Why do they do it?

[glyder]

Let's do the math:

Year 1: £20k - £40k. (If you withdraw, you just zeroed your account. But lets cheat and say you maybe saved a buffer salary from your job so you withdraw nothing in the whole of your first year as a full time trader)

Year 2: £40k - £80k. You have to start withdrawing to live - that is after all why you trade. To make a living. Subtract £40k.

Year 3: £40k - £80k. You did it again...nice one. You earn a living from your trading. Subtract £40k...

Year 4: £40k...you see where I am going with this, yet?

And you better hope that you don't get a below average year. God forbid if you only make 90% you are really up sh*t creek. Your expenses outweigh your returns and your pot starts SHRINKING.

Well put Tom,

This is the concern I was trying to express in the thread on trading & inflation.
Also called being undercapitalised I suppose....

http://www.trade2win.com/boards/general-trading-chat/112942-trading-inflation.html

 

[Shakone]

Let's presume you AVERAGE 100% per year. Most people might even turn their nose up at this (usually they are bragging about making 60% per week and trading 5 cents a point whilst averaging positions with no stop) but 100% a year is an incredible return. Most of the market wizards weren't getting anywhere near this.

Then start with a decent pot e.g. 20k that you ran up from nothing whilst doing your full time job. Then pay yourself a good yearly salary of lets say £40k to be conservative.

Let's do the math:

Year 1: £20k - £40k. (If you withdraw, you just zeroed your account. But lets cheat and say you maybe saved a buffer salary from your job so you withdraw nothing in the whole of your first year as a full time trader)

Year 2: £40k - £80k. You have to start withdrawing to live - that is after all why you trade. To make a living. Subtract £40k.

Year 3: £40k - £80k. You did it again...nice one. You earn a living from your trading. Subtract £40k...

Year 4: £40k...you see where I am going with this, yet?

And you better hope that you don't get a below average year. God forbid if you only make 90% you are really up sh*t creek. Your expenses outweigh your returns and your pot starts SHRINKING.

Is this guy a great trader? Yes .

Is this guy ever going to make millions? No.

He could just realise that a bit of suffering in the beginning will pay off in the long run, and pay himself 20k, and live not so well for a couple of years. The math then says

40k-->80k-20k
60k-->120k-20k
100k-->200k-40k (and he's away to the races).

Probably there is an issue of what is a 'great' trader. Is it just someone who can only handle one market like the FTSE?

 

[Black Swan]

Lack of courage to handle huge equity swings?

If I inherited £10M tomorrow I would not hesitate to deposit it all and bet my usual 5-10% per trade. I have no qualms about taking large losers because I cannot stand to have a large edge and not really go for the jugular. I always have had the confidence to bounce back no matter what. Thats my personality, which is probably the exception not the rule.

Presupposing that you have a similarly good edge (which you most likely dont) could you say the same?

One things for sure, I know overly cautious traders like Dante or Dion certainly couldn't. Which is why they will never be making millions from trading. So they will be confined to the realms of pnl mediocrity, despite being good traders. Thats ok i guess, making £40k a year whilst sitting at home as your own boss is cool. Not everyone is willing to risk it all to try to become the next Soros..

Blimey, big risk per trade but heh good luck to ya, like your style You're being a bit harsh and extreme on DT and Dante though eh?

 

[Black Swan]

Many great traders can make large sums of money but the blanket statement: "a great trader should be able to make millions" is ignorant.

When newbies say "great traders should be able to make millions" they are thinking about the theory not about the actual reality.

As usual I am trying to argue that not everything is black and white.

Yes, a great trader can make millions.

But there are plenty of great traders that WILL NEVER make millions.

That is as clear as day.

Good points well made.

 

[Black Swan]

Regarding your question to me: if I happened to stumble upon £10m, I wouldn't bother trading. What would be the point of it to me? £20m would not make more difference to my life than £10m. Neither would £30m, at this point we're talking about a stupid sum of money which would not be used for anything useful.

Surely you'd position a significant sum of it (park it) into various currencies though, which is trading...non?

