Registered: Oct 2009
05-08-12 02:46 PM
Quote from braincell:
It depends on how you diversify risk. You can postpone it in time, for example by selling options or doing martingale trading. That way some have made, even relatively new to trading, around 20% per month only to blow it all up in one or two very short trades. The characteristics of the market aren't just price, you can trade volatility, time decay, correlations, all sorts of things. Some of these will work for a long time and then just crash (ie correlations/hedging) and some will have minor crashes all along (price direction). There's no straight answer to your question because many of the "top" traders probably had luck on their side, however, nobody can quantify what was luck and what was skill. Even those that are consistent for years, statistically there's a good chance they are still lucky (ie 1 in 100k but it happens).
PS - my first question on ET was very similar to yours. I came along thinking that whatever the top dogs are making, i can make, since thus far in life i was successful in almost everything and top of my rank blabla. Trading will make you humble real quick, and it will take effort to reach anything close to a comfortable pro level. Your quantitative finance, math, physics, economics or whatever other knowledge you're proud of, won't help without experience. It's much like a sport, trust me.
also trading is different in that you can't leverage skill because of time constraints. For example a higher degree instead of doing 4 hours study a day you can leverage it to 8 hours and get better results. With trading you have 100% capital, you have an edge(s), you trade the edge(s) with your capital, then all you do is wait for the setups. you can't leverage time like you can do with other endeavours i.e. spending more time on trading doesn't guarantee more success. the only thing that guarantees more success is more capital which is the only form of leverage available. That's why hedge funds are so successfull (for the guys at the top), they leverage money as they realize leverage time is not possible.