted to be just like him.

One evening when the office was quiet, he gave me an impromptu and rather informal mentoring session on what it exactly it was he did.

"I can do this!" I thought with a surge of adrenalin. "He uses S/R and the order book and he has some experience so that he remembers what the market looked like before it made major moves. There is no holy grail here. I CAN DO THIS".

Then one day, just before Non Farm Payrolls, he hit an offer of 1,200 lots in the ES, left his desk with no stop in and went to Sainsburys.

"Oh...I can't do this." I thought with despondency.

Later that day after he strolled back into the office having made an obscene amount of money, I was talking to one of the grads I had befriended.

"I'm going to be just like him one day." this grad said to me with a look of awe in his eyes.

"No, you're not..." was all I could think as he rushed back to his desk to get his stop to breakeven on the Bunds which had rallied about 5 ticks.
 
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In line with the US policy of adjusting the denominator in order to make a ratio look better, I've effectively reduced the size of my trading pot and just made 1,000% over NFP just now.
 
dante, your story doesn't quite make sense, in that the chap to whom you refer had a high score and was still rolling the dice, i.e. he wasn't reducing his risk.

Or is it more that nearly all of us would look to trade conservatively with a large pot, and the swinger you mention was very unusual?
 
meanreversion said:
dante, your story doesn't quite make sense, in that the chap to whom you refer had a high score and was still rolling the dice, i.e. he wasn't reducing his risk.

Or is it more that nearly all of us would look to trade conservatively with a large pot, and the swinger you mention was very unusual?
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Mean,

The moral is - everyone wanted to be like him and yet he was all in at every turn. Most of us cannot do this.

He had a high score and he still had his foot to the floor.

He spent several years bulding his account. At 1200 lots, I would say a catastrophic non farms number would be career over.

I even asked him what he would do if this were to happen to him.

And he replied with a shrug: "Get a normal job".

Is that advisable psychology for making a business of this? No. But that's not my point.

The newbies dream of these outlier returns. And that is the mindset it often takes to get them.
 
trader_dante said:
Mean,

The moral is - everyone wanted to be like him and yet he was all in at every turn. Most of us cannot do this.

He had a high score and he still had his foot to the floor.

He spent several years bulding his account. At 1200 lots, I would say a catastrophic non farms number would be career over.

I even asked him what he would do if this were to happen to him.

And he replied with a shrug: "Get a normal job".

Is that advisable psychology for making a business of this? No. But that's not my point.

The newbies dream of these outlier returns. And that is the mindset it often takes to get them.
Click to expand...

The funny thing is so many people think this is admirable...

then again, maybe it is. In the ultra long run, we're all ****ed :)
 
We're definitely ****ed in the UK... cable down today, copper and oil higher.

Big story for the second half of 2011 will be the collapse in commodity prices when the China housing bubble implodes.
 
meanreversion said:
Big story for the second half of 2011 will be the collapse in commodity prices when the China housing bubble implodes.
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Yeah... that needs a lot more attention, it's ludicrous and is going to be THE major theme in 201X

But why X has to = 1, I dunno. no real reason there can't be years left....
 
trader_dante said:
The reason Bison, despite largely trading my calls, under my tuition, outperformed me so dramatically was that when I was taking my foot off the gas pedal at £10,000 (and withdrawing my initial stake plus profit), he was going all in on every hand the market dealt him.
Click to expand...

Well, now that Bison is a Coach/Trainer perhaps you can get some tuition from him!:idea:
 
meanreversion said:
We're definitely ****ed in the UK... cable down today, copper and oil higher.

Big story for the second half of 2011 will be the collapse in commodity prices when the China housing bubble implodes.
Click to expand...

Nah, big story will be the contagion and attempted containment of uprisings in the M.East/Africa due to the continued inflated price or raw materials and commodities..all the 'fault' of The Bernank and his creationism.

The US probably think they're being 'dead clever like' by promising to fund (bribe) the Egyptian military with tens of billions to keep the status quo after dumping Mubarek, but it won't free the people who will be in a civil war for a decade+.

If the M.East wake up (and I hope they do) and the younger generations take back what's theirs then we're in for interesting times.

BTW I think this China housing bubble tipping point theory is being over cooked in the MSM, commods and raw material prices have been shooting to the moon due to the 'clever' money having nowhere else to go, has it been the biggest hedge ever?..It'll collapse under the weight of its own bu115hit, not due to lack of demand from the BRICS..
 
trader_dante said:
Hello Dionysus Toast,



The more my account grows, the less risk I take.

The funny thing is, £1,000 - £10,000 is exactly the same percentage return as £100,000 - £1,000,000.

However, I have no problem losing 10% of £10,000 in a single trade but I don't have the stomach for dropping £10,000 in one at this point in my career.
Click to expand...

Isn't this more or less what J16 used to say, and why he was so keen to move stop to B/E?
When trading his size of account, it mattered a lot more.
 
new_trader said:
Well, now that Bison is a Coach/Trainer perhaps you can get some tuition from him!:idea:
Click to expand...

LOL yes. Now that would really be what you call going full circle.

The question is however, can you teach someone to stomach risk?

A lot of it depends on both your attitude towards money and your situation in life.

I think many people underestimate that fact. Particularly the situational element.
 
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