# Most who want to get rich or retire wealthy... have got it wrong



## tech/a (5 February 2015)

(1) I've seen post after post from younger people who are overcapitalized and under educated who are searching for ways to increase their net wealth.
They all want to invest their merge funds and compound their wealth.
In a large majority of cases that effort to increase their $5-10K by $1000 in a year just doesn't cut it.

(2) Then there are those who are close to retirement or retired with a nest egg that they want to generate income from dividends and with a bit of luck out perform the market so they can keep ahead of inflation.
They cant stand the thought of their nest egg being eroded so invest "Safely"
Again very few actually achieve better than the market. Let alone improve their position in retirement.

*I think both parties have it wrong.*

My view is that they "should" be aiming for a way to use the financial markets to generate a financial return from a very low capital base week in week out.

I know of 2 here (probably more) doing this right now returning every week at least and often way more than a decent wage.
From Under $20,000 capital base.


If your young and could increase your income by 20-150% a week in a few hrs a day---would you?
If your retired and could supplement your income 20-150% each and every week---would you?

*My point is people should learn how to fish rather than giving their boat to someone else to go fishing for them!*
Or putting their boat at risk.

Fish in Big ponds with Lots of fish.
Taking lots of small fish and the odd bigger one.
Safely without putting their life savings at risk
Be it the young guy or the long time saving retiree.
Both have similar agenda's

What would $300-$2500 a week do to your life style?
I would argue that to the majority of average people 
Quite a lot.


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## craft (5 February 2015)

I disagree.

Compounding is what creates true (intergenerational size) wealth.


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## tech/a (5 February 2015)

craft said:


> I disagree.
> 
> Compounding is what creates true (intergenerational size) wealth.




I don't disagree
But I doubt many get there.
Particularly in ranging or bearish markets.
growth is something you don't hear a lot about.

You don't hear of 1000s of people compounding since their first pay packet.
personally I knew that I could only hope to increase wealth by earning more than I spent.

Has served well for 60 years.


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## Nortorious (5 February 2015)

tech/a said:


> (1) I've seen post after post from younger people who are overcapitalized and under educated who are searching for ways to increase their net wealth.
> They all want to invest their merge funds and compound their wealth.
> In a large majority of cases that effort to increase their $5-10K by $1000 in a year just doesn't cut it.
> 
> ...




I'm with t/a on this.

I'm 28, earn $85k plus bonuses (on track for around $32k this year) and am using the stockmarket to leverage my capital for the future.

I spent from 17 to 27 in constant learning and real trading of the market and have only cracked the code recently to generate decent returns. Yes I lost money during the learning years, but I only volunteered around $17k to the market through this. My uni degree was $30k+ and isn't as valuable as knowing how the market moves.

My ideology is to generate a second and third stream of income through investing:
Income #1 = My salary and bonuses
Income #2 = Capital gains
Income #3 = Dividends

Capital gains and dividends are putting my cash to work rather than it sitting in a term deposit or in a savings account where I get taxed again on after tax savings. In saying that, any cash I have as an emergency fund is sitting in an offset account.

I see t/a's points as my ticket to wealth and financial freedom.


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## craft (5 February 2015)

tech/a said:


> I don't disagree
> But I doubt many get there.
> Particularly in ranging or bearish markets.
> growth is something you don't hear a lot about.
> ...




So worked for 40 years?

Buy and hold over those 40 years has been about 11.5%

Assume average earnings and investing 10% of income. 

You would today have $5 Million dollars – that’s a passive income of $275,000 at today’s dividend yield.

Now you are talking 130K (top of your range) return on 20K – a return of 650%  so increasing the compounding rate by 2.5% seems pretty modest yet it would double the 5M to 10M, or 5% outperformance would give you 20M. 

Achieving a 5% compound outperformance seems a little bit simpler to me then a 650% trading return that produces nothing when you stop. But I’m sorta lazy – If I was real lazy I would just settle for the 5M index return and get on with other things in life.


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## tech/a (5 February 2015)

Craft

Yes iknow all the theory.
I don't know of anyone or even heard of anyone
Who has actually done this or is 10/20/30 years into it.

But I do know plenty of people who work 2 jobs some 3
Who work massive overtime.

I'm suggesting the financial markets are perfect for the well trained 
To make a fantastic increase in weekly income in some cases spectacular
Week in week out. For an hr or so a day--- even less.

They could then put the excess earnings into a compounding investment strategy
If they wished they could do both.

The younger people want something tangible and NOW.
Nothing more motivating than $600 in an hr on a Monday night!
Or 
10% in a year on your $10,000 that's a grand a year 
$1100 next year.

I know which one most would stick at
Just ask PAV


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## Wysiwyg (5 February 2015)

craft said:


> So worked for 40 years?
> 
> Buy and hold over those 40 years has been about 11.5%



Oh I'm in now. Buy and hold what 40 years ago?


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## tech/a (5 February 2015)

Wysiwyg said:


> Oh I'm in now. Buy and hold what 40 years ago?




Good point
Vast difference to
Theory and Practice


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## craft (5 February 2015)

tech/a said:


> Craft
> 
> Yes iknow all the theory.
> I don't know of anyone or even heard of anyone
> ...




I have no issue with making/ supplementing an income from trading. But your thread title is 







> Most who want to get rich or retire wealthy... have got it wrong



 I don't reckon what your saying will make somebody wealthy (are your examples 'rich/wealthy' from the market?) - *compounding will*.


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## McLovin (5 February 2015)

craft said:


> I don't reckon what your saying will make somebody wealthy (are your examples 'wealthy' from the market?) - *compounding will*.




+1

An interesting discussion though. And how scaleable is something that can consistently pull in 650%/year.


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## tech/a (5 February 2015)

craft said:


> I have no issue with making/ supplementing an income from trading. But your thread title is  I don't reckon what your saying will make somebody wealthy (are your examples 'rich/wealthy' from the market?) - *compounding will*.




Wouldn't be so sure.
For a young person it will open up many doors closed to them due to under capitalization---that includes compounding

*You have to have something to compound*.

Imagine if your 30 earn $60K a year and learn how to make another $60K over the next year.
What could you do.
Money *Does* Make money. 

If your retired that little bit extra can make life easier
and protect your nest egg.
Even add to it

I'm not suggesting massive amounts even E mini could see a few Hundred a week for
a well trained practitioner.

*What I'm actually saying is*

*YOU DON'T HAVE TO BE WEALTHY OR RICH*
You know how to fish so you can generate income

You can be 
UN employed
Sacked
Injured some--handicapped
Redundant---try that at 55
Retired
The list goes on.


You don't need Wealth to generate it.


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## craft (5 February 2015)

Wysiwyg said:


> Oh I'm in now. Buy and hold what 40 years ago?





Argo, and Milton are two funds that jump to mind that give you broad market exposure and have been around for more than 40 years.

I also suspect you are taking a very literal interpretation of buy and hold – the dividend stream and savings stream is progressively invested, and corporate takeover action occurs – even if you otherwise sell nothing.




tech/a said:


> Good point
> Vast difference to
> Theory and Practice




In practice it works just fine too.


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## futurenow (5 February 2015)

As an 8-6 cube farmer I don't have the time to watch live feeds.

What you're suggesting is a full time job for some.

Unless I'm missing your strategy, I'm not sure how a full time schmo can take advantage of market volatility and still be a productive employee.


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## Wysiwyg (5 February 2015)

craft said:


> Argo, and Milton are two funds that jump to mind that give you broad market exposure and have been around for more than 40 years.
> 
> I also suspect you are taking a very literal interpretation of buy and hold – the dividend stream and savings stream is progressively invested, and corporate takeover action occurs – even if you otherwise sell nothing.
> 
> In practice it works just fine too.



That is okay, I believe you. Having foresight and a degree of fortune now or 40 years ago could create the wealth you believe is possible.


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## craft (5 February 2015)

tech/a said:


> Wouldn't be so sure.
> For a young person it will open up many doors closed to them due to under capitalization---that includes compounding
> 
> *You have to have something to compound*.
> ...




I don’t really disagree with anything here (except the thread title).

But if you have a million bucks and leave most of it too rust while your work 20K hard – I think that’s dumb – you need to manage it all for the best overall dollar return. 

The other thing that would be dumb is if you devoted all your time to trading and never built yourself a compounding machine for the surplus income – especially as the skill sets are pretty transferable for the two approaches, if people can get past their biases.

I've said my piece about compounding -I will wish you well and leave you to your objective with this thread. 

Ps – I started out trading.


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## burglar (5 February 2015)

futurenow said:


> As an 8-6 cube farmer I don't have the time to watch live feeds.
> 
> What you're suggesting is a full time job for some.
> 
> Unless I'm missing your strategy, I'm not sure how a full time schmo can take advantage of market volatility and still be a productive employee.




Speaking for myself, 
it doesn't have to take long. 

I just have so much time to pass.


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## Wysiwyg (5 February 2015)

Wysiwyg said:


> That is okay, I believe you. Having foresight and a degree of fortune now or 40 years ago could create the wealth you believe is possible.



The alternate outcome is getting it wrong due to circumstances. Tech/a sought of leans toward present time versus faith or long time. One is measurable every moment while the other waits for a future outcome.


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## futurenow (5 February 2015)

burglar said:


> Speaking for myself,
> it doesn't have to take long.
> 
> I just have so much time to pass.




So you don't go to meetings, manage staff, attend conferences or report to management?

The wins (and losses) of daily fluctuations are instant.

A long conversation, toilet break or lunch (which is a daily event at work) jeopardises any reaction to the market.

Suggesting an hour of research on a Monday night can earn you $600 seems nice, but unrealistic when you're locked in daily meetings with the PHB*

*Dilbert reference


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## Ves (5 February 2015)

tech/a said:


> Craft
> 
> Yes iknow all the theory.
> I don't know of anyone or even heard of anyone
> ...



I'm 29.  Wife is a bit older. I work one job,   Earn about $60k.  Wife works part time.  Maybe $20k ($30k on a very good year). 

We own our house.   Mortgage basically paid off.  I keep a small balance to keep the loan rolling in case I need it.

Also have a six figure sum in the share market.  It's growing.   I'm adding to it as much as I can.

If I keep saving at this rate we will be the couple that you don't believe exists.

Edit:  Before you ask I saved every cent I have from my own salary.  No inheritences.  Last time someone intimated that what I do is from someone else's work or it's just a hobby I got offended.


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## shouldaindex (6 February 2015)

tech/a - So if you make 20% a week, and you started off with 10k last february.

You'd have over 50m today.

Really?


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## burglar (6 February 2015)

futurenow said:


> So you don't go to meetings, manage staff, attend conferences or report to management?
> 
> The wins (and losses) of daily fluctuations are instant.
> 
> ...




Don't mean to rude ... or misunderstood.
I am unemployed, in that I don't have all those wonderful things to fill my day.

Bosses, backstabbers ...
Chief Warden and white hat ...
Left behind!


My children are grown up and have left home.


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## galumay (6 February 2015)

I dont see any convincing evidence that trading leads to getting rich or retiring wealthy on anything but a random and incredibly infrequent basis. All the studies I have seen suggest the vast majority end up with net losses over time.

But, if you can make money from it, and you are happy doing it, then why not. Just abstain from assuming others are wrong because they dont share your world view.


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## ROE (6 February 2015)

tech/a said:


> Craft
> 
> Yes iknow all the theory.
> I don't know of anyone or even heard of anyone
> Who has actually done this or is 10/20/30 years into it.




I do I know a few actually, they bought CBA shares when it float NEVER sell a single share even today
at $90, they also bought CSL and Telstra and never sold a single share with all the up and down.

They also bought into Medibank recently...they just ignore the blah blah of  macro talk and the next prediction etc...

Their portfolio is truly multi millions with dividend in their hundred of thousands for doing nothing for the last 30 years with very little invested capital ....

then their kids get into the act, they too early for CSL and CBA but they bought TLS and held have not sold, they now bought in MPL and I am pretty sure they buy a few more in the next 30-40 years.

what has happened during those years? dot com bust, Asian crisis, 1988 melt down, GFC, Russian and countless other countries default etc.

