And here I thought Duref Mudgins was a hobbit from Lord of the Rings, like Frodo Baggins. Kind of disappointing to learn its an anagram of... Sigmund Freud. Makes me want to change my username to Anal Angerpens. This interview format is a great idea; very informative and entertaining. Count me as a follower and beneficiary of Anekdoten's thread.
Excellent Interview Duref! Anek...I was wondering if you set daily or weekly or monthly goals etc. I wonder if you play the compounding games like I do where I calculated 20% return monthly compounds to over 800% or 10% monthly is over 200%! I know, I know you live off your trading so it's not that simple yet I wonder if you dream along those terms? Deep in my gut I feel those that have made a Fortune at this game somehow achieve such incredible feats even if for a short while or a few years! Is this the way to make it really big...Dream Big...so big that one only has to make 1 trade per month or so because their account is sooo big the return of that 1 trade makes them enough money they need not work or trade for a while because the return more than covers their spending and their saving requirements. I htink it was Soros ex-partner who said that. Do U dream like this...has anyone on this site truthfully accomplished something like this and what was that process like? Lucky
Lucky, I don't, I take what the market gives me. Lately I've been setting a max daily loss limit but not a target. I feel if I'm "one' with the market on a particular day I should not quit unless otherwise. First and foremost I'm a scalper, I start small and when i see an intra day swing position that merits averaging up I go for the kill and then it's up to the trend to reward me or not. I do well and there's enough to support the family, plenty of luxuries and yearly charity donations but unless I increase my starting position I won't be making any top lists anytime soon. I'm extremely disciplined so any changes I make are very very gradual. Greed is good but it can also very well be a double edged sword. Hope it helps. Anek
Not doubting your word on anything you have said.... I do though wonder about the concept that one can average up in a mean reverting market like the SP. Every strategy test I have ever ran indicates the tendency since the inception of SP futures that they are mean reverting. To oversimplify buying more at the highs is not a good plan in the SP. Any comment on that?
MJ, Sure, but not every day is optimal for it. When the time is right you can see it coming from a mile away. No weakness to be found or no buying anywhere within proximity. They are rare but certainly special, it's up to the trader to identify them correctly and in there lies the art and skill of the daytrader. Anek
You need to put your statement and tests in context of the time frame being traded. Trading is always about putting things into context but having an eye on the big picture. Averaging up is a killer way to make a good trade perform better after banking some profit.
Not sure I am grasping this either... Averaging up = adding to Po Banking Profit = subtracting from Po
By adjusting your stops on the majority of the winning positions you are banking profits even if you are still adding to the trade. Anek
That correct. You can keep adding to your position and maintain and average on the position that is below a stop point. You have to use some parameters for this. You obviously can't just keep adding until the market turns; although some do with some restrictions. Also, the market being "mean reverting" is a very misleading idea. What mean? What is the slope on that mean? You can have a market that touches an average on pullbacks all the way up to new highs. So how can adding on pullbacks not work in that case? Remember, context is where many lose their perspective in trading.
Okay thanks... I understand the philosophy. There must be some real talent at work here to know when to average up in the S&P. I know if I bought 3 at the entry signal, added 2 later and moved the stop on 5 to BE, and then added another 1 and moved the stop to protect the average of 6, I'd guess I'd be making very little at least 8 out of 10 trades. I'd have to make a helluva alot on the other 2 out of 10 to make up for the losers and those that stopped out with a marginal gain. If you have the talent to know when its going to really trend, then the way you trail the stop is probably the least of it... I don't believe that type of talent is something you could teach.