Question for those who believe everything is 50/50 always...

pinabetal · Nov 20, 2016

Mtrader said:
First I would like to tell you that I really appreciate what you write and I agree with you. Also the way you “discuss” is refreshing. I feel intuitively, but also based on my +20 years of experience, that you are one of (the very few) people on ET who knows what he is talking about.

But I only have limited abilities and have to use them at max to survive. So what you tell that should be done is for me impossible. I am too stupid for that. And I have learned not to show or share my real performances with anybody.

After the story you told, I would like to tell you also a story.

Trader A is trading the ES for +10 years profitable now. After struggling for more than a decade to survive and to become profitable.

He started with a modest capital. As he saw that his system appeared to have lots of winning trades and very few losing trades he did not have to invest 10,000 ’s of dollars. He noticed that even with a small capital he would quickly generate decent profits, especially because he was going to use compounding.

He also realized that he could blow up. One more reason why he started with a modest capital. This gave him the opportunity to blow up his account 10 times in a row without ever harming himself financially. He said to himslef: “If you have a good system start slow, you will be millionaire a little bit later than planned, but if ever it turns out bad you will at least not completely wipe out from start.”

As his backtests showed him that he, on average, gave back less than 10% of the generated monthly profits in losing trades he could trade with an aggressive leverage. Therefore he was always reinvesting his total profits in new trades, but with 1 limitation: When a stop was hit (3 points ES) he had to be able to do the next trade with the same size as the losing trade. This to prevent that he should make big returns to recover small losses (like lose on 3 contracts and then try to recover on 2 contracts).

Backtests showed him that weekly profits almost always went over 100% of the initial invested capital. This was partially due to the relative small size he traded. So he decided to reset his account to the initial starting capital end of every month, or sometimes sooner if profits skyrocketed (some weeks could be huge will others could be very small, depending on what the market offered).

The result was that the first week was the most dangerous one, but even if the account would be wiped out there would be no problem at all and he would start over again. The possibility to wipe out his account 10 times in a row were, and still are, almost non existing. I never heard of a trader that wiped out 10 times in a row. And even then the damage would be small compared to the total net worth of trader A.

But he survived the first month, and his real results were in line with the backtests, he had +16 times his starting capital. Resetting it to the initial starting capital gave him a financial backup that allowed trader A to wipe out 15 times in a row and still have his starting capital.

After a few months trader A saw that the system performed well, and as he had already generated a decent amount of money he decided to double his initial starting capital, generating double the profits he had before. After trading 1 month with the higher starting capital his profits were again like when he started to trade. He could again put away 15 times the initial starting capital, but this time that capital was double from the previous one. Trader A was very happy now, could live good, but he would never be a billionaire. But trader A was more interested in quality of life then in a stressful life with capital he probably could not handle emotionally and maybe also psychologically.

Trader A still does not know if he was lucky or had the necessary knowledge and skills. He did around 5,000 trades which would logically be enough to show it was not just luck. Luck will not last 5,000 trades and 10 years of daytrading.

But he does not have to break his head on that anymore. It is for 100% sure he will never go broke because of the capital management he uses. The price to pay for that insurance was to give up the chances to become a billionaire. Becoming a billionaire would make trader A a very rich person on the graveyard, but with his actual profits he can do whatever he wants to do (within reasonable limits). So why make life complicated if you can keep it simple. The way trader A trades, took away all problems that a trader can encouter: stress, emotions, psychological problems, wipe outs…
More...

Great story! Trading is performance based activity full of psychological implications and obstacles to overcome. Those who learn how can "do" it w/o any higher education. You can study to fly an airplane for 15 years but until you actually attempt to fly it all your knowledge is theory...and it may be good theory....but it is purely theory. One can actually learn to fly a plane w/o one class of theory. However, theory can be useful too. However. One does not need a degree to learn to trade. Many a Harvard graduate couldn't trade a yo yo from a termite.

Maverick74 · Nov 20, 2016

Mtrader said:
First I would like to tell you that I really appreciate what you write and I agree with you. Also the way you “discuss” is refreshing. I feel intuitively, but also based on my +20 years of experience, that you are one of (the very few) people on ET who knows what he is talking about.

