the "professional traders" Schwager interviewed are the ones among hundreds of other professional traders. And they all together in sum are a small percentage of all traders in total. So, what can I deduce from that? Not much........I am afraid. Take 1000 traders, keep the ones that are up at least 50% for this year. Further sort, and keep the ones that are up 30% annualized over the past 5 years. Do the same and keep the ones that sport a decent return over the past 10 or 15 years. So what do you have? You have a bunch of highly successful people and if you try to find out what lies behind their success you end up with totally different stories. It cannot be technical analysis as other equally intelligent guys could just do the same and reach a similar level of success. It either comes down to a few brilliant people who have got extraordinary skills in forecasting or you just met the law of averages. Take many people and you have always some winners among those. Does it now mean that those that ended up after filtering out the less successful guys will surely be successful in the future because they found the holy grail? By no means!!!! This is where most people get confused. Those guys in Schwager's book could have stopped being successful at any time. Maybe half a year before Schwager conducted his interviews there could have been another dozen highly successful traders who lost their shirts because they lost it all and where therefore not included in the book. Look at Jesse Livermore: He had it all and lost it again and again despite his money management skills, analytical skills and what have you. No computer in the world would have assisted him to change his outcome. Whenever you look at a statistic or someone's performance this is a record of the present and does not tell you anything about his future performance. And at any time you see winners and you see losers. The same applies to the market itself. Daytrading is no science, not even art, its plain and simple. Its all about your emotions and that your brokers do not go under and your execution platforms work. In the end its not where the big money lies. All those charlatans in the industry throw themselves on small traders and tell them that in daytrading lies the true liberation from this world's hardships. What a lie!!! Even a Larry Williams with all his selling his funny research and trading systems (that I believe don't work a bit otherwise he would keep them for himself) needs to fill his mind with other more intelligent hobbies to not become completely stupefied. Position trading is a totally different story. One is making bets on the market direction through elaborate studies of economic factors, foreign exchange, fixed income markets, the international political landscape and the like. All that is already priced in of course, but one makes a bet on future direction. It takes much more work and effort but the effort is paid off handsomely when having done one's homework. To all beginners: Do not believe those losers here on ET claiming that with a little effort and 1 year education you can make 6 figures. Its true that someone is making 6 figures but its with your money and its not you!!! To start with a humble attitude and small is the number one rule in the game!!! And nothing can beat a decent knowledge of statistics if you believe what the real winners say (proprietary traders at the big I-Banks who pocket millions of bucks each quarter on their position trading; from working at an I-Bank I can testify that the real winners quantify everything and calculate probabilities on anything that they can get their hands on. I still second guess that even those guys are consistanly profitable but I believe those at least the most because they are working in the most desired and best-paid positions one could want to have as a trader. If I were truely successful I would get to a top hedge fund, work for Goldman Sachs or the like, but I would not be willing to have my name included in a book such as New Market Wizards and if I decided to make money on my own by trading privatetely I would so so PRIVATELY and not tell the whole world about it. Its everywhere and always the same: Those with the biggest mouths have the least to say and should be reminded why their creator gave them 2 ears, 2 eyes but only 1 mouth. I myself do not claim to be highly successful (although I make enough for myself and my family) and also do not look down on whomever makes more or less money than I do. But I am sick of those people telling all those made-up and dreamer-like stories to beginners in the game. I cannot believe some are even lured into wasting their tuition money at prop firms instead of first going to college or university. There are too many scammers in this industry this is all that worries me!!!
BBMAT- great post, that's exactly what I'm planning to do is start small, learn as I go and eventually make enough playing the "game" to replace my income from work. is this a pipe dream for me? man I hope not!
Sometime in the late '90's the phrase "80% of daytraders lose money," got into the public vernacular. If you told anyone that you were daytrading, thinking about daytrading, knew someone was daytrading; hell, heard that there might be someone who was thinking about daytrading, the response would invariably be, "80% of daytraders lose money." Apparently, nothing has changed.
the guys you listed must be the Who is Who of trading......although I and my colleagues have never heard of them. Have they ever worked at a big firm on Wallstreet? Sounds more like some "wanna-bees" taken out of fun-pages such as daytradinguniversity. If yes, have they truely traded on technical terms, only, and is there any audited performance of those guys publicly available? There is so much big-mouthing and stating wrong figures going on in this industry that I am extremely critical of such claims. (Example: Ask what people think about Gann and you hear the funniest stories in human history). I am seriously asking because I do a lot of research and readings and I would love to get my hands on some performance reports on technical trading systems. Thanks
There is a statistical study of 50 pages made on cocoa futures markets depending if it is LIFFE or CSCE market during 15 years testing about 3000 trading systems from moving average to breakout systems more than 60% were profitable on LIFFE whereas only 12% were profitable on CSCE although it is the same product cocoa. So it is false to say that it is always 95% since purely mechanical systems can majoritely be winners or losers this depends on markets chosen and markets contexts. Once again this is not astonishing if one understand persistency law (see the thread on Arcsinus law): http://www.elitetrader.com/vb/showthread.php?s=&threadid=22256&perpage=6&pagenumber=12 "It's rather that at long term there are only a few percentage of "good traders" but on short term (this is relative of course to period and style of trading this means dozens of years for portfolio managers for example to a few months/years for short term traders) there can be even a majority of winners ... and after that a majority of loosers: that's what persistency means, it's easy to see it during bull phase where all the public and traders believe into a "new era" because it seems to last long time enough (remember arcsinus law is about time not about the distribution of mean which is another law - the central limit theorem) and that everybody seems to be winner . Since at each cycle there are newcomers the same illusion can begin again and again, this on multiple scales."
bbmat, you must be joking! The guys that Cutten listed have a combined earnings that is higher than the GDP of many small nations! They are all verified and legit. All are running multiple BILLIONS of dollars and have lifetime earnings in the multiple BILLIONS of dollars. For the record, most of them are mathematicians and trade utilizing mathematical arbitrage.