The things I take away from this is, good business will keep on delivering regardless of macro, it may have a temporary set back but over a long period of time it will deliver you the dividend and the capital grow.

How else the billionaire get their billions? from their business dividend and the value of their business  worth much more over time.


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## galumay (6 February 2015)

I tell you what tech/a, i will suspend my scepticism and follow your strategy if you are in fact willing to share it with a crash test dummy! I have plenty of time on my hands during my gap year, I have some capital I could put at risk to test the strategy so lets give it a shot! 

If it involves Technical Analysis as I assume, then I will truly have to overcome my scepticism given that I believe it has been substantively proven that TA does not work, this in itself will be a good thing to challenge the core of my world view!

If you want to discuss it offline give me a pm and i will share my email with you.


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## ROE (6 February 2015)

What about this guy   ..compounding works for him

http://www.news.com.au/finance/mone...rprise-donations/story-e6frfmci-1227209887369


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## PinguPingu (6 February 2015)

galumay said:


> I tell you what tech/a, i will suspend my scepticism and follow your strategy if you are in fact willing to share it with a crash test dummy! I have plenty of time on my hands during my gap year, I have some capital I could put at risk to test the strategy so lets give it a shot





Interesting UK series on something similar: https://www.youtube.com/watch?v=v6ciY8u04Kk


Would also be interested in being a crash dummy, paper trading mini futures, doing ok, but definitely not making the money stated in this thread.


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## pavilion103 (6 February 2015)

galumay said:


> I tell you what tech/a, i will suspend my scepticism and follow your strategy if you are in fact willing to share it with a crash test dummy! I have plenty of time on my hands during my gap year, I have some capital I could put at risk to test the strategy so lets give it a shot!
> 
> If it involves Technical Analysis as I assume, then I will truly have to overcome my scepticism given that I believe it has been substantively proven that TA does not work, this in itself will be a good thing to challenge the core of my world view!
> 
> If you want to discuss it offline give me a pm and i will share my email with you.




I would have thought the test case is the guy who started the futures thread.


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## tech/a (6 February 2015)

> I do I know a few actually, they bought CBA shares when it float NEVER sell a single share even today
> at $90, they also bought CSL and Telstra and never sold a single share with all the up and down.




I'm not saying it cant be done.
Clearly it can. *VES* is another example.

I had a great run compounding tech trader for 7 yrs 2000-2007
It was traded live for those years On Radges site and we turned $30K on Margin 2:1 at the time from BT
to $386,000 (peak $429K) over 7 yrs compounding returns. Very powerful.
There are a few I know who are still trading it and have new equity highs.

If anyone is interested its in Radges book '"Unholy Grails" Page 109-113



> tech/a - So if you make 20% a week, and you started off with 10k last february.
> 
> You'd have over 50m today.
> 
> Really?




How do you figure that.
20% on $10K is $2000 x 52 Weeks.= $104,000

$1000 on a DAX contract---single contract is 29 ticks.
It moves approx. 80 a session on average.

I pluck a K or so a week out of it
So far this week its about $5200 all traded here in the Derivatives thread if you want to have a look.

Here https://www.aussiestockforums.com/forums/showthread.php?t=26509&page=211



> I dont see any convincing evidence that trading leads to getting rich or retiring wealthy on anything but a random and incredibly infrequent basis. All the studies I have seen suggest the vast majority end up with net losses over time.




This is very true there has been all sorts of studies done with brokers and their accounts.
One I saw said 90% were stagnant and the rest only a sprinkle were profitable.
The vast majority wouldn't place their Super in their own hands ---most will have it in a fund which at best covers inflation over many years.

As for the younger people they just wont have the funds to grow. Life is tough enough without blowing what little 
capital you have put aside.




> So you don't go to meetings, manage staff, attend conferences or report to management?
> 
> The wins (and losses) of daily fluctuations are instant.
> 
> ...




I know this was for Burlar
But I do.
I have a small business of 20 and my day is full on.
But my trading is now at night when my wife watches "Neighbours" Cant stand it----or any reality show!!

My trading is only an Hr or so when Im at the screen.




> But, if you can make money from it, and you are happy doing it, then why not. Just abstain from assuming others are wrong because they don't share your world view.




Your mis understanding my purpose. I've noticed the larger majority here are my target audience.
I'm suggesting an alternative---not a theory of alternation but one I know works. I and PAV are doing it---so too I'm sure are others on this site.
You don't needs wads of money and you can supplement whatever income you have in a very short time each day without a massive time investment (After you learn what your doing). Setup is a few $$s for live feeds etc.



> But if you have a million bucks and leave most of it too rust while your work 20K hard – I think that’s dumb – you need to manage it all for the best overall dollar return.




I agree but I'm not targeting people with a million bucks.
The Young ones who are trying to move forward and those who are close to or retired who came up short!



> I tell you what tech/a, i will suspend my scepticism and follow your strategy if you are in fact willing to share it with a crash test dummy! I have plenty of time on my hands during my gap year, I have some capital I could put at risk to test the strategy so lets give it a shot!
> 
> If it involves Technical Analysis as I assume, then I will truly have to overcome my scepticism given that I believe it has been substantively proven that TA does not work, this in itself will be a good thing to challenge the core of my world view!




Kris my son is a Physics PHD. I'm luck enough to be able to employ him for 2 days a week for however long this takes between other projects his company works on. The quant capability of these guys is amazing. Way way beyond me.
I'm teaching him to trade and he's teaching me what works and why. 

I can tell you that your wrong about T/A Dr Bruce Vanstone also a PHD has written a lot of papers on the topic proving that T/A has an edge. We know it has an edge.

Some of Bruce Vanstone's works here http://works.bepress.com/bruce_vanstone/

So too does Howard Bandy.

*My point.*
Why if you had something really good would you share it with the public

Well You wouldn't and I don't (well I did with PAV). 
This was without Kris.---You *DONT* need a Kris.
But what we are seeing in the first month is truly mind adjusting. The final aim is a bot.(Think 3 or so tiks 30-100 or more trades a session).

I'm presenting here something for those who are in the position they perhaps see as daunting.
An alternate way to financial stability. I'd argue a more practical way of attacking the markets than that which is always totted!


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## pavilion103 (6 February 2015)

Tech, 

Teaching someone how to fish..... I was thinking about this in the car this morning. 

Most nights on the FTSE I am on for 1-1.5 hours. 
If I wanted to I could take 1-2 good trades per week and do nothing else. 
The knowledge I have is enough to make an income (or more).
I have this for the rest of my life. 
As I grow in confidence I can slowly increase the number of contracts thus doubling, tripling etc my income with EXACTLY the same number of hours work as previously (1-1.5 hours). 

Stocks - When the market is trending I get involved. 
I do literally a 10 minute scan and flick through charts. 
I do maybe another 10 minutes of entering pending orders and adjusting my stops. 
I don't have to check it until the next night. 
In a trending market the returns are better than you will get anywhere else. 


A few years of learning and effort (equivalent of a uni degree) and the ability to replace my income with a maximum of 2 hours "work" per night. 10 hours per week. And even while I'm at the screen I can be listening to music, watching a doco, even exercising if I want, waiting for setups to appear!

Increase contracts.... and you're looking at multiples of an income for 10 hours a week work. I'm not at THAT point yet, but probably not too far away.

I guess some can see it. Some can't.


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## craft (6 February 2015)

tech/a said:


> I'm not saying it cant be done.
> Clearly it can. *VES* is another example.
> 
> I had a great run compounding tech trader for 7 yrs 2000-2007
> ...




Hmmm, I’m wondering now if Tech wants to advocate freely what he believes passionately to be the truth or is he(and maybe others) positioning with smoke and mirrors for a commercial enterprise.

I know my weaknesses, and one is tolerating ‘gurus’ with ‘secrets’ for sale.

Hope my suspicions are wrong – but I hear my queue for a break from the forum.

Signing out.

Cheers folk - Take care.


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## pavilion103 (6 February 2015)

I don't get it. 

There is no secret knowledge that is hidden from all except an elite few. 

Anyone can do this. 
Anyone can do it without Tech or anyone else. 

Heck, the two books that I found most helpful to me were free PDFs. 


Futures opens up a whole new world. 
If we are looking at purely returns on stocks... that's a different thing..
But futures....Once you know how to trade them you can do the things mentioned above.


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## tech/a (6 February 2015)

> Hmmm, I’m wondering now if Tech wants to advocate freely what he believes passionately to be the truth or is he(and maybe others) positioning with smoke and mirrors for a commercial enterprise.




Now there's an idea!
seriously though.

There are people who want to be guided.
I'm happy to do that here as I have been for many years.

Kris and I have discussed method release and to be honest we have no intention of releasing anything.
I certainly adhere to the school of----if its that good why would you release it to others. We wont.

But there are wads of information gleaned from the research Kris is doing. Stuff that proves and disproves all sorts of ideas-----common and not so common. Great to know and can save lots of time.
The testing ability using Python in the hands of someone like Kris is way beyond amibrokers capability ---although we do run some together
.
We got stuck on the first method test--Ami couldn't write it!
I have briefly chatted with Joe.---nothing serious or formal.

The sole intention of this thread is as I have said above.


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## futurenow (6 February 2015)

tech/a said:


> I know this was for Burlar
> But I do.
> I have a small business of 20 and my day is full on.
> But my trading is now at night when my wife watches "Neighbours" Cant stand it----or any reality show!!
> ...




How do you trade when the markets are closed?


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## pixel (6 February 2015)

futurenow said:


> How do you trade when the markets are closed?




Simple: You pick a Market that's open when you want to trade.
New York;London; Futures; ... endless possibilities


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## galumay (6 February 2015)

tech/a said:


> I'm presenting here something for those who are in the position they perhaps see as daunting.
> An alternate way to financial stability. I'd argue a more practical way of attacking the markets than that which is always totted!




You lost me, you are offering something, but you are not prepared to share it with anyone?

I made a genuine offer to accept the help you were posting about - and for that you just blew me off!!

I really cant work out what your motivation is for posting this thread.


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## Value Collector (6 February 2015)

The way I see it is this.

The companies on the stock market generate value, year in year out, they are producing earnings. Some of these earnings go to holders as dividends, some reinvested in growth (some growth investment works others doesn't, but overall the companies will grow, or even just buy back shares pay off debt etc).

Now who gets the benefit of this value generation depends on the strategy employed.

If your a buy and hold investor, owning a decent cross section of the market, and you hold through the various ups and downs, you will get the full benefit of the value generated over the years. You are guaranteed you will get a market average return.

When it comes to the traders, some by skill or luck will be able to increase the portion of the value generated they capture by jumping in and out of the market at opportune times, so may get a better than average market return, however this will be at the general expense of less skilful or unlucky traders on the other side of their bets. you will also be sharing this return with your broker.

Trading is a zero sum activity, if you're making a larger than market average return, then someone else has to be making a below average return, add to that broking costs, and it's impossible for the average person to beat the market average return.

However it is very easy, for even an unskilled investor to earn a market average return without spending any time on trading each week, simply buying and holding an index and dollar cost averaging into it, sure it's not exciting, but earning a 10% return over the years will allow them to hit their goals.

Compounding is the key, as craft and Mcglovin said.


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## pavilion103 (6 February 2015)

Value Collector said:


> The way I see it is this.
> 
> The companies on the stock market generate value, year in year out, they are producing earnings. Some of these earnings go to holders as dividends, some reinvested in growth (some growth investment works others doesn't, but overall the companies will grow, or even just buy back shares pay off debt etc).
> 
> ...




Do you mean the average person by the definition of average? (given it's a zero sum activity)

Would you acknowledge that anyone who committed properly to trading futures and willing to put in the time and effort (like myself and others) can achieve well above average returns?


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## tech/a (6 February 2015)

galumay said:


> You lost me, you are offering something, but you are not prepared to share it with anyone?
> 
> I made a genuine offer to accept the help you were posting about - and for that you just blew me off!!
> 
> I really cant work out what your motivation is for posting this thread.





Seriously you guys crack me up.
I'm offering an idea as to an alternate train of thought and way to use the financial markets.
Other than buy and hold--value invest---Managed Funds---trend following---ETF's etc.
A change of thinking where you don't need poultice of $$s to lighten the load of financial burden.

