Statistics also should tell you that successful traders can not exist in an efficient market......so maybe you should quit trading altogether since you seem so faithful in science?... I'll keep you posted. I'm prepared for whatever comes my way. I feel safe right now having made back most of the money I lost. Honestly, I think it's all gold from here on out......when I build my account to $1,000,000, I'll be sure to let you guys know what my real name is too.... BTW, I think you are probably JMOWERY. good luck in your reading about trading MOWERY,....you'll learn a lot about the markets that way...lol
I thought NAPM would would send this market down. Down a little over $300 today but up $5000 over past two weeks so I'm happy. Bonds are trading just below daily resistance now. I think bonds will still rally all week in anticipation of a fed standstill next tuesday. HOwever, the fed is probably going to raise rates next tuesday and that's when I'll make the BIG $$$ cause no one else seems to think they will... I wish I could express just how much I LOVE my job.,...
I don't believe luck has anything to do with it. I believe in something called FATE. No matter what happens in the meantime, the end result will be the same. I truly beleve that I was meant to be a successful trader. no matter how stormy the experience gets along the way, the end result will be the same nonetheless...I believe this to be the case irrespective of whether I build this $35,000 stake into $1,000,000 or trade it into the abyss... you see, i have something no one else has: unrelenting determination to succeed and eternal optimism no matter what happens...Losing what I have now would just get me back to working a 9 to 5 to build another stake and do it all over again....it's that simple for me because I know the end result will be the same no matter what troubles I have along the way... I may trade for 10 or more years before I get to where I am destined to find myself...that's fine.... You may disagree with the way I decide to "promote myself" with position size increases but the way I look at it is this: if I get up to $40,000, then I am definitely doing something right. If I get up to $40,000 and then drop right back down to below $40,000 then I'm back to 7-lots.....that's the way it's gonna work Whether my performance defies statistics does not concern me. I expect to defy statistics myself when I one day turn a really small account into a billion dollars. I don't allow myself to be bound by the laws of statistics or by any laws that attempt to limit my potential. I truly believe there is nothing I can not do as long as I have the will to do it. I just turned a sub $6,000 account into just under $35,000. Now do you think I'd have been able to do that if I allowed statistics to tell me what is possible? Mowery, I wish you luck in your pursuit of success as a trader. However, you have some serious issues you need to work out before you can even say the word "success" let alone actually achieve it...For one thing, what we do as speculators of financial markets is very much out of the ordinary. We traders are often outcasts who do not prescribe to societel norms (for example, my own rejection of any "universal rules" governing limitations of success in the financial markets...i.e. you can't turn $6000 into $1,000,000, and etc..). Every day we thumb our noses at economic and mathematical theory which purport that consistently profitable traders can not exist in this efficient marketplace.... And let me end this discussion by stating that you may be right: it may be a matter of time before I bring this currrent $35,000 account down to 0. But what you need to understand is that it doesn't matter. The end result will be the same nonetheless; I will be a multi millionaire one day no matter what happens along the way....
Actually, it's $31.25 per tick in bonds. Bonds don't move as much as their relatives the two and five year notes. Let me say this: I've been cutting losses like you wouldn't believe.....I've been right alot and when I've been wrong there has been basically a zero tolerance attitude where I immediately take the $218 -$312.50 loss. However, I do a lot of scaling and it is only when a position is working for me that I am actually long or short my full 7-lots. Usually I cut my losses at 3 or 4 lots without maxing out my position size. So, I end up losing money on 3 or 4 lots and making money on 7 lots. So far it has been working out quite well for me. Of course, a monkey could have made money buying bonds over the last four weeks. I'm realizing that being right can pay you handsomely if you don't second guess yourself. I've done nothing but buy bonds over the last 4 or so weeks. I picked the bottom in bonds successfully and have probably about two or three short trades over the past three weeks which all lost money....Of course, I lost so much money shorting about a week before the low in bonds and it was the fact that shorting lost me money that made me very bullish on bonds and thus led me to correctly picking the bottom... Trading that kind of risk can make sense if you are right and if you have a zero tolerance policy when you are wrong (i.e. get out immeidately and don't let losses mount). Of course, it is still risky but that is the nature of what we traders do.
