My first post; some observations on trading.

Discussion in 'Trading' started by abc1, Sep 2, 2007.

  1. abc1


    Having spent over a year lurking on this forum without posting I have now decided it is time to post.

    My thoughts on trading come from experience as a trader, having seen other people trade, some reading and an open philosophical mind among other things.

    For a start there are several things that hold true for 99% of traders; that is that they all are making money and lots of it, that there is a skill or secret to successful trading and above all that you must hear all about it.

    The realities of trading are somewhat different. Very few make money - at least consistently. More importantly is my ultimate belief that there is no skill or secret to trading; that trading is pure chance. I have yet to meet anyone who could convince me otherwise. I have met plenty of people with varying degrees of experience, who will tell me otherwise, often giving me a despairing look or attempt to educate me with the 'facts' but to no avail. These people I call 'the believers' and it looks like there are plenty of them here. :)

    They will point out the charts, talk about TA, resistance, support, economic indicators, their bad luck on the last trade etc. They can even read the morning newspaper informing them what happened yesterday.

    The belief in 'an edge' is another of my pet favourites. True there are edges in trading but it is limited to a very small percentage of people. They include brokers, exchanges and those with insider knowledge, i.e., those who make money on every trade and those who really are trading ahead of the curve.

    What a lot of people really don't understand or want to believe is that it is the future that determines what happens and very little in the past can tell you what that will be. A stock chart might show a high or a trend but it won't tell you the company is going bankrupt tomorrow, that the company's latest profit generating product has a flaw and is about to be recalled from retail, that several brokers are about to upgrade the stock (bad news for those that are shorting) etc.

    While this might seem painfully obvious, very few realise the significance of it. Anyone can use plenty of information to make a trade but nobody can guarantee profit or a loss. Fate, chance or simply tomorrow's news will decide that.

  2. ABC, you obviously didn't make it to D.

    "Fate, chance or simply tomorrow's news" haven't a damn thing to do with the outcome of a 60 second scalp.

    I could continue, but I'll let other people who trade take over from here.
  3. no. 22

    no. 22

    ABC, I believe it's true that it hardly matters whether you go long or short or when you do so. What matters is whether you've got the patience to wait for the trade to become profitable. Patience is augmented by capital, of course. Some short term traders get into trouble because they don't have enough capital to wait; they have to exit a "losing" trade in order to free-up their capital to enter the next trade.
  4. Trading consists of buying inventory at one price and selling it at a higher price.

    Traders look at indicators either technical or fundamental and decide what is the mostly likely setup that would entice someone else to pay more for that same inventory. That is called profit.

    Best Buy buys inventory of Flat screens. It uses demographics and cost ..(ie fundamental and technicals) To determine if it can sell at a profit. To entice a customer to come to the store to pay more for that inventory best buy needs to have the cost and popular product

    ....Both trader and retailer need the same thing...inventory that is priced right and in demand.

    Both trader and best buy are exposed to equal risks
  5. Do we really need another thread about the philosophy of trading?
  6. mde2004


    One word, yes.
  7. Dude you're a dumbass if you've spent a year lurking on ET and concluding this. In the time you spent that year lurking on ET, I spent the time learning how to read human psychology and how to find predictable patterns - I also was taught how to trade some real edges. They're not that hard to find if you watch price. You're stupid and you haven't watched price and you would rather "be right" with your beliefs you learned from ET than make money with beliefs learned from experience with price. It would be a service to the world that you also spend the next year of your life not posting on ET, and perhaps a service to you to stop reading it, since it's a waste of time. Why would you read ET continuously if you're not a trader interested in learning how to trade or a an experienced trader going here out of boredom? If you spent the last year of your life also intending to learn how to trade, you wasted it. I can define for you 10 real "edges" that work consistently, requiring varying degrees of judgement and intuition - from none at all and fully automatable to requiring lots of experience and even emotional feel for the market (a good trader can feel his own emotions and use that as an indicator of how the crowd feels and trade in the right direction, or use the feel of the other traders around him if in a trading room - this alone is kind of an edge, heh). Some edges were just plain "obvious" to me and I don't think I'm special and have a magical gift for seeing market edges... I just watch price and sometimes it's really fucking obvious).

    Why am I not RAKING money in?
    Because I don't have good enough emotional control skills, which is what I"m working on. I gamble, revenge trade, get frustrated, take shots, trade in sub-optimal states of mind, fight stocks, and even trade AGAINST what I KNOW is the right thing to do. When I don't do those things, I constantly make new records. I make huge donations though and lose money doing dumb shit, like trading news, and get in my own way generally.

    Despite this, I gross (unfortunately my comm structure is a ripoff and I don't net that much) $10-20k/month + consistently, within 9 months of trading, over tens of thousands of trades - yes tens of thousands, huge sample sizes. I have adopted to many different market conditions and seen constant change in my 9 months - but I've been able to stay on top and more and more one step ahead because it's not that complicated - price is not complicated - it's human emotion and intention and reaction to uncertainty and even sometimes anxiety and fear and greed. It's a cool game. THe variables don't change, and the market always gives clues, because price doesn't move from some computer program that generates random walks - it moves from human emotional patterns, which constantly repeat, thus there are always "edges" to exploit them - every real trader on this board who read your post knows this, but people don't even bother to try to explain to people as stupid as you what is actually a very simple concept.
  8. Certain personality flaws are guaranteed career killers, and certain flaws- while costly- can be dealt with and survived.

    Your innate flaws are very similar to my own, and belong to the latter category, fortunately for you. Judging by this post alone, I'd say you probably have some pretty decent potential. The thread starter, on the other hand... needs to find a different line of work.
  9. patoo


  10. abc1


    They have everything to do with it. Think of the amount of news and other traders out there during that 60 seconds. Your attempt to scalp could be in ruins before you know it.

    Interesting philosophy but a bit flawed (no offence intended.)

    You are never buying or selling the company; you are buying or selling their shares (UK) or stock (US) and you appear to assume that the performance of both mirror each other; which is not always true.

    The risks are certainly not all the same.

    This was my first post and I thought it may generate some interesting discussion.

    Well now we are even :p

    Firstly please learn some politeness.

    Secondly I am a market participant; my education and forming of opinions has come from the market; not an online forum.

    Tell me, how's the emotional control bit going ?

    Congratulations on your success so far. May I ask what you use to trade (direct market access, broker, trading company) ?

    You are correct on the factors you list. However, my point is that there are so many humans out there all reacting slightly differently; using different strategies and absolutley none of them knows what will happen next.

    #10     Sep 3, 2007