yup yup it's been called many names: the itch, the beast it hunts you down and blows you up but this is want people want from trading.
I defended once on this forum in around 2 years ago, I remember because I felt like a fraud afterward for doing so. I was making money trading up through 09 but was getting extremely bored, I joined his room because I was bored out of my mind and had to have some sort of chat/whatever going on and he seemed genuine to me. After 2 months I left having never taken a trade of his; he and I look at the market in completely different ways (I am not a technical trader like him). When I told him I was leaving he started offering me deals to stay (pay him $900 and get one month free!) He had a chat all could see and the questions being asked were very basic, beginner type stuff. The fact that he was leading people who didn't know better down this path to inevitable blow up bothered me and I considered reporting him to the NFA and CFTC but decided against it. At the time he only traded the ES and didn't trade the news, the open, the close and everything was based on MA's. Also, he traded tiny at the time, most days he would make between 12.50 and 62 bucks. He used an initial 3pt target and 3pt stop(which is funny for a pro, at least to me) but always moved the target closer and the stop further away. His best trade while I was in this ridiculous "pro's" room was 2 contracts 1 off at about 1 pt and the other 3pts. and he bragged and bragged about this. Statistically I found it odd that he never placed a trade that initially went in his direction, he always had to average his losers. You would think that after enough trades he would have a lucky trade that just went his way! The worst part about the room was his never ending babbling about earning the right to trade his size (which I never saw).
For a smart fellow, he could have been a goldmine. You have to realize, all you need the signal giver is to be CONSISTENT. So if the trades were going consistently against him, you should have just reverse traded him and had made decent amount of money. Again, it is not the profitability what counts, but the consistency, winner or loser. Look at Smurf's journal. It is slightly profitable, but incredibly inconsistent and random in results. So you never know if you should follow him or reverse trade him. Looks like this Hoffman dude would have been great for someone who knew how to use his signals....
It is funny you say that because while I was trading my way I was using a sim on a laptop and it was for the most part profitable but I could never put money behind it because from my perspective he was taking trades in the middle of nowhere.
He got lucky for a year (2010) where supposedly he didn't have a losing trade. The problem is he thought his understanding of the market (levels, etc.) was so good that he could just keep averaging down as a strategy and it would always come back in his favor. Hmmm....Is there any chance that those who lost money in his room over the past several years have any recourse with regard to some type of refund of subscription fees?
I agree a 2 yr good track record is enough to say that one is a good trader. But, within that track record you have to look at a lot of things. The size of your winning days vs losing days to me is the most important. If people just looked at his numbers without knowing the kind of risk he took (risking 100k to make 1-3k........horrendous), then they could have been fooled very easily. Myself, if I saw a guy who had 15 mos of small winning days without a losing day, I would ask a lot of questions. First being what size does he trade/what's his biggest position. That will tell you right away that he is a loose cannon/average down guy.
Yes. VN's strategy was exactly the same as Hoffman......and VN blew up twice. Was very predictable. The problem is, it's very tough for guys like Hoffman and VN to change their ways. VN blew out, came back later, did the same thing and blew out again. If Hoffman reloads his account, he will eventually blow out again. It might take a while, but he will.
anyway just to add, ppl who trade futures using infinity will know that their standard risk assessment level (MAX loss in the account) for DAY Trading is 60% of the total account. So assuming that he did not tweak it with his broker, and his broker Infinity liquidated him, meaning that it must have crossed that threshold.. that 300+k loss would be 60% of his account.. So based on this, his account would be worth about $500+k.
Actually, now that I think about it, he's damned lucky that he "only" lost 312K. The notional value of his total postion, when he was in on 852 contracts, was almost 70 million dollars near the bottom on the day he was involved. What the heck was he thinking, with an account that is only maybe around 500K?! I can't stress enough how bad this is!