good effort. Sounds like you got things covered. A few questions that you probably already asked yourself... What's the maximum loss you're willing to take on a single trade? what's the profit you expect from any trade? what's the average profit you actually get on any given trade? what's your average holding time for winners? for losers? and one more thing... regarding a previous statement of yours... It is statistically impossible to make any money in an eficient market... that is true. Because an eficient market is in equilibrium supply=demand=price, the price is not moving, so it is imposible to make money in a market that is not moving. However, markets usually don't last too long in equilibrium, there's always someone who changes his mind about a particular market in any moment in time, and breaks the equilibrium [he buys or sells] . Once an inefficiency in the market is big enough to distort supply and demand at a given price, supply <> demand, then price changes to adapt to the new conditions. Your window of opportunity is caused by the inefficiencies in the market, and it is statistically possible to make money in an inefficient market, that's where we all get our lunches. Dont try to fight statistics, find a way around to put em in your favour.
Over the last three weeks, my maximum loss per trade has been $156.25. Obviously, I haven't always been able to assure that but 99% of the time I have. I don't place limits on the maximum profit I will take per trade. I basically let the trade go and go and go and get out on movements that are obviously not pullbacks. My profit per trade is usually $500 or so. I don't look for small fluctuations; i try to grab at many points of profit per trade. Average holding time for winners is 4 hours 21 minutes. Average holding time for losers is less than 4 minutes 47 seconds (over the past three weeks)... Efficient market theory holds that any financial news is already reflected in the market. That being the case, what you describe as shifts from equilibrium to disequilibrium flies in the face of economic theory. This is not to say that what you say is not true. But you seem to be trying to defend efficient market theory yet at the same time present a state of affairs in which such efficient market theory is clearly being decimated. I don't believe markets are efficient. The fact that there are shifts from equilibrium to disequilibrium makes my case. The facts that it is possible to be consistently profitable defies the notion of market efficiency. Statistics bother me because they attempt to quantify things which are often not quantifiable. Risk can not be accurately quantified. You calculate the risk of a particular trade or strategy to be .000001%. COME ON> >>>> > that's guaranteed money right? When it fails you conclude: it was an anomoly. I'm not a big fan of quantitative models. Their results are useless, IMHO...
Good effort, you´re using good risk management, not hanging on {or hoping on} losers, letting winers ride... profits to risk ratio around 3:1... Sounds like you have a sane strategy. On market eficiency, I study economics, and I´ve done my share of thinking as to why economic models dont work in the market. Here´s few thoughts about it. I consider the markets to be in equilibrium only when no trades are happening. When a trade happens then the market is out of balance. I consider a trade to be an inefficiency correcting it self, for example, you where bullish, now you´re not, there´s an inefficiency in the way you feel about your long position, you sell inefficiency solved. If you look at a market that´s completly efficient, it´s imposible to make money there... {like rica foods...} the damn thing moves once a month, or less! It has near 0 volume. The few people that actually care for that stock all agree on price... it´s in equilibrium. But a market like QQQ for instance, won´t be efficient more than a few milliseconds at a time... it becomes unefficient over 100MM times a day... The problem with economic theories {when applied to the market} is that those theories are based on a fix moment, therefore the asumption of ceteris paribus {everything else remains constant}, that happens to be in most models. In a stock that prints 500 shares per day, you can asume ceteris paribus most of the time and still be right... but when you look at qqq all things never remain constant. Ceteris paribus doesn´t work here, and that´s a problem for many models... In a completly caothic market you can say that ceteris paribus is never true... however this is another extreme and is not right either. The reality of the market is that many things remain constant, while others dont. The markets are efficient as to observing long term price levels, but become less efficient as time frames become shorter. Several things do remain constant {and that´s why the markets have ranges. For example GE, most of the time all traders in GE asume that the finantial information of the company remains constant {fundamentals} however, that doesn´t imply that each trader´s expectations for the company remain constant... they are constantly changing... and therefore the stock has several million, small inefficiencies every day, while remaining inside a broader range. The markets are efficient but they have a margin of error. We trade inside that margin of error, and that margin becomes larger as you increase your time frame. But as the time frame increases the unusual prices become less comon, so that market becomes more stable... withing a larger error margin {the markets are usually not wrong about long term price, but when they are it´s not pretty... think ENRON}. This is why instant time frames in the market are randon, but it creates paterns in the longer time frames... Statistics do apply to the market, however not in a simple way, you have to go through fractals and chaos theories... {this 2 theories also explain why the markets reflect fibonnaci patterns, the golden ratio, and natural exponential growth ratios[interest rate]} The easiest application of statistics to the markets is risk management {is actually an indirect application} and you´re already doing that.