You and Craft have come to the conclusion that my thread has an ulterior motive. I'm priming up to sell something.

You seem to think I have something I wish to prove is profitable and your the person who should be convinced.
Craft thinks I am edging to sell something.

I have a method I use and have used for sometime. Its not for sale and wont ever be.
Kris and I have some methods which also wont ever be for sale.
Many here have often said 
If its that good "Why would you sell it?"

*INDEED*

Why would I give you the method I use or any method to placate your scepticism?
Where did I offer help you or anyone?
I'm suggesting an alternative not offering to give/sell that alternative.

You guys fly off at a tangent.

TPI!!

*Most know I use a combination of VSA/Micro Pattern T/A on Index futures.*

We are working on other methods.


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## TPI (6 February 2015)

galumay said:


> You lost me, you are offering something, but you are not prepared to share it with anyone?
> 
> I made a genuine offer to accept the help you were posting about - and for that you just blew me off!!
> 
> I really cant work out what your motivation is for posting this thread.




I don't know exactly what tech/a's approach is but from reading his previous posts much of it could be based on "volume spread analysis".

See the free PDF below:

http://www.tradeguider.com/mtm_251058.pdf

I'm about half-way through it now, been slow going due to time constraints and laziness, but the basic ideas behind this approach seem to make a lot of sense, despite me being fundamentally/value inclined.


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## tech/a (6 February 2015)

> However it is very easy, for even an unskilled investor to earn a market average return without spending any time on trading each week, simply buying and holding an index and dollar cost averaging into it, sure it's not exciting, but earning a 10% return over the years will allow them to hit their goals.




So Im 25 I have $20k so I can set and forget for $2000 a year
OR 
Alternately I can learn how to trade/Fish and with the same $20K earn $300 to $say $2000 a week if I'm really good.

Im offering an alternative way of thought not suggesting you kill any other.
But I do think most Have it wrong

When they come to the stock market at a young age wanting to get rich
Or
At an older age looking to generate well above the market average on larger sums.


----------



## Value Collector (6 February 2015)

pavilion103 said:


> Do you mean the average person by the definition of average? (given it's a zero sum activity)




yes I mean the definition of average, I mean trading is not a strategy that can be employed by the masses.

the average person can not be a better than average driver, though if asked, the average person does claim to be better than average.



> Would you acknowledge that anyone who committed properly to trading futures and willing to put in the time and effort (like myself and others) can achieve well above average returns




Offcourse, but that's not a strategy I would recommend as a simple thing for savers to do.  99% of people would be better served just taking a buy and hold strategy on a broad cross section of the market, ignoring the ups and downs, and regularly contributing a portion of their earnings to it.


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## tech/a (6 February 2015)

Value Collector said:


> yes I mean the definition of average, I mean trading is not a strategy that can be employed by the masses.
> 
> the average person can not be a better than average driver, though if asked, the average person does claim to be better than average.
> 
> ...




Your right

*BUT*

The average person on this forum is already well above the average person in the street.
They have searched out a site which they have an interest in.
These are who PAV and I are talking to.


----------



## Value Collector (6 February 2015)

tech/a said:


> Your right
> 
> *BUT*
> 
> ...




They won't be going up against the average person in the street ( unless you mean Wall Street), they will be going up against the average trader, whom generally would have a skill level equal too or higher than the average person on this site.


----------



## galumay (6 February 2015)

tech/a said:


> blah, blah, blah...
> You guys fly off at a tangent.




Again, i fail to see why you are posting then,

"I have an amazing secret, i can make more money, quicker than the rest of you. I can teach you how to do it to."

blah, blah, blah...

"I am not going to teach you how to do it, its my seekrit!"


----------



## pavilion103 (6 February 2015)

galumay said:


> Again, i fail to see why you are posting then,
> 
> "I have an amazing secret, i can make more money, quicker than the rest of you. I can teach you how to do it to."
> 
> ...




I think you're taking him wrong.

It's more like.... "This is how most think... I'm proposing this alternative (a few hundred to a thousand a week trading futures with a small capital base). Let's discuss it."


----------



## pavilion103 (6 February 2015)

Also that's fairly generic. Not some secret for the exclusive.


----------



## tech/a (6 February 2015)

galumay said:


> Again, i fail to see why you are posting then,
> 
> "I have an amazing secret, i can make more money, quicker than the rest of you. I can teach you how to do it to."
> 
> ...




Where on earth have I said any of the above.

I've posted an alternate way of looking at the stock market.
Why are you so angry?
There was a reasonable amount of discussion now you've turned the thread into some twisted view of your own to suit your own bias.


----------



## galumay (6 February 2015)

pavilion103 said:


> I think you're taking him wrong.




I am just taking him how i am reading him.



> It's more like.... "This is how most think... I'm proposing this alternative (a few hundred to a thousand a week trading futures with a small capital base). Let's discuss it."




Without any detail of what this alternative involves, other than its something he is not going to share, but it works. What are we meant to discuss?

I genuinly cannot see any point to the thread, all i have had revealed is that the secret lies within trading futures.

What are we meant to actually discuss? Anyone posting that trading futures has not historically been a successful way to build wealth for most participants has been dismissed, no details of the strategy will be revealed so we cant discuss them. Questioning the rationale led to me being accused of derailing the thread and being angry - so ad hominem attacks as a response.

I am bemused and confused! I am obviously not welcome in this thread so I will withdraw and move to a sandpit with more friendly kids in it.


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## futurenow (6 February 2015)

pixel said:


> Simple: You pick a Market that's open when you want to trade.
> New York;London; Futures; ... endless possibilities




Simple. 
The thread topic suggests markets are easy to manipulate if you spend a few hours understanding them. Who has the time to research NYSE and FTSE markets ... as well as the ASX? Most 'schmos' have trouble recognising the ASX traders. Throw me a 3 letter acronym from ASX and I _might_ be able to tell who they are, but NY and London is a different story. 

International markets are a different kettle of fish.


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## pixel (6 February 2015)

futurenow said:


> Simple.
> The thread topic suggests markets are easy to manipulate if you spend a few hours understanding them. Who has the time to research NYSE and FTSE markets ... as well as the ASX? Most 'schmos' have trouble recognising the ASX traders. Throw me a 3 letter acronym from ASX and I _might_ be able to tell who they are, but NY and London is a different story.
> 
> International markets are a different kettle of fish.




It's not only the title of this thread that holds a cue. The OP's name, "tech/a" is the master key.
With Technical Analysis, you don't "research ... markets", but you look at charts: price action, volume, direction. Works the same whether it's RIO.ASX, AAPL.NAS, COPPEV.LME, or CHFEUR.FX.

That aside, tech/a suggests we leave the ruts of conventional much-traveled value investing, and start thinking outside the box. Implying this old tomcat needs to learn some new tricks as well... 
Better get cracking then. 

And No, galumay: I don't expect to be spoon-fed for free. Enough clues have been provided to let me try find my own "new way". Nobody is obliged to show me how.


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## Trembling Hand (6 February 2015)

Boy am I enjoying this thread.  Its been the same for 10 years on ASF. There is a parallel thread that has been running for *2 years* explaining exactly what Tech and Pav have been doing with very little capital and very little time.

It seems that none of the guys who pride themselves on investigating value and money making endeavours to invest in have either not been able to understand it or haven't even bothered to have a look. Which I guess is fine. 


It would be nice though if when someone doesn't understand they investigate and ask rather than the dumb as bat **** replies,

"If your return was that you would be a billionaire by now".  ( who said you can compound to infinity)

"No one can trade 8 hours a night"

"No one makes money trading"


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## Trembling Hand (6 February 2015)

futurenow said:


> Simple.
> The thread topic suggests markets are easy to manipulate if you spend a few hours understanding them. Who has the time to research NYSE and FTSE markets ... as well as the ASX? Most 'schmos' have trouble recognising the ASX traders. Throw me a 3 letter acronym from ASX and I _might_ be able to tell who they are, but NY and London is a different story.
> 
> International markets are a different kettle of fish.






pixel said:


> It's not only the title of this thread that holds a cue. The OP's name, "tech/a" is the master key.
> With Technical Analysis, you don't "research ... markets", but you look at charts: price action, volume, direction. Works the same whether it's RIO.ASX, AAPL.NAS, COPPEV.LME, or CHFEUR.FX.




Pixel it isn't even that hard. You pick 1 futures instrument and trade it every day for a few hours. For a young open minded guy that is an easy hobby that could turn their life.


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## CanOz (6 February 2015)

Interesting discussion indeed...

Say you already had the wealth from years of hard work and some luck along the way. You wanted to move to a large Australian city and invest in your own home, a couple of other properties and use you equity trading skills learned over the years and the wealth created by that to change your lifestyle, work to live, enjoy your work kind of thing. Say in this example you had between 3-4 million AUD. Say for this example you were my age, call it 50. You want to create lasting income, a business with a secure asset base for the long term. A portion to be used as 'risk capital', how much? What would the traders here do? What would the fundy guys here do (we have some great ones)?

Would you buy a business from a broker, a franchise? Would start your own trading business? Would you just trade a portion in International markets EOD or futures, or would you be seriously conservative, cash and bonds? Would you invest in divy paying good quality business's with a great future?

Cheers,


CanOz


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## pavilion103 (6 February 2015)

galumay said:


> I am just taking him how i am reading him.
> 
> 
> 
> ...




Have you looked in the "Transition to Futures Thread"?

This almighty and all-powerful secret is in there


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## Value Collector (7 February 2015)

tech/a said:


> So Im 25 I have $20k so I can set and forget for $2000 a year
> OR
> 
> 
> .




Yes, and it will compound, give you an almost guaranteed good result if your time frame is long enough to smooth over short term market gyrations. Also offcourse I would suggest you have a savings plan to make regular contributions to the scheme.

Little skill or effort is needed, which is exactly what 99% of people plan to commit to their investment operation.

(But that's not what I do, But it is what I suggest people do, if they don't want to dedicate the time and effort to becoming a professional investor or trader, it is how I have my super set up though) 



> Alternately I can learn how to trade/Fish and with the same $20K earn $300 to $say $2000 a week if I'm really good.




Yes, that would be possible for some, others would lose a chunk of their capital trying to achieve that result.


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## pavilion103 (7 February 2015)

Value Collector said:


> Yes, and it will compound, give you an almost guaranteed good result if your time frame is long enough to smooth over short term market gyrations. Also offcourse I would suggest you have a savings plan to make regular contributions to the scheme.
> 
> Little skill or effort is needed, which is exactly what 99% of people plan to commit to their investment operation.
> 
> ...




Yeh. It basically comes down to whether you have the time or inclination to learn it.

If so then the possibility to make the money that Tech is talking about is there.

If not then take your standard return and you don't have the spend the time learning the other stuff


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## Value Collector (7 February 2015)

pavilion103 said:


> Yeh. It basically comes down to whether you have the time or inclination to learn it.
> 
> If so then the possibility to make the money that Tech is talking about is there.




It's always going to come down to the skilful and lucky, funding their outperformance at the expense of the people lower on the skill and luck curve.

For people to be outperforming the market (especially by large amounts) there has to be a larger number of people under performing it.

So the majority of people that try, will fail. If the group as a whole all decide to learn certain techniques to increase their earnings, these techniques will cease to be effective.


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## pavilion103 (7 February 2015)

Value Collector said:


> It's always going to come down to the skilful and lucky, funding their outperformance at the expense of the people lower on the skill and luck curve.
> 
> For people to be outperforming the market (especially by large amounts) there has to be a larger number of people under performing it.
> 
> So the majority of people that try, will fail. If the group as a whole all decide to learn certain techniques to increase their earnings, these techniques will cease to be effective.




Yes that is correct. 
Any one individual can achieve greatness in the market. 
But overall the masses will not. 
Whether it's investing in shares, whatever most people in any field generally are not willing to put in the work required to become good at something. They will "chance their arm" hoping to make money, but almost certainly throwing it away when they come up against those who have bothered to put in the time and effort. 

