Probably true. And everything that can be said about all this has been said, so there's really no point in continuing to restate the restated. I find it strange, though, that a board that is devoted to trading in all its aspects does not embrace all aspects of trading. Whatever. Beginners who read this thread can take what they want from it. I only hope that they will not blame themselves if the setup or timeframe or stop level or blah blah that everybody says is so great does not work for them, but rather that they consider that the problem may lie in their personal incompatibility with whatever somebody else is touting as "the way to trade". --Db
And your evidence for this statement? What does anyone's personality have to do with an effective trading strategy? Are you sure this isn't more of that new age gobbledegook? OldTrader
well i guess it has to do with his personality not letting him trade that strategy effectively.........I think that is what dbphoenix has been trying to say all along....i may be wrong as usual.... peace
Sheesh, a guy lays off posting for a while and it's like he went off on a quest or something. Sorry it took so long, had to catch up with Frodo and Sam on their way to Mount Doom. Left when Gollum showed up, that little bastard chafes me.
In the era that Richard Dennis made his millions and became famous, computerized off-floor trading was not available. Trading short-term time frames (not only pure scalping, but also taking 10-15 cents on a stock or 1-2 pts on SP/ES) was not viable off-floor at the time. By the time Richard Dennis became famous and started managing funds, the liquidity would not have been available for him to trade short-term time frames even if the computerized order entry system was available. Any hedge fund example that you bring up will by its nature have to hold for longer time frames because of the dollar amounts involved and completely different risk/reward/incentive parameters compared to indvidual trader's account. Now it may be noteworthy to understand that Richard Dennis and other long-term traders (i.e. Turtles) like Sands, Dunn, et al often hit drawdowns in the 40-50% range during any given year. I know of many short-term traders that have never hit drawdowns of anything worse than 20%. In fact, there are many short-term traders both retail and prop firms that will have have months with no or only a couple down days. The nature of trading on short-term time frames is that you cycle your money faster. You make more trades and let your positive expectation do its thing. In my personal experience and from other successful short-term traders that I've personally talked to, both retail and prop firms, both futures and stocks, this results in a smoother equity curve, more profitable days, and more trading opportunities on trading days where other methods may get chopped or not trade at all. Of course, you need a method that gives you that edge first and foremost. But my point is that using the Richard Dennis/ hedge fund examples is comparing apples-to-oranges.
I have to agree with you here. OT is right that the proper thing to do is adjust your personality to whatever works, but some people are just not going to be able to trade a particular strategy. Drawdowns too big, too many losers, too time-consuming, etc. Better to find something else. But I don't think holding a trade another 15 minutes would put most people into uncharted psychological territory.
dottom, We're not saying it can't be done and some few can't make good money doing it, we're saying that it's hard to do. It's just a fact that a lot go out feet first. If Johnny is having trouble trading, how likely is it he can cut it every day? He's better off waiting for the one play he cna make and not screw up.
AAA, I understand completely. I just wanted to bring some clarity to OT's point about Richard Dennis/hedge funds and holding for longer time frames. I often find many posts on ET where an analogy or some form of logic is used to justify an answer but if you dig deeper into the analogy/logic it is not valid. I'm not saying that what OT is saying doesn't make sense or isn't true in any way, but just that particular Richard Dennis/hedge fund example is an invalid justification of why Johnny should not trade short-term. In fact, I think Johnny would have a much more difficult time trying to trade the Turtle way than trying to trade short-term time frames, but that is my personal opinion.
here is an excerpt from reminiscences of a stock operator, which i think does a good job of 1) categorizing johnny's mentality, and 2)explaining how this mentality leads to johnny's downfall. "The one game of all games that really requires study before making a play into without his usual highly intelligent preliminary and precautionary doubts. He will risk half his fortune in the stock market with less reflection than he devotes to the selection of a medium-priced automobile. The speculator's chief enemies are always boring from within. It is inseparable from human nature to hope and to fear. In speculation when the market goes against you hope that every day will be the last day--and you lose more than you should had you not listened to hope--to the same pioneers, big and little. And when the market goes your way you become fearful that the next day will take away your profit, and you get out--too soon. Fear keeps you from making as much money as you ought to. The successful trader has to fight these two deep-seated instincts. He has to reverse what you might call his natural impulses. Instead of hoping he must fear; instead of fearing he must hope. he must fear that his losses may develop into a much bigger loss, and hope that his profit may become a bigger profit. It is absolutely wrong to gamble in stocks the way the average man does."