Made a killing today. I'm so happy. bought 3 @ 107.30, 3 @ 107.31, and 1 @ 108 evens. I haven't gotten out yet. I'm looking to get out at 108.10 but if this thing goes against me more than 3 ticks, I'll be out.... Anyways, back to your point: i don't believe illiquid markets are necessarily in states of equilibrium; in fact, it seems that it is in such illiquid markets that we see the widest spreads and thus the most inefficient markets. To put my own point succinctly, I do not have substantial faith in anything really....especially not statistics, mathematics and science. That said, some mathematical theories can be applied to the markets. For example, elliott wave theory is most definitely related to fractal mathematics and I've personally witnessed the phenomena of a single (seemingly insignificant) event causing an explosion in market prices (hence Chaos Theory). I am a very big fan of simplicity. The simpler a method is, the better I feel about it. Complex mathematical models of risk are worthless, in my opinion. Such models attempt to quantify something which is inherently inquantifiable: risk. Now there are some who would argue that something (i.e. quantitative models as deficient as they are) is better than nothing. I disagree with that contention.
Good effort on that trade... I´ve never traded bonds... I´ll give em a shot sometime... Yeah I don´t ever try to do any trading based on math models... or statistics... I don´t even like applying elliot waves and fibbonnacci to the market... but it does entretain me to theorize and fit economic models to the market... it gives me something to do when the tape is not printing... and it sometimes helps me understand certain things that I see in the bahaviour of the market. I think you´re right about illiquid markets... Im thinking that perhaps there isn´t such a thing as a perfectly efficient market, just like there isn´t such a thing as perfect competition... or perhaps we should go to the other extreme as to say that liquid markets are always efficient in a given moment in time, however they constantly become inefficient and are forced to correct themselves in the light of new information {therefore, ceteris paribus markets are efficient and it is imposible to make money in them... however there is no such thing as ceteris paribus in the markets for any time frame longer than an instant... creating an endless flow of oportunities to make money...} I´ve actually found plenty of flaus in economic equilibrium models, like the ones used by the WTO to support free trade, mostly because they fail to acknowledge the fact that price is always changing. As for chaos theory, the part of it that I´ve seen in the markets is the one that explain how random price movements in very short time frames can lead to predictable patterns, it happens all over nature, in your lungs, the shape of spiral galaxies, finantial markets, precipitation patterns... seemingly random events {chaos} can bring ordered patterns... this is also the part of the chaos theory that concerns fractals, and the part that links everything to the fibonnacci sequence. I dont believe in coincidences, specially in events that are unlike to be correlated... I belive that there is a relation beyond our understanding... and I dont think we´ll ever come to comprehend such knowledge... a true theory of everything, one that links finantials, biologicals, astronomy, physics and God knows what else. Kind of like the movie Pi.