Some will get lucky during times of extraordinary opportunity but it will have nothing to do with their ability and diligence but rather lucky timing.


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## Toyota Lexcen (7 February 2015)

ROE said:


> I do I know a few actually, they bought CBA shares when it float NEVER sell a single share even today
> at $90, they also bought CSL and Telstra and never sold a single share with all the up and down.
> 
> They also bought into Medibank recently...they just ignore the blah blah of  macro talk and the next prediction etc...
> ...




great post, start early, property or shares, save save invest etc, i look at couple that I have bought and sold and would of been far better just sitting with the market 

dividend re-investment plan a bonus too if you dont need the yield cheque


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## Value Collector (7 February 2015)

pavilion103 said:


> Yes that is correct.
> Any one individual can achieve greatness in the market.
> But overall the masses will not.
> Whether it's investing in shares, whatever most people in any field generally are not willing to put in the work required to become good at something. They will "chance their arm" hoping to make money, but almost certainly throwing it away when they come up against those who have bothered to put in the time and effort.
> ...




Yes, that's why when people ask me what they should do with their money (normally they are asking because they know I don't have to work a job anymore, and have set my family up comfortably) I suggest they take the safe route of dollar cost averaging into an index fund, at least until they have put in a lot of work to learn how and why markets work. At least I know that way they will get a good result over time, I feel suggesting anything else to people who don't have the skill would be like feeding them to the wolves, over the years I have learned they don't want a long complex answer about building a sound investment operation, they generally want a tip, the best tip I can give that sort of person is an index fund.


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## Value Collector (7 February 2015)

> I do I know a few actually, they bought CBA shares when it float NEVER sell a single share even today
> at $90,




We might know the same people, lol.

I know a couple who have held CBA shares on a dividend reinvestment plan since 1995 / 96 (whenever the second float was)

$12 to $92 in 20years, plus all those dividends bought extra shares every 6months along the way.

Did the GFC worry them? well it worked in their favour, the dividends during the down turn bought a lot more shares than they would have otherwise.

-----------------

The long term investor shouldn't be phased by market down cycles, unless it's during a period you were planning on selling you won't be affected, and it will likely work in your favour if your reinvesting dividends or if the company regularly buys it's own shares.

Take Disney for example, I am holding them as a long term investment, the shares have recently skyrocketed, to over $100, which makes me feel good, however due to their share buyback program, I would actually be better off long term if the shares trended down for a while, the lower the price during the years they operate buybacks the more my stake in the company increases.


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## pavilion103 (7 February 2015)

Even having some sort of filter on the index on the monthly chart would increase profitability substantially.

I know people who did this pre GFC when a top became clearer. Reinvested after prices fell and held and began to rise. I'm not suggesting picking absolute tops and bottoms.

But even with a little basic knowledge and knowing when to be in and out on a large timeframe will improve returns.


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## waimate01 (7 February 2015)

tech/a said:


> How do you figure that.
> 20% on $10K is $2000 x 52 Weeks.= $104,000




Get Kris to explain compound interest - $10k compounding at 20% per week for a year is $18.2 million.  

So if I'm understanding your performance correctly, by choosing to spend the $2k per week, you've done yourself out of $18.1 million. 

You should stop spending the weekly 'two large', and six months from now buy yourself a jet. I'd be impressed.


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## Value Collector (7 February 2015)

pavilion103 said:


> Even having some sort of filter on the index on the monthly chart would increase profitability substantially.
> 
> I know people who did this pre GFC when a top became clearer. Reinvested after prices fell and held and began to rise. I'm not suggesting picking absolute tops and bottoms.
> 
> But even with a little basic knowledge and knowing when to be in and out on a large timeframe will improve returns.




Take the example of CBA above,  the couple have never had to pay CGT on their earnings because they haven't sold the stock. yet they have had a fantastic return just by holding.

If they tried to increase that return by timing in and out, when they sold, they would have lost a chunk of capital to tax, so when they put it back in they have less to work with. they may have to see a 10% - 15% fall before they rebuy. just to offset the tax loss.

Sometimes it would work out ok because they would take that smaller amount of money and be able to buy a larger chunk because the shares went down, other times the market wouldn't fall as much as they expected, and they would just end up buying back in at a higher price, with less capital due to the tax loss.


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## tech/a (7 February 2015)

*Before I continue* this thread on topic.

I too over the years have had people who have me question what I do

Top of the tree is this guy and this thread.

https://www.aussiestockforums.com/forums/showthread.php?t=12683


In this thread was this chart




He went on to say that he had helped out friends by knocking up a quick $50k
when they were in times of need.

I called the guy a trader who was *" Like a Punch Drunk Boxer on Ice' *.--hes never forgotten that and neither have I!

My reaction initially was ---this guy's full of his own ego. A Gordon Gekko wannabe.

He kept popping up!

*And I kept going back to that chart*

At some point this ---err Guy/Gal came along

https://www.aussiestockforums.com/forums/showthread.php?t=22820

The regular monotony of 5 tick wins was UN deniable. 

Back to T/H's chart.

Then he started speaking about increasing size.---more ego!!

*NAH*

The penny dropped.

If I could pick up 5 ticks on the SPI with regular monotony and has size--(To me thats 5-10 Contracts to him its 100s and 1000s) Id have a pretty damned good money making machine.

I had the tools I just didn't know how to* APPLY MY TOOLS*

I'm pretty busy through the day so I chose the FTSE.
Refined and applied---then consistency and realization of the task at hand.---success.
The refining was cutting down of screen time---this occurred with the realization that most action is at the open and closing Hr or so.

Then along came this guy

https://www.aussiestockforums.com/forums/showthread.php?t=26509&page=212

Lived in Adelaide Knew people I knew in his work--sounded like a nice guy who was interested in my interest.
So we met.
Spent a few months on the FTSE and nights on the phone and the rest is history.
He sees what I see. So I/We know it is transferable---but while we are similar we are in some part--some application---different.

And We see what *THEY* see (*T/H*---Trader Girl and the like).

Thanks to *T/H* I not only see my mothers face in the Crowd but many faces that I know I will be able to anticipate their movement more often than not. 

So I'm sure Jason is not aware of the influence he has had on me and perhaps many others.
I thought it appropriate to mention it here.

*Thanks Mate.*


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## johenmo (7 February 2015)

tech/a said:


> I had the tools I just didn't know how to* APPLY MY TOOLS*




This is what affects a lot of people, including me.  Some things coe naturally to me, others don't.  Parts of trading don't.  Thans to PAV for the MTM link - now to read it and think about it.  
AS I said in another thread today, I have started travelling more for work so will have empty time to do the reading.
Expect some (dumb?) questions.
Thanks


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## pavilion103 (7 February 2015)

Value Collector said:


> Take the example of CBA above,  the couple have never had to pay CGT on their earnings because they haven't sold the stock. yet they have had a fantastic return just by holding.
> 
> If they tried to increase that return by timing in and out, when they sold, they would have lost a chunk of capital to tax, so when they put it back in they have less to work with. they may have to see a 10% - 15% fall before they rebuy. just to offset the tax loss.
> 
> Sometimes it would work out ok because they would take that smaller amount of money and be able to buy a larger chunk because the shares went down, other times the market wouldn't fall as much as they expected, and they would just end up buying back in at a higher price, with less capital due to the tax loss.




Agree there can be a lot of stuffing around.

For the average person who doesn't want a headache or any additional risk, holding is simply the best choice.

And like you said, things like tax implications to consider too.


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## Trembling Hand (7 February 2015)

waimate01 said:


> Get Kris to explain compound interest - $10k compounding at 20% per week for a year is $18.2 million.
> 
> So if I'm understanding your performance correctly, by choosing to spend the $2k per week, you've done yourself out of $18.1 million.
> 
> You should stop spending the weekly 'two large', and six months from now buy yourself a jet. I'd be impressed.




Dude you should put the year 10 high school formula away and admit that you are passing comment on something you have no understanding about. The mechanics, liquidity, margin requirements and possibilities of the method. You cannot compound to infinity. In trading short term you are lucky if you can double your size more than 2 to 4 times a year, very lucky and very good. The markets are thick enough to when you are starting out small but the bigger road block is dealing with the large $ swings. Its hard enough to stay on the rails getting the odd outlier when aiming for 2k a week. Bump that up to 20 k and you have a recipe for PTSD. (Like a Punch Drunk Boxer on Ice  )

Can we be sensible?


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## Trembling Hand (7 February 2015)

tech/a said:


> *Thanks Mate.*


----------



## tech/a (7 February 2015)

waimate01 said:


> Get Kris to explain compound interest - $10k compounding at 20% per week for a year is $18.2 million.
> 
> So if I'm understanding your performance correctly, by choosing to spend the $2k per week, you've done yourself out of $18.1 million.
> 
> You should stop spending the weekly 'two large', and six months from now buy yourself a jet. I'd be impressed.




I wasn't talking about compounding still not.
But hey
When you can pull $300 to $2k regularly
Compound your brains out.

Pick me up in your Jet.

Then I'll be impressed.


----------



## tech/a (7 February 2015)

Oh
And why do you think I'm trying to impress anyone?

Fundamental Analysis and Compounding is the ONLY
Way to be profitable?

Prefer I don't post?


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## Nortorious (7 February 2015)

Value Collector said:


> We might know the same people, lol.
> 
> I know a couple who have held CBA shares on a dividend reinvestment plan since 1995 / 96 (whenever the second float was)
> 
> ...




So what happens if the stocks that are buy and holds (and div reinvested) trend down and never recover? What's to say that when they do trend down they won't go into oblivion?

You wouldn't be better getting out at near the high (never going to be able to pick the top) and avoiding potentially having your capital tied up for years maybe even decades? And even worse, the value you could have got out at, never being realised ever again?

I don't understand the logic of increasing your stake in a company that is going down in share price. Yes your quantity of stock is greater but if you are seeing the share price drop consistently, those extra 100 shares will have been evaporated by the overall value of the position declining....

Makes me think of how much people love negative gearing properties..... Doesn't make sense to me unless it is a perfect world.... scenario changes, people are in serious trouble.


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## Value Collector (7 February 2015)

Nortorious said:


> So what happens if the stocks that are buy and holds (and div reinvested) trend down and never recover? What's to say that when they do trend down they won't go into oblivion?
> 
> You wouldn't be better getting out at near the high (never going to be able to pick the top) and avoiding potentially having your capital tied up for years maybe even decades? And even worse, the value you could have got out at, never being realised ever again?
> .




As I said, I would recommend a novice by the index, however some one with business and accounting skills, will be able to identify companies that are building value, who's underlying businesses are strong and growing. These sorts of companies will see longterm share price growth. 




> I don't understand the logic of increasing your stake in a company that is going down in share price




Ok, Cba dropped from $60 to $26 during the GFC, it's now $92, what don't you understand? Obviously having it drop to $26 when your dividend reinvestment plan kicks in is better than having it stay at $60. 

Obviously some companies drop for goods reasons, I am not suggesting holding onto rubbish, or buying more rubbish. But when there are accross the board market down trends, the good companies go down with the bad, and if you analysis shows the company is still going well, then selling just because the market has dropped is a silly idea.


----------



## VSntchr (7 February 2015)

Trembling Hand said:


> In trading short term you are lucky if you can double your size more than 2 to 4 times a year, very lucky and very good. The markets are thick enough to when you are starting out small




Started trading seriously at the end of 2013 and have been focused on sizing up. Have gone from x to 5x in 14 months over 3 increments. So that's the first year and I only managed to double my size a bit over twice....that's the noob gains due to starting from a modest base so will probably be the easiest doubles... What I am trying to say is that yes, doubling more than 2 times a year seems very difficult from here.



Trembling Hand said:


> *but the bigger road block is dealing with the large $ swings*



 Ain't that the truth. Have been contemplating removing the $ column from my spreadsheet tracking open trades.


Top thread gents (and ladies?), an all star ASF cast of Fundies and Techies. opcorn:


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## PinguPingu (7 February 2015)

VSntchr said:


> Ain't that the truth. Have been contemplating removing the $ column from my spreadsheet tracking open trades.





