Marketsurfer, you slowly start to really annoy me, not just because of your lack of knowledge in some areas that you claim to possess (although you seem to be the big fish at ET with your 3000 something posts) but also because you are really fast to judge others with absolutely wrong statements. Being a quant myself I believe I am not confusing quant finance with fundamental analysis. Almost all fundamental analysis is heavy on the quantification of market variables into probabilities. Example: You analyze dividend growth and compare dividend rates among stocks within a certain industry. You then form an opinion on your own how you expect dividends to grow, let's say, over the next 5 years. This is only one variable that goes into your entire fundamental analysis but for the sake of it I just limit it to this one and keep it very simplistic. For instance, I believe that the probability of the dividend growth to remain stable over the given time frame is 50%. I continue expressing all my other expectations as probabilities and end up with a tree and branches of the different probabilities of expected outcomes. Another example is your outlook on the price of oil. You would look at all variables that influenced oil prices and you would end up (among others) analyzing the political landscape in oil producing regions, their policy stance towards setting crude prices and so on. If you stopped here you would not have anything that you could work with. Instead, opinions and expectations need to be quantified in order to let such variables flow into the bigger equation. So, FA is very technical indeed (not to be confused with TA) and that is why many traders shun such analysis in addition to the lack of understanding that also in FA, one needs to take a stance and form a subjective opinion. May I ask one question about your comment regarding time frames in TA: You mentioned that time frames are directly related to the timeframe of a trade. How do you know in advance the timeframe of a trade? Are you one of those intelligent guys who knows already now that you will close out your trade in 60 minutes, hence you utilize , let' say 5 min bars for TA? (sorry, please excuse if I got the time frame relationships wrong, I rarely rely on such tools ;-) Or are you one of those guys who became a slave to your TA? (Meaning that even though you should let your profits run but because the time frame you decided to trade on tells you to exit you do exit) Then I get your point but still have to ask how you can then be flexible and adjust to market behavior if you decide a priori to do your own thing? In the end you got a crystal ball and the only way you are different from another TA trader (no matter how intelligent that other guy is or you are) is the time frames you guys trade on. You are no millimeter away from randomness because if every trader traded on different time frames each and every trader would end up entering and exiting trades at different levels, but if each and every trader traded on identical time frames, markets would not function as either everyone wanted to buy or sell. Do you see the contradiction of your time frame argument?
dude, you make me smile a lot. Here is a summary of what you wrote: " YOU ARE ALWAYS WRONG and I AM ALWAYS RIGHT. Peter SOMETHING ( I forgot whom he works for and what firm it is) is a good buddy of Jones and they worked together on SOMETHING with SOMETHING. He also describes Jones' trading style in a SOMETHING video (no idea about the specific video). All this I read over SOMETHING like 13 years ago but I am sure this must be Jones' trading style also today, therefore I AM RIGHT AND YOU ARE WRONG." Man, the guy with an esoteric problem is you and not someone who made millions (sorry was it billions?) in the markets. don't smoke too much over New Year then it will also work with your trading in 2004. GOOD LUCK!!!
I think you mean "res ipsa loquitur" - "the thing speaks for itself." There is also "res judicata" - "the thing has been adjudicated." Cheers.
I think it's time I chimed in to defend my good friend Marketsurfer. With all due respect, bbmat, Marketsurfer knows a lot more about Tudor Jones than you. For the record, Mr. Jones along with most other traders of his ilk, utilize a variety of factors, fundamental, technical, quantitative, etc. Tudor is a strong proponent of the use of analogs, which for those that don't know, he basically looks for historical chart patterns that look similar to current patterns and interprets the outcome to be similar in both circumstances. Obviously, this is purely technical in nature. Why does he utilize this? Because everyone knows that a chart is a picturial display of the market psychology or the demand/supply imbalance. In other words, it offers the proficient reader an opportunity to examine the path of least resistance in the market. Furthermore, it is a picturial display of human nature. Fundamentals change over the course of history, however, human nature remains much the same. Hence the insightful phrase, 'the more things change, the more they remain the same..'. As such, one can interpret that humans will react similarly faced with similar set-ups or situations throughout the course of humanity. Hence the theory of Analogs. As for technical analysis, billions have been made by following the simple golden rule, "the trend is your friend". Simply put, trends represent an edge based upon the principles of physics. Loosely interpreted, the principals of inertia, roughly speaking and not exact, 'an object in motion in a specific direction tends to stay in motion in that direction unless acted upon by an equal and opposing force'. Please correct me all you physics experts. In other words, without significant friction opposing the current path, the object (market) will continue along in it's current path. Make no mistake (to quote Bush), Soros, Tudor, Henry, Dunn, and anyone else you consider successful in this game are simple trend followers with a lot of bells and whistles added to the equation (money management, analogs, pattern recognition, etc.). As for compensation, there are probably 25+ billionaires borne out of the hedge fund industry. The only billionaire I can think of borne out of the i-banks is Sandy Weill. There is simply no comparision as for compensation at hedge funds to i-banks from lowest level to most senior level. I-Banks are bush league, everyone wants to make the Majors! Welcome all critics...Neal.
IMNSHO, 99% of traders (real proprietary traders, risking money to make money) lose money. Don't forget to add attrition to the equation! Neal.
I do not think trading eats up that many traders. There are a lot of uneducated and undercapitalized people who go into it and lose the 1k they put into it and quit. More like gamblers really. People who go into trading as a business.....I would think it was more like 60-70% make it.
When you have devised a system where you can be stopped out on 1/2 half of your trades and still make a living trading stocks, then you have arrived at being a trader. To devise that system (and no one will tell it to you) and have it work consistently, is the the big challenge that every new trader must face. Maybe most drop out without getting there. Learning to daytrade requires your undivided attention for at least the first half of the day. Focus on charts to see how the market moves and how the individual stocks trade. Then you will know when to enter trades and what chart patterns are likely to produce winners. The big trading houses are doing it successfully. Their traders had to learn it too.