 

[montmorencyt2w]

I've always thougth that old phrase "Those who cant teach" is one of the biggest load of bollox going anyway,not to mention half the people who trot it out on these forums will have no problem telling someone in another thread that they should read Van Tharps stuff,a guy who can't trade so teaches.

Attributed to G.B.Shaw, a gifted playwright, and gifted in other ways, but he had some odd ideas as well, such as Eugenics. It's a great line, but it doesn't take much imagination to come up with exceptions, as several people have already done.

 

[montmorencyt2w]

Just because you are a good trader doesn't necessarily mean you will be a good teacher or be able to communicate your methods clearly. I know plenty of very clever people in my office who would be useless as a teacher, sometimes the less able ones are more effective.

That's a really good point, and it is valid in almost any walk of life or area of expertise. You could express it as a corollary to the G.B.Shaw line as something like:

"Those who can do, cannot necessarily teach what they do well".

 

[marketpupil]

Those who can do, those who can't teach. Therefore if you know a bit about trading but are not profitable then it's easier to make money selling courses to gullible people. That's why no trainer will ever show you an account statement.

I think this is true to a degree however, I am going to put a slightly different spin on the topic.

There are many individuals who know everything there is to know about trading market securities, but they cannot successfully trade themselves. Why? Because they cannot stick with a strategy.

Trading takes a certain amount of guts that many people do not have. You build up a non-existent tolerance for risk. If you are not comfortable losing money, you will never be a successful trader.

 

[Pazienza]

I think this is true to a degree however, I am going to put a slightly different spin on the topic.

There are many individuals who know everything there is to know about trading market securities, but they cannot successfully trade themselves. Why? Because they cannot stick with a strategy.

A good point. Just because someone can't trade themselves doesn't mean that they can't teach something of value.

But we always go back to the same thing. There are some trainers and groups, and perhaps even a very, very, very, very few vendors (although I doubt it) that are worthwhile.

The vast majority are useless. Good luck finding one who isn't.

 

[meanreversion]

There aren't many like Joe Ross out there, you need to learn as much as you can before they meet an untimely death in an unfortunate accident whilst frying cod.

 

[DionysusToast]

LOL, I know...that essay above is not about me! I have no life whatsoever and I don't earn those sums of money for the privilege.

I'm just saying, all is not black and white.

The biggest mistake in thinking about trading is that "if you are a great trader you should be able to make millions".

People that think this are complete beginners.

Fair enough.

Do you share account statements with your students to show you can 'walk the walk'?

In fact, as a vendor - could you do that now to show transparency? This could also attract some more students - so not only do we get the point proven about a genuine vendor, you also attract rectruits!

 

[megamuel]

People have done the "statements" thing before. It never works. Jealous people always say they are forged. Or they are actually forged.

 

[DionysusToast]

Blimey, big risk per trade but heh good luck to ya, like your style You're being a bit harsh and extreme on DT and Dante though eh?

Well - for me, only time will tell.

He's right in a way because I only trade 3 contracts and my risk nowhere near 1% per trade

But this is because I am still learning the craft and don't have the confidence to do more yet. It stands to be seen if that confidence will come and I become a Bison or a Buffalo.

Also - my goal is not to become a zillionaire. A few thousand dollars a day is where I'd like to be. That puts me ahead of the salary in my day job. With my current style, it allows me to trade with only 15-20 minutes prep before the open. It's low maintenance but it's a steep learning curve.

So - whether it is harsh or not remains to be seen. For sure - if I ever ended up with a 90% hit rate, trading the most liquid product on the planet, I'd be willing to risk more that the much lauded '1% per trade'.

 

[DionysusToast]

A good point. Just because someone can't trade themselves doesn't mean that they can't teach something of value.

I don't know about this. As I mentioned previously, I know a few full time guys. When I look at how much their experience has impacted their performance, I just can't see an unprofitable guy getting you to profitability.

I know a guy called Joel - after 10+ years full time trading futures, he can turn the damn thing on and with very little effort make money, he has the experience. He also knows the value of that experience and it was he who taught me that and made me understand its value.

In part, this is why it's so hard to replicate someone else's methods. It is not that you can't trade them, it's just that you don't have their experience. I don't think you need your own methods particularly- but you do need your own experience.