Blerghhh this so much. Currently trading a mild momentum strategy with low backtested max dd yet since I've allocated more savings/capital to it and the day to day swings are larger in $$ terms I start second guessing :crap:


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## Nortorious (7 February 2015)

Value Collector said:


> As I said, I would recommend a novice by the index, however some one with business and accounting skills, will be able to identify companies that are building value, who's underlying businesses are strong and growing. These sorts of companies will see longterm share price growth.
> 
> 
> 
> ...




What if you sold at say $58 and sat out the drop to buy back in at say $30 and ride it back to $92? Would you not have more capital overall than if you stayed in the whole ride? 

We all have different objectives with our trading I guess but my main objective is to maximise gains (whether capital gains or passive income gains) and minimise opportunity cost (having capital tied up in positions going sideways or down).

One more scenario for fun, you sell at $58, short down to $28 and buy back in at $28 and ride up to $92... Hindsight makes this scenario seem easy and obviously it is not but is a different approach that is also valid. From the charts, trading this way is possible. From
Fundamentals, probably not.


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## DeepState (7 February 2015)

The pointy end of the Forbes 500.  Did they get most of their riches:

a. Via salary
b. Via (near term) trading as a supplement to personal exertion income
c. Via compounding their equity
d. Other




As a check...the next 10:


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## burglar (7 February 2015)

DeepState said:


> The pointy end of the Forbes 500.  Did they get most of their riches:
> 
> a. Via salary
> b. Via (near term) trading as a supplement to personal exertion income
> ...




Bill Gates had an opportunity!
Unlike most of the rest of the world, he *recognised the significance* of what he saw!
From what I can gather he became wealthy by taking IBM to lunch.


PS Had to research the Waltons, thought to share!

http://gawker.com/the-waltons-are-the-greediest-family-in-the-world-1300311273


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## luutzu (8 February 2015)

burglar said:


> Bill Gates had an opportunity!
> Unlike most of the rest of the world, he *recognised the significance* of what he saw!
> From what I can gather he became wealthy by taking IBM to lunch.




Na, IBM invited him to lunch... bought and paid for his lunch; then he ate both his and their lunch, for lunch.


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## Value Collector (8 February 2015)

Nortorious said:


> What if you sold at say $58 and sat out the drop to buy back in at say $30 and ride it back to $92? Would you not have more capital overall than if you stayed in the whole ride?
> 
> We all have different objectives with our trading I guess but my main objective is to maximise gains (whether capital gains or passive income gains) and minimise opportunity cost (having capital tied up in positions going sideways or down).
> 
> ...




Yeah, offcourse if you knew ahead of time that it was going from $60 to $26. But you could just of easily sold out on a dip, lost $10 per share in Tax, only to find the big fall you expected never came, and you had to buy back in at a higher price. 

We are all trying to maximise gains, but if I see a stock as undervalued and know eventually it will see a large gain, why would I avoid it just because it's gone down or has been heading side ways? Even if it heads side ways for 12 months, I am still probably better of holding it while I wait because the dividend may be better than a cash investment, and it gets the 12 month clock ticking on the 50% capital gains tax discount, also I have no idea when the run up in price will come, and holding it for 12 months is nothing if the payoff is going to be 50% or even several hundred %


----------



## luutzu (8 February 2015)

burglar said:


> Bill Gates had an opportunity!
> Unlike most of the rest of the world, he *recognised the significance* of what he saw!
> From what I can gather he became wealthy by taking IBM to lunch.
> 
> ...




I think that if you had invested $1 into Wal-Mart some 40 years ago, it would be worth $100, 000 now.


Sam Walton's autobiography - "Made in America" [I don't think he was referring to the products WalMart sells] was a good read. An amazing story.

Yea, the Waltons could be more generous... but they just do what we would all do - follow the law and keep the wealth in the family.

Obama is going to have a go at trying to tax capital gains passed on as inheritance though. Currently, if a person dies and pass it on, the heirs will not have to pay any capital gains tax for gains made before it was inherited.

As Buffett said, there is class warfare and the rich are winning.


----------



## Trembling Hand (8 February 2015)

DeepState said:


> The pointy end of the Forbes 500.  Did they get most of their riches:
> 
> a. Via salary
> b. Via (near term) trading as a supplement to personal exertion income
> ...




If you are using just that list for data,

Outside of Buffet they all made there $'s from a business. So my conclusion would be, as it has always been, if you want to be rich create a business. You can exclude Buffet as insignificant data. 1 outta 25. I would prefer the 24 out of 25 as odds. So it would be b not c. They are trading products; it doesn't matter if its software, mobile phone calls, chemicals, cheap cotton T-shirts or futures contracts. Its all a business that can be ramped up big time if your are smart enough to recognise an early niche and go after it aggressively.

Though I don't think a list of outliers to draw conclusions from is ever the best way to approach this subject.


----------



## McLovin (8 February 2015)

Trembling Hand said:


> Its all a business that can be ramped up big time if your are smart enough to recognise an early niche and go after it aggressively.




Isn't ramping up a business just compounding your equity, without the nasty drag of taxation? The guys who started Google have gone from $0 to $29b and all other things being equal haven't paid a cent in tax on that gain. The guy trading assets is getting stung for cgt every other day. I'll take the option (a) which seems like a pretty good head start to me.  If anything, the list shows that trading in financial instruments is not a way to get into the top 25.


----------



## Trembling Hand (8 February 2015)

McLovin said:


> Isn't ramping up a business just compounding your equity, without the nasty drag of taxation? The guys who started Google have gone from $0 to $29b and all other things being equal haven't paid a cent in tax on that gain. The guy trading assets is getting stung for cgt every other day. I'll take the option (a) which seems like a pretty good head start to me.  If anything, the list shows that trading in financial instruments is not a way to get into the top 25.




What about to 26th then, 




But no I have never paid cgt on my trading. And my tax paid on profit is much more advantageous than your option A.


----------



## McLovin (8 February 2015)

Trembling Hand said:


> But no I have never paid cgt on my trading.




Which is a shame because it's half the rate that you're paying.



Trembling Hand said:


> And my tax paid on profit is much more advantageous than your option A.




More advantageous than zero? Sign me up.


----------



## prawn_86 (8 February 2015)

I think part of the issue is that people who have had success one way (be it through luck, hard work, whatever) tend to think as that being the only way to do it; for them.

Not everything will work for everyone and most people tend to underestimate the effect luck plays in their life over the long run imo


----------



## Trembling Hand (8 February 2015)

McLovin said:


> Which is a shame because it's half the rate that you're paying.
> 
> 
> 
> More advantageous than zero?




No its not zero its 30 % which is a lot better than trying to earn a wage which to start off is going to be very capped then split in half once you start earning real money.

But tax is not the point. For a young dude trying to get a kick start what Tech is trying to get to is valid. I know of a few prop guys in their mid to late 20s who are sitting on accounts in the 1-4 mil from trading futs. These guys have got skills that has put them way way out on the earnings curve basically in the first 5 years of their working life. These skills will be with them for life. No matter what they choose to do from here, which at their age and now their capital is literally anything. 

Compare that to another group I know. Just about all my oldest friends own business. The most successful of the lot has just sold his to a ASX 20 company for 30 mil he is the same age as me, 42. That by anyone's standard is the successful 1 in 1000. Yet the prop guys are way ahead of him. They didn't invent anything, they didn't work their nuts off managing hundreds of staff and customers and they took close to no business risk. Hell they didn't even risk their own money. They have simply taken advantage of the system we have. That is ridiculous amounts of money moving all around the world in financial instruments.

Its a valid idea. If you have some spare time, a little capital and are tenacious enough to stick to learning a simple yet not easy game you will be put way out in front on the earnings curve.


----------



## pavilion103 (8 February 2015)

Trembling Hand said:


> No its not zero its 30 % which is a lot better than trying to earn a wage which to start off is going to be very capped then split in half once you start earning real money.
> 
> But tax is not the point. For a young dude trying to get a kick start what Tech is trying to get to is valid. I know of a few prop guys in their mid to late 20s who are sitting on accounts in the 1-4 mil from trading futs. These guys have got skills that has put them way way out on the earnings curve basically in the first 5 years of their working life. These skills will be with them for life. No matter what they choose to do from here, which at their age and now their capital is literally anything.
> 
> ...




Love this.


----------



## waterbottle (8 February 2015)

Definitely some food for thought in this thread.

I wonder if the possibilites outlined here are achieveable with other instruments. Or if they are achievable with infrequent trading e.g. trading 1x/week. The most suitable instrument seems to be the one that offers high leverage, reasonable volatility and a deep market.


----------



## craft (8 February 2015)

Trembling Hand said:


> Its a valid idea. If you have some spare time, a little capital and are tenacious enough to stick to learning a simple yet not easy game you will be put way out in front on the earnings curve.




Potentially - there's certainly no guarantee, even if you strictly control the inputs; education, practice, resources etc , the outcomes are still variable.

.......................

Anything that can increase your earnings above your expenses enables you to build up surplus capital – its compounding your surplus capital that will make you wealthy and produce passive income.  The thread title brought out the compounding perspective – At least for me the compounding point is not an argument against earning more income through trading - the two can and should be complementary. The thread title just confused things.

..........................

On the point of increasing income through trading – Be realistic when approaching the possibility (being realistic doesn’t mean you shouldn’t try, by the way)

There are no barriers to entry – nothing to preclude those with natural ability entering (are you one of them?)

There is some very well capitalised and resourced competition. 

There is a huge amount of competition. 

It is a losers game (zero sum less costs)- this doesn’t just mean that mathematically at least 50% have to lose plus some more to cover costs, the reality is that a few make very good money and the majority lose. 

Trading shares long and you will get some leakage from the underlying business performance – so a few more marginal traders can survive but future do not have this benefit.


blah blah blah - don't risk your capital until you understand your trading business's economics and competitive environment. 

If somebody who claims to be one of the few who make good money from trading futures wants to help you also become one of the few for a *FEE*, insist on third party verification of their performance – preferably as a series of tax returns and cross matched broker accounts – the penalties for manipulation of tax returns is really your best insurance of seeing the truth. 

..................

If this is a purely a non commercial sharing_ (some of the posts made me wonder motivation)_ of views on trading futures to produce income from small capital balances – then let those interested get on with it. (my intention)

ps 
change the damn thread title.


----------



## DeepState (8 February 2015)

Trembling Hand said:


> Though I don't think a list of outliers to draw conclusions from is ever the best way to approach this subject.




I agree - also for many other subjects.  

I was mostly curious to see how people chose to define their wealth creation from the increase in value of their equity. Option b or c.  And I was also curious as to what came out of d. Option a is banal.  

Is it compounding their equity in the somewhat traditional way? That would be making money off an ever increasing capital base which generates a positive return on investment no matter where that capital base happens to be housed. Or does that increase in equity value come from personal exertion ('trading') which is somehow different from the activity that they get for drawing a salary and yet occurring concurrently.... To me, to start a business, you inject equity.  To build it, you generally inject more or reinvest dividends.  How different is that to investing in someone else's business?  That's capital markets.  

If you invest (as opposed to trade in the sense of the fast paced world of securities markets) in someone's business and they make money, it's compounding.  Yet if you invest in your own and it makes money it's trading. At the same time, if someone else invests in your company and it makes money they are compounding. ??

Bill Gates pretty much doubled his wealth in the period after he stepped down as CEO of Microsoft.  Hard to claim he was 'trading' from that point, I think.  Of course, he is just one example. The Walton family got there via genetic lottery.  Are they actually getting/staying rich by 'trading' or leveraging off a capital base that was handed to them whose returns are not fully consumed?

Ultimately you can get rich, seriously rich, in a whole lot of ways.  Along the way, a lot of people find themselves to be pretty poor as well in a whole lot of ways that fall under b. c. and d.  To each their own.  I did (have done) all three.  I am glad for all of them.  However, compounding is what is going to take me to the next world and keep me/us clothed and fed in this one. But, definition is important here. To me, compounding means to save more than you earn and then allowing the savings to earn a return which...compounds.  If you earn a return on that capital base via trading, sweet. All power to you.  Compounding arises from compound interest.  You only get compound interest when you have something to compound.  That implies not consuming all of your earnings of any stripe. It also implies that this interest rate is generally positive...