But I only have limited abilities and have to use them at max to survive. So what you tell that should be done is for me impossible. I am too stupid for that. And I have learned not to show or share my real performances with anybody.

After the story you told, I would like to tell you also a story.

Trader A is trading the ES for +10 years profitable now. After struggling for more than a decade to survive and to become profitable.

He started with a modest capital. As he saw that his system appeared to have lots of winning trades and very few losing trades he did not have to invest 10,000 ’s of dollars. He noticed that even with a small capital he would quickly generate decent profits, especially because he was going to use compounding.

He also realized that he could blow up. One more reason why he started with a modest capital. This gave him the opportunity to blow up his account 10 times in a row without ever harming himself financially. He said to himslef: “If you have a good system start slow, you will be millionaire a little bit later than planned, but if ever it turns out bad you will at least not completely wipe out from start.”

As his backtests showed him that he, on average, gave back less than 10% of the generated monthly profits in losing trades he could trade with an aggressive leverage. Therefore he was always reinvesting his total profits in new trades, but with 1 limitation: When a stop was hit (3 points ES) he had to be able to do the next trade with the same size as the losing trade. This to prevent that he should make big returns to recover small losses (like lose on 3 contracts and then try to recover on 2 contracts).

Backtests showed him that weekly profits almost always went over 100% of the initial invested capital. This was partially due to the relative small size he traded. So he decided to reset his account to the initial starting capital end of every month, or sometimes sooner if profits skyrocketed (some weeks could be huge will others could be very small, depending on what the market offered).

The result was that the first week was the most dangerous one, but even if the account would be wiped out there would be no problem at all and he would start over again. The possibility to wipe out his account 10 times in a row were, and still are, almost non existing. I never heard of a trader that wiped out 10 times in a row. And even then the damage would be small compared to the total net worth of trader A.

But he survived the first month, and his real results were in line with the backtests, he had +16 times his starting capital. Resetting it to the initial starting capital gave him a financial backup that allowed trader A to wipe out 15 times in a row and still have his starting capital.

After a few months trader A saw that the system performed well, and as he had already generated a decent amount of money he decided to double his initial starting capital, generating double the profits he had before. After trading 1 month with the higher starting capital his profits were again like when he started to trade. He could again put away 15 times the initial starting capital, but this time that capital was double from the previous one. Trader A was very happy now, could live good, but he would never be a billionaire. But trader A was more interested in quality of life then in a stressful life with capital he probably could not handle emotionally and maybe also psychologically.

Trader A still does not know if he was lucky or had the necessary knowledge and skills. He did around 5,000 trades which would logically be enough to show it was not just luck. Luck will not last 5,000 trades and 10 years of daytrading.

But he does not have to break his head on that anymore. It is for 100% sure he will never go broke because of the capital management he uses. The price to pay for that insurance was to give up the chances to become a billionaire. Becoming a billionaire would make trader A a very rich person on the graveyard, but with his actual profits he can do whatever he wants to do (within reasonable limits). So why make life complicated if you can keep it simple. The way trader A trades, took away all problems that a trader can encouter: stress, emotions, psychological problems, wipe outs…
More...

This is a story. A narrative if you will. This industry is full of stories. It's how vendors make a living selling charting packages, seminars, books, trading schools, etc. They are sold with stories. They can't sell based on hard facts because there are none. I have no interest in stories. When I was younger I'll admit I was enchanted by bullshit like I suppose a lot of people. As I grew older, I needed to find a way to cut through the bullshit and the only thing that did that was math. Math was hard to fake. Stories were easy to create and embellish. I'm not here telling anyone what or how to live their life. I'm offering a perspective. I'm not charging anything for it so you can toss it in the trash on your way out. But I'll leave it on the table and let it simmer in your mind a little bit. Do with it as you please.

USDJPY · Nov 20, 2016

Mtrader said:
First I would like to tell you that I really appreciate what you write and I agree with you. Also the way you “discuss” is refreshing. I feel intuitively, but also based on my +20 years of experience, that you are one of (the very few) people on ET who knows what he is talking about.

But I only have limited abilities and have to use them at max to survive. So what you tell that should be done is for me impossible. I am too stupid for that. And I have learned not to show or share my real performances with anybody.

