A New Guy Asking Some Questions

Discussion in 'Professional Trading' started by Corey, Sep 13, 2007.

  1. Corey


    Hey all,
    Just a quick history about myself, and then I will get to my questions! I am currently a junior at Cornell University studying Computer Science, with a concentration in financial markets.

    My experience in the markets is in long-term bias only. I have been investing for several years in mutual funds, and about a year ago took complete control of my money and began investing on my own. I started off with winners and losers, taking my bumps along the way. This February was the first real market shakeout I experienced -- and being emotionally unprepared, I lost about 3% of my total capital -- even after the market had fully recovered. I certainly learned my lessons.

    The majority of what I have learned has been self taught through books. I try to read everything I can get my hands on -- from basic personal finance books (e.g. The Richest Man in Babylon) to technical analysis books to autobiographies of traders ... and even to books on mob theory (recently picked up Extraordinary Popular Delusions & the Madness of Crowds). I am trying to get as wide a theoretically view about the markets as possible.

    Currently, I believe I have developed a very, very good edge for long-term buys, and can take advantage of short term inefficiencies through options. I took a good inner look at myself, realized that I was quite risk adverse, wanted low volatility, and wanted to make sure bets. I created my own form of value investing using a bit of technical analysis to determine entry points. Back tested over 20 years, it has worked out really well -- and so far has been working great since I implemented it.

    Okay, so where is all this going? Why am I telling you all this? Well, I want to view the OTHER side of the market. The market the people on this forum experience. I am a strong believer that for a person to trade a security or derivative, the market for that security or derivative must match their personality. From what I have personally analyzed about myself, I think my trades tend to be

    1) Risk adverse
    2) Very mechanical
    3) Have low volatility
    4) Defined entries and exits
    5) Long term

    These stem from several facts

    1) I am a college student with very little time to analyze the markets. I know that seems like a terrible trading habit, but I believe it also helps keep me out of the general trading herd.

    2) I am a computer science student. Logic and mechanics are very natural to me.

    3) I am a jew. I hate losing money ;) I figure it is better to admit to my faults than ignore them.

    So my question for all of you would be, what market do you think might best suit me? Forex? Futures? If so, which ones? I am absolutely clueless, and hence I turn to you.

    My goal would be to experience an entirely separate form market experience than what I have currently. I would probably analyze the market daily, both intraday and multiday, taking notes on patterns and experiences. I think a broader scope of knowledge on other markets would help me in any future markets I choose to trade.

    Ideally, I would also like to find some sort of trading simulation system that I can practice on for this market before I actually begin trading -- preferably something that actually tracks the real time systems.

    Finally, I use a Mac, so I was wondering if anyone had any recommendations about trading systems for a Mac for when I am just learning about the markets (i.e. any software that can give me real time charts?)

    Thanks a lot for taking the time to read this overly lengthy post!

    I look forward to your responses!

  2. We ALL hate losing money (except the basket cases looking for sympathy)

    And we ALL lose money now and then.

    Nothing ventured. Nothing gained.
  3. lindq


    InvestorRT at www.linnsoft.com

    Mac and Windows
  4. Corey


    Thanks for the quick responses.

    I didn't mean to say I was against losing money. I personally think that we learn our best lessons when we lose money. I just know that over time my trades have become less risk averse ... none of the small cap momentum type of guys.

    As for your offer BnB Analytics -- I will ignore the comments in your other thread and just take your videos at face value. Personally, I don't feel your videos offer much to me -- I can already pick out basic volume/resistance/support lines on my own. What I am looking for is to develop the temperance of emotion and the eye for the subtle movements of the market that are truly indicative. Those sorts of things aren't teachable -- they have to be experienced. But best of luck with your endeavors.

    As for Investor/RT -- well, I don't feel like shelling out the dollars yet when I can't get a real-time demo of the Forex or Futures charts. I found a couple online -- but none of them offered real-time charting. I am beginning to think I might have to write my own...Realtime Forex and/or Futures market practice suite!

  5. Hi Corey,

    Great opening post, very informative and well thought out.

    It sounds like you have desires, in terms of risk-aversion and general trading, that are what I currently do (although I do trade primarily intraday only). And, since you're a CS major, advanced stats and programming should be fairly easy for you. Anyhow here are my recommendations:

    Trade (at no more than 50-100 shares a clip for the first year or two) the SPY and the QQQQ, as well as the options for both. Then slowly transition into their respective index futures/options.

    While you are doing the above, learn all you can about volatility modeling.

    More importantly, learn all you can about neural networks and their financial applications, time series analysis, and auto-regressive models. Start creating some pricing models and see where they take you - creativity is the often overlooked key to success in this business...

    When you have the necessary discipline in place from trading the above products discretionarily, start applying the systemic risk analysis/modeling you've learned about to your trading.