So, I also agree with at least some of what pretty much all of you has said.  Such a diplomat.


----------



## fiftyeight (9 February 2015)

Maybe not the title so much as I do not want to be rich by my definition. But some of the content speaks to my personal situation.

I have about maxed out my current earning potential to fund a property development that will then hopefully snowball (compound) into another planned development and so on. This is my long term plan and wont be taking out any profits from this for about 10+ years.

But this has left me poor now. If I plan on snowboarding anytime soon, I need something that will generate a second income off of a very small capital base. It really wont cost me much money to figure out if I can trade or not so ill have a crack, if I fail ill try something else.

Does it have to be a choice between trading and investing, cant you do both, either or none as life requires?


----------



## avion (9 February 2015)

Trembling Hand said:


> The markets are thick enough to when you are starting out small but the bigger road block is dealing with the large $ swings.




TH, are you referring to drawdowns in one's account...?



Trembling Hand said:


> Its hard enough to stay on the rails getting the odd outlier when aiming for 2k a week. Bump that up to 20 k and you have a recipe for PTSD. (Like a Punch Drunk Boxer on Ice  )




Would you say your stress levels are less now given the experience and all or would you say it's the same because you've increased your size?



tech/a said:


> So I'm sure TH is not aware of the influence he has had on me and perhaps many others.
> I thought it appropriate to mention it here.
> 
> *Thanks Mate.*




Same here, *THANKS TH!*


----------



## Trembling Hand (9 February 2015)

craft said:


> There are no barriers to entry – nothing to preclude those with natural ability entering (are you one of them?)
> 
> *There is some very well capitalised and resourced competition. *
> 
> ...




Hmmmm....

These comment/sentiments really rub me the wrong way (mainly the bolded bit as a negative). I'm not sure why but they do. I feel that they are wrong to the core. Maybe because they are based on some theory from far rather than practise or maybe I just have a lucky genie who has been showing me a different reality over 20 or more traders every day for the last 10 years..... maybe my 15 thousand hours of trading futs is too small a sample size.....??!!

What you are saying is don't set up your hotdog stand here,




set it up here,




No one is denying its a hard game to trade short term but one thing you must absolutely have is lots of participants. If you haven't got that you are left with small moves that don't cover expenses with no volatility to enter on good R:R trades. What you end up with is the miserable small cap market that the ASX has been post GFC. Its no coincidence one of the most active threads in the last 2 years is Pav's futs thread while the ASX stock thread is relatively void of activity. Its because futs always offer opportunity and therefore there is always something to post. Mean while the stock punters wait year after year for the "good times" to return.

The fact that there is massive capitalised players is a huge positive not a negative. The positive leakage from stocks vs futs is a theoretical furphy. Every year billions and billions of new money is sunk into the futs market from Hedge Funds etc . On average the performance of these players is no better than 0% return true - that is your less than zero sum game theory from a far. But the size of the big players mean they are inefficient in executing their ideas. What that means for a small player in practise is when the hot money is flowing and the whales are going at each other there's more than enough scraps to be picked off. Leaving skilful punters to get fat on what is no more than executing cost for a billion dollar Hedge fund.

Back to the two pictures above. You have a business - what type of environment you set up in will determine your possibilities.

In the second pic you will be the biggest business in town...... but broke.

In the first pic you will be a small tiny insignificant player....... but run off your feet with customers.

I will always choose the market with massive players for my business because there is where the grow for a small player is easiest.


----------



## McLovin (9 February 2015)

Trembling Hand said:


> Its a valid idea. If you have some spare time, a little capital and are tenacious enough to stick to learning a simple yet not easy game you will be put way out in front on the earnings curve.




I don't disagree with most of what you're saying. If someone can supplement their income by trading, fantastic. Will they become wealthy or rich by doing so? The odds are heavily stacked against that outcome. And no I'm not saying they shouldn't bother with it, just that they should go in to it with realistic expectations.


----------



## craft (9 February 2015)

Trembling Hand said:


> Hmmmm....
> 
> These comment/sentiments really rub me the wrong way (mainly the bolded bit as a negative).
> 
> ...




You can rub whatever way you like TH.

All that was intended by the post is to say – be realistic about your operating environment. The points were the first few that came to mind, – Blah Blah Blah should probably cover 100’s of other points I didn’t list. 

Remora fish don’t mind swimming with the sharks – others get eaten.  Well capitalised and resourced competition is just a dot point – I didn’t necessarily mean it as a negative.

I didn’t say don’t have a go. 

I said be realistic and aware.

**** it is hard to make comment sometimes without being ascribed beliefs you don’t hold.


----------



## pavilion103 (9 February 2015)

McLovin said:


> I don't disagree with most of what you're saying. If someone can supplement their income by trading, fantastic. Will they become wealthy or rich by doing so? The odds are heavily stacked against that outcome. And no I'm not saying they shouldn't bother with it, just that they should go in to it with realistic expectations.




I guess it depends on how much time and effort someone wants to commit to it. 
"Realistic" is only a term relative to the amount and commitment someone gives to it.
If someone wants to learn a bit about it and take some trades here and there and make a bit of extra income then it's unrealistic to think that they will make hundreds of thousands from it. But it someone is willing to give it everything they've got and do whatever it takes then it's unrealistic to think that they can't make hundreds of thousands from it.


----------



## pavilion103 (9 February 2015)

craft said:


> You can rub whatever way you like TH.
> 
> All that was intended by the post is to say – be realistic about your operating environment. The points were the first few that came to mind, – Blah Blah Blah should probably cover 100’s of other points I didn’t list.
> 
> ...




I don't think anyone is saying just jump in and ride the gravy train to inetivable success. 

We are all aware that you need to seriously commit yourself to becoming successful in trading or you will get eaten up. 

But to think that any of the factors you have mentioned are any reason not to get involved is incorrect.

There is enormous opportunity there and anyone who is willing to commit themselves can make big money from futures.


----------



## McLovin (9 February 2015)

pavilion103 said:


> "Realistic" is only a term relative to the amount and commitment someone gives to it.




Being realistic is far more encompassing than just how much time and commitment someone gives something. I could practice batting every afternoon with a cricket stump and a water tank but it's highly unlikely I'd ever play test match cricket. You've got to get lucky in the gene pool as well as having determination to succeed. With $20k you can probably succeed with just commitment but can you do that with $20m or do you need a better edge than just turning up to training?


----------



## craft (9 February 2015)

pavilion103 said:


> But to think that any of the factors you have mentioned are any reason not to get involved is incorrect.





DID I SAY THEY WERE REASONS NOT TO GET INVOLVED? ffs.

perhaps I actually said



craft said:


> (being realistic doesn’t mean you shouldn’t try, by the way)






pavilion103 said:


> There is enormous opportunity there and anyone who is willing to commit themselves can make big money from futures.




This statement could equally said about many things - Sport, Acting, Arts, Singing, Business ...... 

There is enormous potential in being VERY good at many things - there are also varying costs of failing to be good enough to make it to the payoff. (time - expenses - opportunity)


----------



## pavilion103 (9 February 2015)

McLovin said:


> Being realistic is far more encompassing than just how much time and commitment someone gives something. I could practice batting every afternoon with a cricket stump and a water tank but it's highly unlikely I'd ever play test match cricket. You've got to get lucky in the gene pool as well as having determination to succeed. With $20k you can probably succeed with just commitment but can you do that with $20m or do you need a better edge than just turning up to training?




Agree. I'm talking about someone with 20K.

Anything over that is a I've my head and I can't comment on.


----------



## pavilion103 (9 February 2015)

craft said:


> DID I SAY THEY WERE REASONS NOT TO GET INVOLVED? ffs.
> 
> perhaps I actually said
> 
> ...





Go to my futures threads. Learn how I trade. And do it for yourself.

It would be a good use of your time.

I'd encourage anyone else with small base and an inclination to learn to do the same.


----------



## craft (9 February 2015)

pavilion103 said:


> Go to my futures threads. Learn how I trade. And do it for yourself.
> 
> *It would be a good use of your time*.
> 
> I'd encourage anyone else with small base and an inclination to learn to do the same.




You crack me up.

What you aspire too as a yearly income isn't even an average days volatility anymore - the capital has all been accumulated through the markets.

but you make a good point about use of time - I gotta stop wasting mine, here.


----------



## Trembling Hand (9 February 2015)

craft said:


> but you make a good point about use of time - I gotta stop wasting mine, here.




But Craft that goes both ways. You say you were trying to add some realistic expectations. But for what ever reason you have added a list that is actually incorrect and others have added points that are just dumb. So instead of getting to the meat of the subject that is making some serious capital out of short term trading people have had to waste time and argue about the same old tired lines thrown up about trading, 

Compounding - "if that was true you would be richer than Buffet in 2 years"

Zero sum game - "You are playing a game that is stacked against you because you are small"

And other blatantly obvious and well know points.

Then just as a nice sourer you have accused two posters that have put up a lot of info for no return over many years of having ulterior motive.......... How about what the Fuxk back at you????


----------



## pavilion103 (9 February 2015)

craft said:


> You crack me up.
> 
> What you aspire too as a yearly income isn't even an average days volatility anymore - the capital has all been accumulated through the markets.
> 
> but you make a good point about use of time - I gotta stop wasting mine, here.




You have no idea what I aspire to as a yearly income.

I've set a goal of $50,000 to take a year off work.

What I aspire to as a yearly income is much higher than that (in subsequent years).


I'm not going to argue. 

People can go look in my thread and decide whose methodology they want to aspire to. Yours  or mine.

Maybe you can even start your own thread and see if you generate any interest.


----------



## tech/a (9 February 2015)

> **** it is hard to make comment sometimes without being ascribed beliefs you don’t hold.




Craft-----read what you've written---then think of me!

I have much more coming but not the time *RIGHT* now perhaps tonight.

Ill explain the title---from my view when I titled the thread---which I did think about--although it seems I didn't---from you and others view.

And On with the Topic as I meant it to be.


----------



## tech/a (9 February 2015)

To the topic.

Obviously I hadn't made myself clear.

Hopefully this clears it up.

(1)
I see many beginners come to ASF and many who contact me.
Most want to be able to make as much as they can as quick as they can and they want to know how to do it.With $20k or much less.

(2)
I have many friends who are struggling to freehold their house let alone have enough to retire on.
Many will chew up their super on their mortgage. They started late and finished short. They* ALL* want to know how to catch up. How do I get rich enough to retire in 10 yrs.

These are the *MOST* who want to get rich or retire wealthy.

I believe an attitude of I need to get rich *OR* I need to *BE* rich/er is wrong!

*FOR THESE GUYS!*

I believe in* THEIR* positions---without a large capital base or the time to build one----
they should be looking at making a strong commitment to increasing their income beyond that which they need.
This will do 2 things.

The young guys will get surplus that they can utilize elsewhere.
The older ones will have another income stream that they can supplement their position.

Sure you have to put in the hrs to be proficient---but the rewards are like anything else you put your mind to---you become proficient and can become expert.

I personally have found Index futures to fill the needs.
Lots of very liquid markets.

In particular
HSI
DAX
FTSE

In this timezone.
No reason why other really liquid markets in other time zones wont supply the same.


Best action in the first 1-2 hrs often less and at the last hr.
Even with 1 contract I can have a meaningful return.
An expert (With bigger Kahoonas). who trades 10x what I do would have made $52,000 on my last 
weeks trades! Which totaled around 3 hrs!


Next post to some meat on the topic.


----------



## burglar (9 February 2015)

tech/a said:


> ... They started late and finished short ...





I thought I was in this boat, but as pension age approaches, I find that I will cope!


----------



## Wysiwyg (9 February 2015)

burglar said:


> I thought I was in this boat, but as pension age approaches, I find that I will cope!



Topped up with a few burglaries recently did we? :kiffer:


----------



## tech/a (10 February 2015)

So my point is that for a few Hrs a night with a solid grounding you can see and trade what some of us here see.

Just with one contract you can make a sound regular difference to your situation.
Sure it takes time to learn but its well worth it.