After the story you told, I would like to tell you also a story.

Trader A is trading the ES for +10 years profitable now. After struggling for more than a decade to survive and to become profitable.

He started with a modest capital. As he saw that his system appeared to have lots of winning trades and very few losing trades he did not have to invest 10,000 ’s of dollars. He noticed that even with a small capital he would quickly generate decent profits, especially because he was going to use compounding.

He also realized that he could blow up. One more reason why he started with a modest capital. This gave him the opportunity to blow up his account 10 times in a row without ever harming himself financially. He said to himslef: “If you have a good system start slow, you will be millionaire a little bit later than planned, but if ever it turns out bad you will at least not completely wipe out from start.”

As his backtests showed him that he, on average, gave back less than 10% of the generated monthly profits in losing trades he could trade with an aggressive leverage. Therefore he was always reinvesting his total profits in new trades, but with 1 limitation: When a stop was hit (3 points ES) he had to be able to do the next trade with the same size as the losing trade. This to prevent that he should make big returns to recover small losses (like lose on 3 contracts and then try to recover on 2 contracts).

Backtests showed him that weekly profits almost always went over 100% of the initial invested capital. This was partially due to the relative small size he traded. So he decided to reset his account to the initial starting capital end of every month, or sometimes sooner if profits skyrocketed (some weeks could be huge will others could be very small, depending on what the market offered).

The result was that the first week was the most dangerous one, but even if the account would be wiped out there would be no problem at all and he would start over again. The possibility to wipe out his account 10 times in a row were, and still are, almost non existing. I never heard of a trader that wiped out 10 times in a row. And even then the damage would be small compared to the total net worth of trader A.

But he survived the first month, and his real results were in line with the backtests, he had +16 times his starting capital. Resetting it to the initial starting capital gave him a financial backup that allowed trader A to wipe out 15 times in a row and still have his starting capital.

After a few months trader A saw that the system performed well, and as he had already generated a decent amount of money he decided to double his initial starting capital, generating double the profits he had before. After trading 1 month with the higher starting capital his profits were again like when he started to trade. He could again put away 15 times the initial starting capital, but this time that capital was double from the previous one. Trader A was very happy now, could live good, but he would never be a billionaire. But trader A was more interested in quality of life then in a stressful life with capital he probably could not handle emotionally and maybe also psychologically.

Trader A still does not know if he was lucky or had the necessary knowledge and skills. He did around 5,000 trades which would logically be enough to show it was not just luck. Luck will not last 5,000 trades and 10 years of daytrading.

But he does not have to break his head on that anymore. It is for 100% sure he will never go broke because of the capital management he uses. The price to pay for that insurance was to give up the chances to become a billionaire. Becoming a billionaire would make trader A a very rich person on the graveyard, but with his actual profits he can do whatever he wants to do (within reasonable limits). So why make life complicated if you can keep it simple. The way trader A trades, took away all problems that a trader can encouter: stress, emotions, psychological problems, wipe outs…
More...

Is the real reason you are not going for the billion is to stay off the Forbes 500 list?

Turveyd · Nov 20, 2016

Not read any so sorry if been said.

Market becomes nearer a 50/50 game the longer you hold, on a months hold say Index or Currency it will pretty much be 52/48 so you edge is reduced too much news and random events.

Opposite trade ( how I trade ) its pretty much 90/10 being 5min holds.

So if your a newbie/crap then monthly holds you won't lose much over a year say, as you'll still profit 48% of the time.

Ofcourse on a 5min hold, you can if your crap (me) drop to a 10% win rate ( and I do ), I pretty much trade near 90% or 10% profitable, never anything inbetween, ( maybe 85/15 ).

Mtrader · Nov 20, 2016

Maverick74 said:
This is a story. A narrative if you will.
More...

Sorry to disappoint you. My story is more or less reality. I saw hard proof like broker statements. I was, and still am, witness of it.But I understand you.

When I was young I dreamed of becoming rich in trading stocks. After a reality check and wiping out my account I cancelled my dream and replaced it by a wish: make 2 points a day net in the ES. For many years it looked as unachievable. If I look back where I am now, I know that I would myself never have believed that you can make what I make today in a consistent way.

