How do you send PM on this forum? Nowhere I can find this option. All I can do is start personal thread but that's not the same thing.
Yes, Baron changed it so that the "private thread" is the PM. I didn't like that change but no one gave me a vote.
Hello Mav, Haven't checked it in some time as I'm recovering from old fart surgery. : ) I'm having some concentration issues so he'll have to hang tight for a while.
Sorry to hear that Senior Yanks. I hope everything is fine. I find in the market whenever I'm having concentration issues I simply add more leverage. Always seems to do the trick.
Maverick, I'm going to refresh the comment you made several times. Now, in light of ACD and more broadly in general sense, what makes a bad trader in your opinion? Besides lack of discipline, no willingness to do own homework, impulsiveness, impatience etc any other trails that constitute a bad trader that won't make it?
I get asked this a lot. I've refined my answer over the years. I think it all boils down to cost/benefit analysis. Most people in life are horrible at this. We take huge risks for little rewards or don't understand the expected values of various outcomes. Traders MUST be able to maximize their expected outcomes. You'll often hear traders talk about how college is a waste of time. Yet education has one of the highest expected payoffs of any bet you could make in your life. It does not matter if it makes you a better trader, it's simply a very attractive bet that offers a large positive expectancy. The power of networking. You'll often hear traders on this site talk about working alone and keeping their secrets. Yet these people clearly don't understand probabilities. Just about any cost benefit analysis will how the returns to far outweigh the risk when it comes to collaborative partnerships. These might sound trivial but the reasons many traders don't do these things is because they are not adept at truly understanding the long term payoffs to various short term costs. And this skill is vital to being a good trader. Traders who are too short term focused. You'll often see traders completely blinded by their short term p&l. Not looking at the big picture. They give up on ideas that have not worked for a month. They look at 3 charts and completely ride off a viable strategy. They let one large loss completely dominate the empirical data. This goes beyond just trading. The most successful people in life in any endeavor are the ones that truly grasp the idea of cost/benefit analysis in all its forms. A very common one on this forum is the guy or girl who walks away from a 80k a year job to make 10k a year trading. The long term expected value of simply investing their 401k funds in an index fund while earning 80k a year will far exceed the total revenues generated by trading alone for most traders with small accounts yet they see it the opposite. All they really need is an excel spreadsheet and a few macros and the numbers will be obvious. Or take the guy with a 3k FX account with dreams of moving to Switzerland with the billions they will make. It might sound funny but their problem is not that they are dreaming. There is nothing wrong with dreaming. The problem is the math. I've said this many times on here that you can count on two hands how many people in the entire world have generated long term returns greater than 25% yet 98% of the people on this site think that is their monthly goal. Again, it comes down to understanding math and perhaps the central limit theorem. All long term averages drift towards zero, not the other way around. It's very fundamental to math. It has nothing to do with how good of a trader you are, it's just the law of averages. If one can make 10% to 20% a year you are in a very very rare breed. If you could document live trade data with those returns with little correlation to other risk assets you could raise millions in outside funds. It's a very worthy goal. Yet most on here would claim they wouldn't get out of bed for those kinds of returns. They are usually the ones that end up losing all their capital. I think most people could benefit from a very basic course in statistics that one could get for free on Coursera or other MOOC. Just understanding basic math, compound returns, averages, sample data, distributions, outliers , etc. Nothing fancy and certainly no rocket science. Just learn to understand numbers. No need for a PhD. Paul Wilmott has written some great books on this stuff. Some of it is heavy but he has some beginner books that will suffice that cover all the basics. I actually have one that is a miniature version called "Frequently Asked Questions in Quantitative Finance". Tiny little book but covers all the bases.
sorry to refresh this old post but as I'm reading through this lengthy thread, I decided to contribute a bit by throwing in a wrench into this clever idea. Please don't take this as a criticism but rather some food for thought: The problem with using news reports, econ data etc etc for establishing OR is that it often interrupts regular "market auction" process. The moves might get violent if it's against the consensus and as a result of temporary lack of liquidity to handle sudden flows. However once the news is digested, the market often revisits the "scene of crime" (where it was right before the news) and/or resumes it's auction process. You can see that all the time. Fisher's "Bad news, good action" is a perfect example of that. Think about it this way: how good would it be to build OR in CL based around on EIA report? How significant (valid) it might be? I'm not making any statements here, just thinking out loud and asking...