Finally - what an experienced player will be able to impart is nuance & context. They will be able to answer questions relevant to making money in a way that no unprofitable teacher ever would.

Bottom line, if you can't do it, you can't teach it in any meaningful sense. Not in terms of what it takes to make it work.

 

[DionysusToast]

People have done the "statements" thing before. It never works. Jealous people always say they are forged. Or they are actually forged.

My impression is that most vendors won't go to the lengths of committing fraud, hence all the disclaimers etc. on their sites.

Most think up excuses, rather than produce forgeries.

 

[Pazienza]

I don't know about this. As I mentioned previously, I know a few full time guys. When I look at how much their experience has impacted their performance, I just can't see an unprofitable guy getting you to profitability.

I know a guy called Joel - after 10+ years full time trading futures, he can turn the damn thing on and with very little effort make money, he has the experience. He also knows the value of that experience and it was he who taught me that and made me understand its value.

In part, this is why it's so hard to replicate someone else's methods. It is not that you can't trade them, it's just that you don't have their experience. I don't think you need your own methods particularly- but you do need your own experience.

Finally - what an experienced player will be able to impart is nuance & context. They will be able to answer questions relevant to making money in a way that no unprofitable teacher ever would.

Bottom line, if you can't do it, you can't teach it in any meaningful sense. Not in terms of what it takes to make it work.

 

[Pazienza]

Most think up excuses, rather than produce forgeries.

Probably true, but still they're incredibly easy to fake.

 

[trader_dante]

Fair enough.

Do you share account statements with your students to show you can 'walk the walk'?

Yes, I do.

But I'm not prepared to reveal my earnings on the net for the whole world to read. There is already enough information about me on the internet including my name, where I live, where I've worked etc without me needing to show my salary too.

However, I appreciate that people will ask. So I don't have to reveal my full earnings I show a "model account" that was started around the same time I began some teaching. It's real money in a live account but from a small stake so people can chart growth and get an idea of expectation as most people I teach don't start with a huge amount of capital.

I have 11 months of back to back statements in this to show the progress from £800 - £10,000. Forgive me for keeping my cards a little close to my chest, I was once asked to provide a statement of the account I used to get a job in prop. I duly provided it and later found it was used by an applicant to the same firm. (not the cleverest thing to do but there you go)

I do also give names and contact details of references that have been mentored. It's great to know what the guy that is teaching you has done but it's probably more important to see what his students have. Some of them will show their account statements. Bison is one. He went from £2,700 to £65,000 with Interactive Brokers. I see he's also been posting a 16k monthly statement on this forum. I've actually PM'd him to ask him to take this down. He was exceptional and not many will be able to do what he has done so quickly.

In general, though, I do prefer to pass potential interest on to references because I mentor people in a style that suits them. Bison trades in a way that I personally do not and in fact could probably not make money at. Since I taught something I can't do, I'm actually pretty proud of it. I guess he is living testimony that those that can't do, CAN teach others too! At least with regards to a style of trading.

Finally, I do of course call out all my live trades and where I think all the markets are going. And I am happy to let people watch me do this for a few days for free. You can soon discern whether someone can walk the walk or not in this environment.

If after all that they are not satisfied, well, plenty of other vendors out there!

In fact, as a vendor - could you do that now to show transparency? This could also attract some more students - so not only do we get the point proven about a genuine vendor, you also attract rectruits!

I have no interest in attracting recruits. I've been running a live room for 8 months and I have 14 members. I like it this way because I can get to know all of them and help them properly. As individuals become profitable and leave, more are free to join.

Anyone that is interested will hopefully do their due diligence.

In the meantime, I'd like to get on with posting material on T2W without people worrying I am trying to sell them something. I'm not.

 

[Black Swan]

I do also give names and contact details of references that have been mentored. It's great to know what the guy that is teaching you has done but it's probably more important to see what his students have. Some of them will show their account statements. Bison is one. He went from £2,700 to £65,000 with Interactive Brokers.

In 8 months? Really?

 

[BlackBison]

In 8 months? Really?

hehe TDs not going to be happy with me..