The only thing you can doubt about is the 100% return a week. All the rest you can check mathematically. And I understand you are good in math so that cannot be a problem. Please let me know what is mathematically wrong.

To be clear: I never made any offers in any way to sell anything at all. It is too easy to classify statements that you don't believe as snake oil vendors. Especially without any hard proof. I challenge everybody on ET: show 1 document or posting from me trying to make money from any kind of sale. You can even check the whole internet, not just this website. You will find nothing at all.

USDJPY · Nov 20, 2016

Mtrader said:
Sorry to disappoint you. My story is more or less reality. I saw hard proof like broker statements. I was, and still am, witness of it.But I understand you.

When I was young I dreamed of becoming rich in trading stocks. After a reality check and wiping out my account I cancelled my dream and replaced it by a wish: make 2 points a day net in the ES. For many years it looked as unachievable. If I look back where I am now, I know that I would myself never have believed that you can make what I make today in a consistent way.

The only thing you can doubt about is the 100% return a week. All the rest you can check mathematically. And I understand you are good in math so that cannot be a problem. Please let me know what is mathematically wrong.

To be clear: I never made any offers in any way to sell anything at all. It is too easy to classify statements that you don't believe as snake oil vendors. Especially without any hard proof. I challenge everybody on ET: show 1 document or posting from me trying to make money from any kind of sale. You can even check the whole internet, not just this website. You will find nothing at all.
More...

To make over 100% a week trading the ES, you would need to make more than 2 points a day. That comes out to 10 points a week. You would need over 200 X leverage to accomplish this, which is crazy.

Turveyd · Nov 20, 2016

USDJPY said:
To make over 100% a week trading the ES, you would need to make more than 2 points a day. That comes out to 10 points a week. You would need over 200 X leverage to accomplish this, which is crazy.
More...

Agreed on this, fishy.

Plus there is only so many times you can double the account before you hit max contract size.

2000
4000
8000
16000
32000
64000
128000
256000
512000

Thats 8 weeks from 2k, what contract size to make 256k from 10pts? 100contracts whats that $1800 area ? A long way off 25600, your 100% is gone before you hit 32k, not that 18k per week would be too shabby.

Also if true your a billionaire, why still posting here?

pinabetal · Nov 20, 2016

Maverick74 said:
This is a story. A narrative if you will. This industry is full of stories. It's how vendors make a living selling charting packages, seminars, books, trading schools, etc. They are sold with stories. They can't sell based on hard facts because there are none. I have no interest in stories. When I was younger I'll admit I was enchanted by bullshit like I suppose a lot of people. As I grew older, I needed to find a way to cut through the bullshit and the only thing that did that was math. Math was hard to fake. Stories were easy to create and embellish. I'm not here telling anyone what or how to live their life. I'm offering a perspective. I'm not charging anything for it so you can toss it in the trash on your way out. But I'll leave it on the table and let it simmer in your mind a little bit. Do with it as you please.
More...

And your story? Not all stories are stories. Some are true. Markets and math are two different things. Markets are more like art. Each day is different. No two days are exactly alike. Math is science and exact. One cannot corner up markets and make them science and exact. Never has been done and never will be done. That is why a good discretionary trader will outperform algos (excepting at nano second level for obvious reasons) over the long haul

Mtrader · Nov 20, 2016

USDJPY said:
To make over 100% a week trading the ES, you would need to make more than 2 points a day. That comes out to 10 points a week. You would need over 200 X leverage to accomplish this, which is crazy.
More...

Who said that trader A makes only 2 points a day? Where did you read that?

Read what is posted, not what would be convenient for your posting and your calculations.

Mtrader · Nov 20, 2016

Turveyd said:
Also if true your a billionaire, why still posting here?
More...

Well Einstein,

read my posting again or ask somebody to explain you what I posted. Your calculations proof that you cannot even read plain English correctly.
I will give you 1 hint: after four weeks (1 month) I reset my account to the starting capital. This means that in your calculations after you hit $32,000 you should put away $30,000 and trade again starting from $2,000. Your yearly profit will never exceed 12 times $30,000, or $360,000.

I doubt if you understand this. Maybe first follow English language for beginners and after that basic math.