out-sized ROI is for multi millionaires or under-capitalised gamblers, for the majority of us safe trading systems generating steady ROI is the only way forward. I have seen it so many times when the most safe set-up is reversed with such a strength/momentum that one might not have enough time to shout out - "Oh SHIIIIIIT!" and that over-leveraged position is blown. So what's the point? Don't forget that the majority on ET are not extremely well capitalised individuals and they will love the idea of hitting a big winner, though will probably never actually risk that much and if they do/did I am certain they will never attempt doing it again. EDIT: In principle I might agree with you that the ones that don't risk will not be drinking champagne (Dom Perignon of course)
hi, thanks, i agree with the edit. my question is:why trade then? why not just purchase mutual funds? thanks, surf
1) to be in control, 2) to earn the huge (legal) kickbacks in the form of commissions, mark-ups or the like, associated with one's trading volume... instead of giving them away to the mostly useless mutual fund guys who have little incentive in making you serious money anyway... also, they wouldn't be set up as a mutual fund if they were any good... clear enough?
Some like to delude themselves into believing they can safely write cheap gamma many deviations otm while taking comfort in the probability of profit. The same tend to buy into the belief that they are great traders based on the ability to generate large absolute returns based solely on a passive short gamma strategy made possible by risk-based haircuts available in index futures options. Selling otm stops requires less skill than screwing in a light bulb.
now i am even more confused! retail traders earn huge kickbacks?? not any who i know. are you talking about high volume rebate trading with a professional firm?? if so, that was certainly not who i was addressing with my comments. surfer
dude - who says i or a couple of posters you've not-so-thoughtfully replied to are 'retail'? also, wisen up, rebates, mark-ups etc are not just sthg you only find at prop firms... there are quite a few ways to 'extract' those type of fees legally... and thats not small... obviously makes no sense if your only trading your PA, but if PA + OPM... do you trade? retail-type? just curious...
Interesting, but you are talking more about 'value at risk' than the quantification of the risk itself.