*You'll have it for life!*

You'll see opportunity where others see lines.
You'll take trades that others cant see.
You'll keep it to yourself!

I strongly suggest highly liquid markets.
HSI
DAX
FTSE
There are E MINIS in the HSI and FTSE where the tick value is much less than a full contract.

This is Last nights DAX.
I traded the first move and left----------- the rest is what I see on a chart---this chart.




For those of you who prefer real time see THIS THREAD HERE
https://www.aussiestockforums.com/forums/showthread.php?t=26509&page=211

and look to the right of page at the top of the chart above
I bought at 10620 





Just pointing it out.
Worth investigating I thought.
Good trading.

Covered at 10640


----------



## Nortorious (10 February 2015)

tech/a said:


> So my point is that for a few Hrs a night with a solid grounding you can see and trade what some of us here see.
> 
> Just with one contract you can make a sound regular difference to your situation.
> Sure it takes time to learn but its well worth it.
> ...




Nice posts tech/a and also pav.

I haven't had the opportunity to go through the threads in detail but love the story that you both have been writing. I'm hoping to move into futures at some stage not too far down the track and will hopefully be able to add some value to the threads.

In regards to your other post, I'm one of those young guys that is currently working hard to increase my income to a point where I have a surplus building up, that I can then put to work to build my wealth. It's not going to be an overnight process (it's been about 6 year journey already) but as you say, it's a skill I will have for life... well worth the effort.


----------



## Newt (11 February 2015)

Definitely an all star thread on the go, which is great to see.  Was so happy to see craft back in action but now worried he's gone again.  Nooooooooo!

- so much to learn from these forums if people take the time
- it is hard for most people to trade well - you read over and over how to play the instrument, but until you practice/practice/practice you don't really understand or FEEL why expectancy, watching risk, developing technique is so important
- definitely agree when tech says you have to be saving more than you earn to get ahead in life
- agree also that finding compounding investments so important (but not always easy for most people)
- great to hear from a few benefiting from pav's futures thread.

I'm just thankful so many take the time to share some of their knowledge, whether T/A, FA, stocks, futures.
More please......

   :drink:


----------



## fiftyeight (11 February 2015)

tech/a said:


> I strongly suggest highly liquid markets.
> HSI
> DAX
> FTSE
> There are E MINIS in the HSI and FTSE where the tick value is much less than a full contract.




There is a mini FTSE? I cannot find a code.


----------



## tech/a (11 February 2015)

fiftyeight said:


> There is a mini FTSE? I cannot find a code.




Your right
Always thought there was---


----------



## skc (12 February 2015)

My  on this topic.

Tech/a has a fair point. For a person with $20k, a good trader will beat a good investor hands down, over 1-5 years. 

However, if we starting dealing with averages... The average trader is a loser, while the average investor earns a market return (less a bit of brokerage), which is positive over most years.

So if you were to take probability into account, the right advice for an average person (who will turn into an average trader or an average investor) is to simply buy an index fund. The probability-weighed outcome favors the investor.

Having said all that... the average trader probably didn't put in enough effort and committment to acquire the skill to succeed. So again, Tech/a has a fair point: put in the effort and committment and the rewards could be substantial... and more substantial than the investing thinking (again, for $20k in capital).

FWIW, I think trading is financially more rewarding than investing (and compounding), up to about $1-3m dollars in capital. The figure varies depending on the strategy and the instrument (probably less in futures). After that, it's unlikely that you can use it all in trading without changing what is probably pretty "retail" strategy that got you there. So it's worthwhile to have an alternate way to deploying the capital. Alternatively, you can go trade someone else's capital and put your own capital in the investing/compounding path earlier.

Craft.. if you are still around this thread. I think you said that you started off trading... At what point did you make the switch? And did you make the switch for the reason above or a different reason?


----------



## Newt (12 February 2015)

skc said:


> Craft.. if you are still around this thread. I think you said that you started off trading... At what point did you make the switch? And did you make the switch for the reason above or a different reason?




I'd be grateful understand more about this too craft.  Would be an insight to know what sort of trading approach you followed, and how that developed into a more quantified analysis/TA approach?


----------



## craft (12 February 2015)

skc said:


> Craft.. if you are still around this thread. I think you said that you started off trading... At what point did you make the switch? And did you make the switch for the reason above or a different reason?




Hi SKC

Obviously I have seen your post, all of which I agree with. My transformation from trading is generally covered by what you say. I’m reluctant to expand on that here because whilst I may post with the intention of relaying an experience to help it will probably be interpreted as negativity to trading and derail things again – which I don’t want to do.  

To not duck the question I will put something in the PVFCF thread.


----------



## pavilion103 (12 February 2015)

Were you successful or unsuccessful when you traded?

Fairly direct question but would give insight...


----------



## craft (12 February 2015)

pavilion103 said:


> Were you successful or unsuccessful when you traded?
> 
> Fairly direct question but would give insight...




By the standards some achieve on forums I was crap.


----------



## Value Collector (12 February 2015)

skc said:


> My  on this topic.
> 
> Tech/a has a fair point. For a person with $20k, a good trader will beat a good investor hands down, over 1-5 years.




Not sure if I agree with that, a highly skilled investor can generate high returns, that could match or beat a trader.

Traders claiming to get super high returns are often using leveraged instruments, if you factor in using leverage in an investment operation, If that operation goes well the returns will be quite remarkable.

let me give you an example, say an investor has $20,000 to invest. and he wants to leverage his position over two stocks he is comfortable with, we will use 2 stocks I have been involved with in the last 3 years CBA and CZZ (capilano honey).

Say he takes the full $20,000 puts it into CBA 3years ago at $45 / share, he then uses the CBA as collateral on a margin loan and puts $16,000 into Capilano, the CBA dividend more than covers the interest.

After 3 years his CBA has doubled to $92.00 / share, and capilano has gone from $2 to $9.20 + capilano dividends.

CBA- $40,000
CZZ- $73,600
total- $113,000

that's a 565% return in three years and that's not including the surplus dividends and franking credits, on a basic set and forget leveraged investment operation. He could have also built in a few option positions along the way to increase this return also. 

Also this positions profits were not taxable along the way until he sells, and when he does sell, he gets a 50% capital gains tax discount.


----------



## Hodgie (12 February 2015)

Value Collector said:


> Not sure if I agree with that, a highly skilled investor can generate high returns, that could match or beat a trader.
> 
> Traders claiming to get super high returns are often using leveraged instruments, if you factor in using leverage in an investment operation, If that operation goes well the returns will be quite remarkable.
> 
> ...




It was previously mentioned by some (including yourself) that the average investor would be better off just going in an index fund so I think for the purposes of the above comparison you would need to use index returns rather than that of CBA and CZZ.

I'm not necessarily disagreeing with anything you have said, but based on the "average" investor, market returns seem more appropriate.

Of course when you start using a "Highly Skilled Investor" as a benchmark the sky is going to be the limit, as with a "Highly Skilled Trader"


----------



## ThingyMajiggy (12 February 2015)

Value Collector said:


> Not sure if I agree with that, a highly skilled investor can generate high returns, that could match or beat a trader.
> 
> Traders claiming to get super high returns are often using leveraged instruments, if you factor in using leverage in an investment operation, If that operation goes well the returns will be quite remarkable.
> 
> ...




Might just be a technicality but a lot of those who are saying investing can take it to trading, always seem to refer to a trade that one could have taken X years ago, I think this is another advantage to trading, what if that trade 3 years ago didn't work, if CBA didn't double? What would you do now today if you had a trader vs investor challenge? With trading you get multiple chances a day to dig yourself out of a hole(if you get into one), don't have to wait weeks/months/years to find out what the result is before you pull the plug on it and look for something else. I think trading is better bang for buck, especially index futures like a few of us trade here, you know right now whether it's going to work and can then still make a considerable sum even if you start the day bad or whatever the case may be. 

That being said I think it would be best to do a bit of both, none of this trading OR investing competition.  

IMO


----------



## Newt (12 February 2015)

I'll look forward to check crafts update to the PVFCF thread.

These types of threads shared by a very helpful minority of frank ASF members are the equivalent of reading one of the Market Wizards books in some ways.  Fascinating insights into investments methodologies fine tuned in the furnace of real life trading/investing.  You try to copy at your own risk, but never know when something will resonate with your ego/personality/style.


----------



## Value Collector (12 February 2015)

Hodgie said:


> It was previously mentioned by some (including yourself) that the average investor would be better off just going in an index fund so I think for the purposes of the above comparison you would need to use index returns rather than that of CBA and CZZ.




I said the average person, is better off in an index fund than attempting trading, this example was to show a highly skilled investor using leverage, because a another forum member mentioned a skilled trader would always beat an investor. the example was to show that a relatively simple leveraged investment operation could achieve very high returns with almost a set and forget approach. 

I don't personally use index funds, and have held positions in both the stocks I mentioned.


----------



## Value Collector (12 February 2015)

ThingyMajiggy said:


> Might just be a technicality but a lot of those who are saying investing can take it to trading, always seem to refer to a trade that one could have taken X years ago, I think this is another advantage to trading, what if that trade 3 years ago didn't work, if CBA didn't double? What would you do now today if you had a trader vs investor challenge? With trading you get multiple chances a day to dig yourself out of a hole(if you get into one), don't have to wait weeks/months/years to find out what the result is before you pull the plug on it and look for something else. I think trading is better bang for buck, especially index futures like a few of us trade here, you know right now whether it's going to work and can then still make a considerable sum even if you start the day bad or whatever the case may be.
> 
> That being said I think it would be best to do a bit of both, none of this trading OR investing competition.
> 
> IMO




A skilled investor can find companies that are selling for less than they are worth, and building up value inside their company, these stocks a bound to go up in value eventually, its almost impossible for them not too.

I didn't just Cherry pick CBA and CZZ, these are both stocks I have had positions in (CBA was put option strategy). go to the CZZ thread and you will see I was posting about it's virtues and how undervalued it was for ages, to me it was clear as day, I bought so many shares I am in the 20 twenty shareholders list in both the 2013 and 2014 annual reports.

you can monitor the company along to the way to be sure value generation is still happening, you don't have to lock yourself into it, investors adjust positions too.


----------



## Hodgie (12 February 2015)

Value Collector said:


> I said the average person, is better off in an index fund than attempting trading, this example was to show a highly skilled investor using leverage, because a another forum member mentioned a skilled trader would always beat an investor. the example was to show that a relatively simple leveraged investment operation could achieve very high returns with almost a set and forget approach.
> 
> I don't personally use index funds, and have held positions in both the stocks I mentioned.




Yeah I actually re-read skc post and saw that he brought up the suggestion of a skilled trader will beat a skilled investor. My bad.


----------



## pavilion103 (12 February 2015)

Value Collector said:


> I said the average person, is better off in an index fund than attempting trading, this example was to show a highly skilled investor using leverage, because a another forum member mentioned a skilled trader would always beat an investor. the example was to show that a relatively simple leveraged investment operation could achieve very high returns with almost a set and forget approach.
> 
> I don't personally use index funds, and have held positions in both the stocks I mentioned.




Depends how many contracts you are trading also.

$25,000-$30,000 will allow roughly 4 on the FTSE.

A highly skilled  trader could certainly make $200,000 in a year doing that.

That would blow the investor out of the water.

You also aren't relying on a handful of stocks to go up. You can trade the fitures index any direction also.


----------



## pavilion103 (12 February 2015)

That makes $113,000 over 3 years look like peanuts.


----------



## Value Collector (12 February 2015)

pavilion103 said:


> Depends how many contracts you are trading also.
> 
> $25,000-$30,000 will allow roughly 4 on the FTSE.
> 
> ...




Is that what you made?

Because I actually held CZZ over that time, so the return is pretty close to the return I made, and I had a lot more that $20,000 in the deal.
_____

I said that is just one example though, of a very simple way an investor can leverage his returns, it could be improved with the addition of options etc, or with different stocks.

I wasn't trying to get into a measuring competition, just trying to show that a lot of the traders high returns will be because of leverage, so to compare it to an unleveraged return is not the right comparison.


