For every Graham Bell and Edison, there are thousands of would-be inventors who never made it, but at best spent their lives tinkering in their basement. This includes the guy who invented a telephone but arrived at the patent office three hours later than Graham Bell.
The greatest traders have began being losers. Even the great Jesse Livermore has been ruined at his beginning. Even Gann. Gann said in fact that losing motivated him. As for me I would never discover my model if I had not being washed exactly in the same circonstances as Jesse Livermore that is to say he didn't understand at first why after being so successful he suffered terrible losses. So you have to take some distance to understand why. Now of course not every losers will learn the lessons, so it will depend on people attitude and / or capacity to react to their losing situation.
Niederhoffer and Livermore are the most prominent people who IMO never understood the basic concepts of risk management. I wonder why they are among the most quoted people ... no I actually know why. It is because the true business IMHO is not spectacular at all and not attractive enough to get the attention of the media. peace
I gotta agree with Man... Livermore had a minimal conception of risk management... but he is acclaimed because his achievements were sexy.... see my Elitetrader book review of Reminiscences of a Stock Operator....
Right on the money. Trading is hard disciplined work that doesn't translate well to media. You know the funny thing about Niederhoffer is that not only was he wrong but he stayed wrong(stubborn). He had been selling naked puts to collect the premium when the market took it's first big leg down. Instead of taking his spanking right then and there he sold more premium into the hole. Next leg down wiped him, and more importantly his customers, out. Stupid stupid rookie move. Dr. Zhivodka
posts saying what fl_trader says (and by the way he does make some generally accepted points). I want people to think there is no edge, zilch! I want people to not come into trading. I want people to think it is harder than nails to make a red cent. Let that be the consensus. Let the Ph.Ds. debate all that crap. Hate to sound selfish but it makes me sometimes smile when I read about get-rich-quick "traders" coming on board (whether on ET or elsewhere) thinking they can come to this biz and (deserve to) make (big) money from the get-go.... or within a year or two; and then start getting easily frustrated when they lose. That is the test of their will and character. There IS trading Darwinism. Succeeding in this business is NO DIFFERENT than success in any endeavor. All the same qualities come into play. Some cavemen (women) did better than others, some survived... some perished. So it is in trading. And wanting it more than the other 'guy' is a paramount quality. And that is how it should be. Where did the idea ever originate that a large % of people succeed IN ANYTHING that is highly competitive and offers great rewards?! It is for that reason that you can read a thousand books, and take classes and have a zillion resources available but not make money and certainly not get "rich"! However, as "man" has just so perfectly noted... succeeding in this biz is the opposite of compulsive gambling. It is not exciting. It is not about 15 monitors, necessarily... and better this or better that. It is about going to work each day... and doing your job; executing your business model... consistently. Adjusting what needs to be changed or modified to continue performing profitably. It is about reasonable expectations and steady progress. It is about MAKING a living! Not breaking the bank. It is not glamorous, exciting or terrifying in the final analysis... to the real traders... only to the outside world who not unlike patrons of nascar races... wish they could enter the arena and drive 190 mph without crashing... ! iceman
Correct. For every Graham Bell or Edison there are thousands of unsuccessful inventors who never gave up and still never gained success. We don't know their names. We never hear of them. For every Livermore or Niederhoffer there are thousands of traders who may keep trying their whole lives but never manage to become successful at trading. Or, more likely, end up losing all their money, and working as janitors the rest of their lives. We don't know their names. We almost never hear of them. The biographies of survivors highlight the rare needle in the haystack. Just as profiles of lottery winners, or chart-topping musicians or film stars, although true, give hopes to millions that they could reach that rare pinnacle too. There may be only limited room at the pinnacle.
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you read my mind... being a newbie ET guy I'm just getting acquainted with it's features. Thanks very much for alerting me.
Reminiscences of a Stock Operator is a novel, risk management was not the sexy center of this novel, nor statistics. In real he was the first who engaged statisticians to work for him. So it is a little pretentious to say that he had a minimal conception. Many of you thinks he is great because he is winning but as I said in another post it is normal because of random law (Levy's law) that market lets some people win consistently until they wash many of them out but a very long time after. I already told the story of someone I knew who used to win 10000 per day for several months he didn't know why but it was so easy for him and then he lost 1 million and prefered to stop. You should not be pretentious because you are a winner at the moment. Niedhoffer lost everything after 14 years the year he wrote his book : it is ironically when you think that you become the best that you risk the desillusion. Risk management is necessary but today there is a tendancy to make it as the new god in speculation as was other technics in past years until a catastroph shows the contrary. For example the best performer of the famous risk management guru has been crashed recently. People has filled a lawsuit against this trader and the guru.