heh. good basic strat... buying pullbacks. Downside is that much of the time that this strat won't work (hence always having tight stops), but when it does work, large profits... so as it relates to expectancy, it is still positive, but win rate is lower (due to false breakouts or pullbacks) but the gain is larger.. tradeoff is smaller losses, but more frequent. Kind of a related article here: http://www.tigersharktrading.com/ar...nd-Disadvantages-of-Different-Trading-Systems Basic stuff, but if one has the discipline to stick to the system, indeed money will be made.
I'll be brave by saying you are 99% right...supply/demand is key factor in any free market. EDIT: I've said it before, not all people are born with trading ability, not to say that is can't be developed though. How many highly intelligent people can start and successfully run a business? People wishing to make money out of trading financial instruments have to understand the laws of supply/demand, prior to getting entangled in complex trading strategies.
I was generalising Steve, I was in a restaurant trade prior to trading futures and the overwhelming majority of customers did not know that butcher's meat prices oscillate, they didn't know that supermarket's prices oscillate, they do not understand why their house has increased/decreased in value, etc. If those people attempted to make money out of trading, they would most certainly fail, not referring to money management issues here, simply to supply/demand, which IMO, based on many years running a regular business, is extremely important when trading.
No disrespect intended, but I think you failed to see CT mentioning on his example chart adjusting position size according to the Pivot Point. Therefore, your stop might be 1,2,3,4,5, etc points away from entry point and in all these different stops your position size has to be adjusted to your maximum loss.
I understand what he meant in position sizing, no disrespect taken The point I was trying to make is that buying breakouts or pullbacks (as it refers to a trend-trading model) tends to have a higher frequency of losers than winners. It's the nature of the system, so that is why strict risk management rules must be adhered to. The reason for this is because of false breakouts... you get more of those than you get good ones, yet the relatively fewer winners will be larger than your losers... Anyway I fear we have digressed far from the topic of this thread, so I will address it now: Many people, Livermore perhaps included, consider money lost in the market their "tuition." Sure mentors are great, and classes are great, but to truely learn to trade, one must actually.. trade. And when one trades one loses money inevitably, no matter how much training you've got. It's learning how to deal with the ups and downs inherent in trading (Psychology) that is difficult. I think the point of this thread was to get the general consensus of the monetary value of someone teaching someone else to trade... and inexorably that is quite a subjective topic... Furthermore, everyone has different prices they are willing to pay to "learn" to trade... some people seem to be willing to spend 10's of thousands in black box systems or trading courses offered by people who make a [good] living selling them, or the hottest "stock picking" newsletters... Others have smaller trading accounts so the money that would be spent on these "trading courses" is the money they start trading with...
How about this one...get a voluntary (unpaid) job at an exchange as a cleaner/coffee maker and learn from the pros for free
Initially I paid $60,000 to the markets in my first 2 years trading. Then I paid $5000 for a mentor and another $20,000 to the markets in my 3rd year. Including living expenses this has cost me $200,000 (approx). It is now my 4th year into this and I am confidently on track to make half of it back. It will not be until the end of the 5th year that I will turn a profit. From what I can tell this seems to be the norm outside of a booming market environment so for those that are considering this as a career govern yourself accordingly.
If you were a good trader and your manager asks you to train newbies and get a percentage of their commissions, would you do it? For me personally, I would not. I've trained so many newbies few years ago and it didn't work out well. Most of these newbies became successful traders, but the rewards for me was not as rewarding as I would expected. My performance dropped 50%. I was making so much money back then. So getting a percentage of the commissions was not worth it. I am talking about $4k/per month from these traders. In the end, I lose out. I realized that it was harder to focus and concentrate when traders are looking over your shoulder to see what you're doing.
Intriguing post. Although we are going to go off topic, I would like to ask you a few questions regarding teaching: 1. Can you give us a % of how many of your students became succesful? 2. Were they chosen randomly, or was there a selection method? 3. Could it be, that your trading performance dropped because of other factors (market behaviour change, edge's disappearence)) rather than giving away your strategy? 4. Would you say that the students who became succesful generally were ungreatful? 5. Maybe you didn't charge enough for your services? Thanks in advance if you respond....