[snip]Another guy who trades FX sets an incredibly difficult bar of tripling his demo twice before he lets any strategy go live. How many of us have the discipline to do that? Very, very few have the desire and discipline for months of testing and optimizing. Shortcuts won't allow you to move up to the next level. I've pre-ordered this book from Amazon. If useful I'll pass it on to my daughter; if not it will become fire starter this winter. I'll let you know....
I haven't finished it yet, but I think I got the biggest kick out of Indy Jones. Probably the most entertaining read, though his trading style is too different from mine to be of any real use. In terms of which I probably got the most out of, it's the "Man who buys crashes". I haven't traded individual equities in a while, but he lays forth a couple decent ideas to think about and tinker around with.
Why your daughter? Does she trade? You are right about the discipline - it takes 10 years to be a surgeon at least 5-6 years ti be a good litigator, most people simply stop before they acquire any proficiency. Add to that the fact that trading has an enormous of chance and like dramatic arts simply requires raw talent as well and you have this mesmerizing combination of something that looks so easy and is in fact so hard.
Dana chapter is awesome - the part where he buys $1 stocks after the Nasdaq crash was just pure brilliance.
Dana's approach is also very interesting because he uses a multitude of strategies. This, in theory, I think is a great methodology because we all know that diversification mitigates risk. Unfortunately some of us are one trick ponies. I for example am only happy when I trade 1 strategy at a time. To that end Chuck Hays serves as a great counter example. He trades only 1 instrument ER one way - scalping. So my question is what do you think gives you a better chance of winning in trading - being a specialist or being a generalist? My view is that the answer depends to a very large extent on your own personality. It's far more important to trade in sync with your own tastes rather than adapt to someone's else idea of what you should do. What do you guys think?
One other very good technique that many of the traders in the book used was probative trading. Almost none of the traders used their full position at the start of the trade. Most of the guys whether they trades equities or futures of fx would use an "excursionary" orders to test out the market. I think this is a key difference between novices and pros. Novices are always overconfident, assuming that they will be right, so they bet too big. Pros on the other hand assume that they know nothing - or rather that anything can happen - and therefore are always cautious. Markets by their very nature are highly unstable, very much unlike what most people are used to in a work environment. So when novices bring their sense of certainty with them they inevitably set themselves up for failure.
You have brought up many myths in your posts as a consequence of your orientation and experience. How do you think the book would have read if it were written by a person who was a successful trader. Check out Gary Smith as an example of an autobiography. I do not see chance as being involved in the selection of making money in trading. Personality is not a factor either. Were a person to begin at square one to assess or consider making money trading, he might actually use a rational and logical approach as the basis. There is no path to specialist of generalist, the spectrum you have suggested, that would appeal to this person. Instead, I suggest two different maps dictate the path for this person. One deals with money the other deals with life. Everyone can get out each map and in a New York minute make the connection between the two maps. Draw lines to where you want to live from where you live now. read Tobias's obit and see if you drew that set of lines. Now you have the price tag. Those you profiled mostly live in one home near some place where they do their thing. Greenwich is a good example. Drive around and pick the place and note the price tag. Do Manhattan or some other city where there are markets. When you look at the other map you will see why. The other map is where you figure out why being a specialist or generalist isn't in the cards nor is any other point on that spectrum. Do the crayola test. There is only one plan to translate the crayola to the X on the first map. You figure right off that you get to the X on the map soon and after that you have a lot of left overs simply because the X on the map is not a goal, it is a life style that is being maintained with a lot of left overs. Who are these traders and what do they do? Sometimes their cars are delivered to Vegas four months late because of the specs not being met. The crayola tells the story as I said in a New York minute. Money is made effectively, efficiently and optimally all compared to one thing: what the market offers. None of the people you profiled deal with effectiveness, efficiency or optimization from what you have said in this thread. The programmers of the people who live in the houses where the X is on the map are sharp guys. The programmers take all of the nitty gritty off the table for trading for their clients. Timmay doesn't have a programmer nor do any of the people he talks money to. What does a person who is looking to be effective, efficient and optimal concern himself with? None of that came up in the thread before you asked the two questions. Why should it? These are not the concerns of people who interview, go on TV to be talking heads or be employees of corporations in the financial industry. It is a priori as demonstratd by the track records of all these people as compared to the crayola test. Apparently, the myths hide the markets. What is there when a person peels back all the way to the opportunity and then treats it like a business. It is nothing like what the myths pronounce to you and those you profile. The example of the food producer (fresh vegggies) is a good one. He rents the land. He buys everything he can to get more veggies and he pays the least possible to plant, maintain and harvest. He also brokers as much locally and ships the least. He is efficient, effective and he optimizes with his choice of crop rotations. Effective, efficient and optimal traders "grow money". You haven't profiled any of these people as yet. You haven't ID'ed one as yet. Think of this as a possibility. Pretend you are a journalist who wants a story. Where do you go to get a story about a trader. you can go to a trader and try. Darvas worked out that way. He was cool and those times were neat. He stuck out like a sore thumb to his brokers. That's where the word started getting out. What about another route to the story? Imagine a guy who knows his way around and is checking with people who have been turned down. Turned down how? No deal? No amounts? Who will write that book? Look at the Trader's Expo. LOL..... Who are the lurkers? Well 8 and 9 digit money is there. Can you imagine what happens to one of these people when they see a few people after a presentation BS'ing about something? Something they quickly figure out is important? These people have X's on the nicest maps. And they are lurking because they know there are terrific traders here and there. Terrific traders turn down OPM. Why? There was a big joke at the NY Trader's Expo and the moderator didn't know it. He just was the CEO of the TE and was asking Q's. He didn't know how the terrific traders on the platform deal with OPM. One of his Q's nearly knocked all the guys off the platform with laughter. What is the niche that exists for some traders in the financial industry? How did it get buried under the myths? Peope look at the markets all day long and do not ever see what is there. The crayola knows. And some people harvest what the crayola knows. Could it be anyother way for these kinds of people. Certainly not. They can recognize each other in a New York minute, as well.