I thought I better say a thing or two about this topic as I inadvertantly started it on another trading forum. My post arose from comments made by another trader about how seemingly easy it is to take money out of the stock index futures on a daily basis. Whenever I read how easy it is to daytrade the stock index futures - especially from those who aren't doing it - my radar screen goes up. The $500 bounty was from many, many years ago when the Club 3000 newsletter was in full force. Back then there were a bevy of vendors hanging out in that newsletter purporting to be successful stock index futures daytraders. These dream merchants would say and do about anything while pandering their trading courses, yet not one could ever produce any type of verifiable multi-year real money trading record. The $500 was simply a bait to flush out the big talkers. It's funny how over the ensuing years many of the vendors I tangled with have been cited for fraud by the CFTC. Fraud arising from their spurious claims of being successful real money traders in order to induce customers to purchase their wares. As for the average Joe trader, I'm sure there are many who labor in obscurity that can trade the lights out of the markets. I must admit though I'm a bit skeptical of those on trading forums who go on and on about their great trading prowess and claims of making the big money. The last I saw, only 4.1% of the population were millionaires. Reading some of the stuff on the trading forums would make you believe all of those 4.1% are traders since there seems to be so many making the big money. As for myself, turn about is fair play. When I used to be part of Vendorville in the early and mid 90s, (yes, I sold a stock index futures daytrading manual) my trading statements were an open book. I left Vendorland in 1995 but wrote a book in late 1999. Even there, the publisher received years of my trading statements. They told me none of their other authors had ever done that. As for my own trading prowess, I make no great claims. I'm just a small time trader who after struggling for more years than I care to remember, achieved success by consistently compounding my trading capital in a disciplined and systematic manner year after year, bull and bear market alike. Since I possess no special trading skills or abilities, I would never be so pompous as to suggest others can't succeed in this game. So I apologize if that was how my original post was construed. I think we all agree, being consistently successful at the trading game year in and year out requires an extraordinary amount of focus and discipline. Below (beginning with "Disclaimer") is a post I made to another forum last month on how I trade, albeit more general than specific. Hopefully, this won't stir matters up even more. "Disclaimer: To avoid any controversy, let me just say this post pertains *solely* to my particular style of trading. Due to differences in trading time frames, goals, and most especially risk tolerances, my style may not be everyoneâs cup of tea. 2003 has enabled me to come ever so close to achieving a long term financial goal and as a result, sometime in 2004, I plan on easing into a more semi-retired manner of trading. Part One of that new lifestyle change will be (and sooner than later) spending as least time as possible in trading forums. Iâm not leaving this fine forum quite yet, either as a poster or lurker, just gradually fading away. I apologize to any I may have offended along the way and wish all here the best of luck in their trading endeavors. I only wish I knew years ago, what I know now. But then donât we all. In hindsight, much of what Iâve made over the years has come from one particular pattern - tight rising channels and with little to no volatility along the way. Bruce Gould ingrained in me years ago that trading success comes from exploiting repetitious patterns and for Bruce it was price movement that defined repetitious patterns. Trading success also comes from having an edge. And the price movement pattern that has given me the most edge has been whenever an index or sector - be it domestic, international, equity or bond - is ascending in a steady cadence over a period of days, weeks, or months. The longer the cadence, the more profitable because it permits me to implement a concept learned from not only Bruce Gould, but also Jesse Livermore, Nicolas Darvas as well as many others who achieved trading success in their lifetime. And thatâs the concept of vertical trading. This means when you get on-board a trade that is a winner - your initial horizontal position - you then move to a vertical plane as you continually add to that original position. According to Bruce, true wealth accumulation comes when a trader shifts from a horizontal plane to a vertical plane - when the trader recognizes that he is on-board a winner and maximizes his efforts and capital staying aboard that winner. Wealth accumulation in trading (and business) according to Bruce is nothing more than your ability to work with your winners. Big money is made by taking horizontal opportunities and turning the winners into vertical successes - much like Ray Kroc did with McDonalds or Conrad Hilton with hotels. While this may not jive with everyoneâs trading beliefs, I am adamantly opposed to setting price targets or objectives. Let it run till the cadence changes its beat and donât try to predict when that change may come. Of course that is easier said than done and regretfully a principle Iâve been known to occasionally violate. Much to my surprise, after trading just about everything under the sun - from stocks, warrants, and convertibles to futures and options - the trading vehicle that has enriched me the most has been mutual funds. And thatâs because the funds trend more persistently and in tighter rising channels and with lesser volatility than anything else out there. The reason that is desirable, at least for me, is because I can trade the funds at a much greater level of level of aggressiveness than the other trading vehicles. For me, trading the funds were my solution to the age old problem most traders are faced with - how to overcome oneâs natural intolerances towards risk with the need to be prudently aggressive. If you ever want to accumulate a sizable nest egg from your trading efforts, **you must be aggressive and be willing to take risks!** Iâve mentioned this before, but I havenât shorted for years. Although some of my best trades on a horizontal plane while trading the stock index futures were from the short side, I never was able to trade on a vertical plane from the short side. Thatâs because the dynamics of a bull move are much different than that of a bear move - at least for me. Meaning, the bear moves are much quicker and violent and prone to just as quick and violent rallies against that bear trend. In other words, too much volatility to implement vertical trading where I can accumulate positions. While I may have made money consistently while trading the stock index futures, it wasnât until I went into mutual funds on a vertical plane that I was able to accumulate any significant trading capital. Obviously there are lots of tight rising channels to exploit during the bull phases in the market, but they nonetheless also exist during the bear phases. For example, during the brutal bear market of 2000-02, at one time or another you had tight rising channels in such areas as the REITs, TIPs, and small and mid-cap value, to name just a few. Iâm a believer in simplicity over complexity, in my personal life as well as in my trading. I didnât come into trading to be intellectually stimulated, just to make money. While there may have been times earlier in my career when I veered into the arcane and esoteric, I always found the most simple worked best. When you are simply trading the movement of a line in a tight rising channel, you have little need to get bogged down in tedious research and analysis, indicators, or most importantly, your opinions and biases.
Here you go folks. Here's a bit of a reality check. Very recent post from the "UK Scalpers" thread. This guy is a prop trader in London and he seems pretty sincere. How can I say that? Because I know he's right - I fully agree in all points in the first paragraph. He's also taking applications for people who want to start at his firm, and has explained the split and fees procedure, which is very fair and simple. Apart from that, I am in constant contact with a friend who's a European prop trader and he fills me in pretty regularly on how things work in his firm and clues as to what people do and make. Sounds nice to me. I am now even considering going to London for prop trading. Lot less boring than sitting at home all day. And if I can do 30-lots, then there's no reason why I can't 1,000-lots. And it's a lot less boring than listening to the notorious ramblings of losing ET members believing that there's no successful futures traders out there "because nobody is willing to take the challenge for $500" - LOL give me a freaking break! Scientist
Gary thanks for that awesome post. You just sound like someone that is sincere and legit. What exactly is a tight rising channel? Also.. do You look to take positions after a fund breaks out of a sideways base.. or do u frst wait for a trend to be established? --MIKE
'If', and that still remains to be seen. And as usual with you instead of facts you provided Internet tales...
Welcome! I have read your book, 'Trading for a living', and consider it one of the better books in this field. I do hope that you will continue to post here. Best, electron