I saw "license to steal" in your post and it brought the subject to mind If I misread your post I apologize, though my points still stand because I have seen the suggestion that trading is stealing or trading is easy come about time and time again on this board, I wanted to dispel that myth
It makes sense. I just didn't bother to expound on it. Too many threads, too many debates, and much real work to be done. Trust me, I'm OK with it. It is possible to manage risk non-optimally. Maybe if I've had time to think about it more I can answer better. I'm glad you know so much about Vince's work, because there was a time when many of it's vocal critics didn't really understand it. It's nice hear from someone who bothers to understand it before he comments on it. I really don't do heros. I respect Dr. Niederhoffer. It's funny to read all these BSD's (who have never traded a fraction of his size) who criticize him and spout off about how they would never do what he did. But if there's one sure way to a blow up, it's overconfidence. And blowups can happen lots of different ways. For a trader to mock someone who has traded marvelously, just because he stumbles, strikes me as the ultimate hypocrisy. It is sheer blindness. It is so incongruous that I can't help but pity the person who engages in it. I mean that sincerely. Dr. Niederhoffer is an excellent human being, by the way. And trading very well, from what I understand. However, don't expect to read about it in the New Yorker. People love to dance on fallen heros.
Let me clarify my beef with Niederhoffer one last time. First of all, of all the books I've ever read on trading, his was more arrogant than the next ten put together. He may be a great guy, I haven't met him, and the book was entertaining. But his ego practically jumps up to give you a big wet kiss every time you turn the page. Also I think you are subtly trying to suggest we could all easily end up like Niederhoffer. I think this is disengenuous. Again, going to his own book, his own words, there is clear evidence that Niederhoffer has a gambler's complex. He brags about how he almost takes his firm down on a single Yen trade, about how he stays up for three days and nights because a single tick will wipe him out. He brags about how the British Pound almost destroyed him also. He brags about how he makes money for a client for years and years and then loses 20% of the account in a day. He brags about how his father, George Soros, and various other people he knows express major worry and concern that he is going to blow himself up. He brags and brags and brags and brags. He wants you to know that he takes the big risks. He relishes in getting firebombed. Even his self deprecation is bragging in disguise. For crying out loud, is there not a pattern here? If a clinical psychologist read Niederhoffer's book and was asked to analyze personality of the man who wrote it, the report would probably say we are dealing with an ego driven thrill seeker who has a need to seek attention by being unconventional and who has an unrealistic faith in his intelligence, a "me against the world" mentality, and an obsession with statistics. I think he wanted to blow himself up. He pressed and pressed until it finally happened. His own words convict him, he is his own judge and jury. He was like an ant that would run out onto the sidewalk beating his chest, daring the market to step on him. He got his wish. Twice. So don't say we are all like him, we are not. And don't imply that what happened to him could easily happen to anyone. We are all vulnerable, but if you are careful your odds of survival are much better. Certainly much better than if you show all the discretion of freeze tag on the freeway. Most of us don't leverage out the wazoo with naked put options. Playing the reverse lottery is not the same as careful trading. I do not pass judgment on Niederhoffer as a person. But as a trader I think he sucks, I don't care how much money he has made. And I think his zealous faith in statistics is not warranted by any rationale. I'm not a hack or a jealous wannabe, just calling 'em like I see 'em.
I think it's dangerous to fool ourselves into thinking we know what's in the other guy's head...and that we are somehow better.
I'm not a mind reader. But I can read words. I don't know what you are thinking, but if you wrote a book and spelled out exactly what you were thinking, that would give me some clues would it not? There are objective standards to measure the quality of trading. The most basic one is how much money you have made or lost. After his double blowups, Niederhoffer has likely lost more money than he has made. Therefore anyone who is career net positive, by objective standards, can claim to be "better" than Niederhoffer.
i think he was just referring to the game i posted in message #1 of this thread. once you know how to play that game, it is pretty easy to make money. i don't think he meant real trading was easy/stealing.
when replying to a post do we really need to repost the entire quote? i find this terribly annoying. occasionally it's not obvious to whom you are replying but in most instances it is. some of you ALWAYS do this, even if the yours is the very next post! let's try to use a little common sense shall we?
love to see how you'd react under similar conditions. better? relative term. safer? maybe. last chapter not written.
LOL Come on chas, I know you aren't a postmodernist. "Everything is relative" doesn't fly. "Maybe" is not an adequate response to objective analysis. It is a throwaway response that can lobbed up at any point and thus is not a true response at all. Debate mif you will, but don't flap your hand and say "maybe," its a waste of typing. If none of us can define risk at all than we are all buffoons playing with dynamite. Niederhoffer could have defined his risk- heck, he could have at least done a spread- but he chose to be greedy and hang his sack out in the wind instead. There will never be "similar conditions" for me because I will never take on the proportionate amount of risk that Doc did. I will not play russian roulette with my account, even if the gun has a thousand chambers. To borrow a phrase from Jonathan Matte: you aren't just comparing apples and oranges, you are comparing apples and unicorns. Could I blow up? Theoretically yes. But odds of that are on par with full scale thermonuclear war, and if I went down with my itty bitty thirty basis point per trade risk things would be so insane that the exchanges would probably be shut down too. Why do you care whether Niederhoffer is a good trader or not? Do you have some stake in his reputation? Trading ability and intrinsic worth have no valid link in the long run. Why do you persist in defending him? Why not just say he is a nice guy who screwed up and move on?
i didnt say everything was relative. I said 'good' is a relative term. what might be good for you might unacceptable for someone else. Clearly, blowing up is not good for anyone. But swinging for the fences is good for some, and they know they will sometimes strike out trying.