----------



## pavilion103 (12 February 2015)

Value Collector said:


> Is that what you made?
> 
> Because I actually held CZZ over that time, so the return is pretty close to the return I made, and I had a lot more that $20,000 in the deal.
> _____
> ...




It's not what I made. 
And it doesn't matter that that's what you made (good job though and well done!). 
You know that. 

The point is that a skilled trader with a small account can easily beat a skilled investor with a small account. 
A skilled investor can do very well, I don't dispute that. 
But with the ability to make $200,000+ in a year from a $30,000 account -- that will not be beaten. No chance.  
However, you and I both know that that sort of profit is very possible with a futures trading account trading 3-5 contracts. 

IF you are a good trader with small capital you will win hands down certainly within a 12 month period.


----------



## Value Collector (12 February 2015)

pavilion103 said:


> It's not what I made.
> And it doesn't matter that that's what you made (good job though and well done!).
> You know that.
> 
> ...




Do you know of anyone that has done that though? not just in one year, but consistently on average.


----------



## ThingyMajiggy (12 February 2015)

Value Collector said:


> Do you know of anyone that has done that though? not just in one year, but consistently on average.




Yep! Although not a full 12 month period......as they usually go on holidays for a few months a year


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## craft (12 February 2015)

pavilion103 said:


> But with the ability to make $200,000+ in a year from a $30,000 account -- that will not be beaten. No chance.
> 
> However, you and I both know that that sort of profit is very possible with a futures trading account trading 3-5 contracts.




5 Contracts = that’s north of half a million dollars of exposure on a 30K account - Wonder what ‘skilled’ traders are happy to operate with those odds of ruin?


----------



## pavilion103 (12 February 2015)

Value Collector said:


> Do you know of anyone that has done that though? not just in one year, but consistently on average.




No. I don't know any traders or investors. I only know what is possible within reason. 

Continue to follow my futures thread.


----------



## pavilion103 (12 February 2015)

craft said:


> 5 Contracts = that’s north of half a million dollars of exposure on a 30K account - Wonder what ‘skilled’ traders are happy to operate with those odds of ruin.




Manage risk such as: not holding overnight (or limited contracts). not holding during major announcements etc. As stated in another thread then you might have one shock in 5 years where price gaps. It won't be a large portion of capital overall. 

Trade with an edge where losses are kept low relative to wins. E.g. max loss = 8 points per contract x 2 = 16 points on any one position. Most intial risk positions being 5-6 points risk. If 1 out of 7 (14%) make a 30 point win with all others losing the full intitial risk, you break even. Thats a 14% winning accuracy to BE!!!! Get that to around 40-50% and you are laughing. Not to mention the larger winners....   

If you have $30,000, then start with 2 contracts (more than sufficient to make great money). As the account size increases then trade more contracts. OR if you want to manage risk further stay on 2 contracts making $2,000 or so per week. 

I'm not sure where odds of ruin even comes into it operating in the above manner???
If trading with that sort of RR you aren't going to bust yourself. 
If you break your rules repeatedly you might, but we are talking about a highly skilled trader who doesn't repeatedly break his rules.


----------



## pavilion103 (12 February 2015)

Stephen Covey in "The Seven Habits of Highly Effective People" (brilliant book) talks about "paradigms". 

Craft, this appears to be a case of different paradigms. You cannot see what some of us others can see.


Value Collector... I agree with much of your stuff. Don't agree with all. But love your thoughts. Beneficial.


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## craft (12 February 2015)

pavilion103 said:


> Stephen Covey in "The Seven Habits of Highly Effective People" (brilliant book) talks about "paradigms".
> 
> Craft, this appears to be a case of different paradigms. You cannot see what some of us others can see.




Perhaps I can not see what you can see.

Perhaps you have not seen what I have seen.


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## pavilion103 (12 February 2015)

Yes. I think I'll leave it at that.

I like what Tech started in this thread. 

I guess we will see if further evidence mounts in the "Transition to Futures" thread.


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## BeanJumbler (2 March 2015)

There have been some disputes, but that's what's made this thread so educational. Thanks for the great thread, guys 



pavilion103 said:


> I don't get it.
> 
> There is no secret knowledge that is hidden from all except an elite few.
> 
> ...




Mind mentioning which PDFs these were?


----------



## pavilion103 (2 March 2015)

BeanJumbler said:


> There have been some disputes, but that's what's made this thread so educational. Thanks for the great thread, guys
> 
> 
> 
> Mind mentioning which PDFs these were?




Some Wyckoff one from early 1900s. I'll have to dig it up.

And

Master The Markets - Tom Williams. 
This one was gold when I first started.


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## BeanJumbler (2 March 2015)

pavilion103 said:


> Some Wyckoff one from early 1900s. I'll have to dig it up.
> 
> And
> 
> ...




Thanks mate!


----------



## tech/a (2 March 2015)

http://www.tradeguider.com/mtm_251058.pdf


http://www.volumespreadanalysis.com/tradeseqexp.pdf


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## BeanJumbler (3 March 2015)

tech/a said:


> http://www.tradeguider.com/mtm_251058.pdf
> 
> 
> http://www.volumespreadanalysis.com/tradeseqexp.pdf




Muchos gracias!


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## debtfree (3 March 2015)

tech/a said:


> http://www.tradeguider.com/mtm_251058.pdf
> 
> 
> http://www.volumespreadanalysis.com/tradeseqexp.pdf




Didn't have the second one so many thanks Tech.


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## Steve C (5 March 2015)

pavilion103 said:


> Go to my futures threads. Learn how I trade. And do it for yourself.
> 
> It would be a good use of your time.
> 
> I'd encourage anyone else with small base and an inclination to learn to do the same.




I have decided this is exactly what I am going to do.

In my current role I have a spare 1-2 hours a day where I could be increasing my knowledge/supplement my income.


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## tech/a (5 March 2015)

Steve C said:


> I have decided this is exactly what I am going to do.
> 
> In my current role I have a spare 1-2 hours a day where I could be increasing my knowledge/supplement my income.




Id also encourage those who want to trade stock to also have a look at PAVs stock trading thread.
Futures has the benefit of long and short but then CFD's (with all their issues) do as well.


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## BeanJumbler (5 March 2015)

tech/a said:


> Id also encourage those who want to trade stock to also have a look at PAVs stock trading thread.
> Futures has the benefit of long and short but then CFD's (with all their issues) do as well.




Just to clarify, are you referring to the momentum setups thread, or does he have another?


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## pavilion103 (5 March 2015)

Steve C said:


> I have decided this is exactly what I am going to do.
> 
> In my current role I have a spare 1-2 hours a day where I could be increasing my knowledge/supplement my income.




Awesome mate. Go for it


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## DeepState (7 March 2015)

pavilion103 said:


> $25,000-$30,000 will allow roughly 4 on the FTSE.
> 
> A highly skilled  trader could certainly make $200,000 in a year doing that.
> 
> That would blow the investor out of the water.




...as would a highly skilled coin.  It too would blow the investor out of the water.  The hard part being to know that the coin was highly skilled at the outset, unlike its lesser skilled siblings.  Perhaps the coin that tossed three all-in binaries in a row to achieve the above outcome is 'highly skilled' and we should back it accordingly?  

At a starting line on 9 Mar 2015, 1000 traders from ASF (incl lurkers) who have had more than three years on the site following various threads over time and, presumably, have a couple of hundred hours of flying time and sim time logged, start with $25-30k.  The Institute of Highly-Skilled Traders gave this to them, so it is not even their capital.  They are running a turtle experiment, X-Factor for traders.  They get to keep the money only if they convert this to $200k in less than a year.  If not, they walk with nothing.  For the purposes, this money is presumed to be noticable as supplemental income and considered to be worth 2-hours a day of spare time by each candidate.  Nothing stops them from trading on their own account either....etc. add legal stuff to close off the loopholes to the clear intent of this question.  Multiply the dollar figures by 1000x if you feel the need to make the traders stupendously motivated for the chance to make $200m.  

They trade FTSE and DAX only.

What proportion of traders, who make this attempt from scratch, do you think would achieve this outcome if this type of thing was their objective?  Can you outline the reasoning?


----------



## skyQuake (7 March 2015)

I would assume its >12.5% (all in double or nothing 3 times from $25k)


----------



## Wysiwyg (8 March 2015)

I am eligible for the exercise but doubt being able to increase initial equity to 200k in one year. This is based on my experiences to date and my psyche.


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## Habakkuk (8 March 2015)

skyQuake said:


> I would assume its >12.5% (all in double or nothing 3 times from $25k)





There is no need for 3 times.
Just flip a coin for long or short and set a stop-loss at x % and a profit target at 8x %. It saves time.

Of course, nobody here would do that. They all believe they have skill and could do better. A few (very few) would be right, a few more would be lucky and the others would miss out. I'm confident that there would be nowhere near 125 winners. No way.
Maybe just a dozen or so. 700% profit pa is a tall order.

Now I have a more interesting question. Assuming that you know that you have no trading skill but that you would like a better than 12.5% chance of collecting the $200k, how could it be done? Let's aim for a 50/50 chance, $200k or nothing.

How would YOU do it without trading skill?


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## DeepState (8 March 2015)

Habakkuk said:


> There is no need for 3 times.
> Just flip a coin for long or short and set a stop-loss at x % and a profit target at 8x %. It saves time.



It doesn't work like that.  The moment the coin/binary flips, you gap.  If you want to insure that gap risk...you pay for it.  And then some.  SQ's approach is superior and would be worth the extra few minutes.




Habakkuk said:


> Of course, nobody here would do that. They all believe they have skill and could do better. A few (very few) would be right, a few more would be lucky and the others would miss out. I'm confident that there would be nowhere near 125 winners. No way.
> Maybe just a dozen or so. 700% profit pa is a tall order.



As the last few posts have begun to highlight, not quite all here are detached from the concept of likelihood. There are a reasonable number who do not fall into the grand sweep.  Nonetheless, I'm with you on the <12.5% as central case. This contrasts a bit from SQ, but the extent depends on how much greater than 12.5% he (or others) think that figure should be and why. Seen the spread on binaries?  I'm not going to die in a ditch arguing for <7.5% for example.  In all, what I take from SQ's response is a thought the starting line comprises of people who should do better than the market as a whole (which is pretty random, though not quite so).  To which I ask, "Why"?

I think 1-2% success as you suggest is on the low-side for this set-up which encourages large scale risk taking given it clips the downside to zero.  Like you hint at with the one-swing concept above (though with my misgivings on the way it would actually work), ASF'ers can figure out that a few big bets get's you a higher chance of walking away with cream than getting nibbled away with com' and spread on 1,000 tight trades....unless they are truly gifted(possible)/deluded(more likely).  This set-up is absolutely loading the question in favour of maximum favourable outcome just to see what the belief on upside capture is.  Whatever this figure is supposed to be (and it could be >12.5% under certain conditions), the reality with personal capital will be much lower, partly for the reasons you suggest and others besides.

So, let's sweep all the complexity away and just use this maximum upside set-up for the population of thread viewers and participants with a couple of hours a day to spend on this, motivation to do so, and experience sufficient to make them capable of understanding this stuff, if not yet sufficient to be world class.

What do others, the frequent posters with the strongest beliefs on high return outcomes and extolling trading as a means to get rich and/or retire wealthy, think this figure should be?  Why?  What about the detractors of this concept?



Habakkuk said:


> Now I have a more interesting question. Assuming that you know that you have no trading skill but that you would like a better than 12.5% chance of collecting the $200k, how could it be done? Let's aim for a 50/50 chance, $200k or nothing.
> 
> How would YOU do it without trading skill?



More interesting?  It's right in front of you already.

Outright best revenue raiser: Be a pure broker. Better still, publish signals. 

If you want to get more creative, enter into a low stakes 'put up or shut up' wager with Joe as bag-man/collateral-manager with anyone who pops up claiming that this is easy and obvious to achieve stretch outcomes and watch them or their proxy/scion/protÃ©gÃ© try to achieve it.  Sometimes they will. It helps a lot if the idea is actually possible and demonstrably so. You will get a lot of volume coming your way from a new breed of believers. Soak it up. You'll do better than 50/50 unless Joe's fees are rather extortionate....if so, don't argue..he knows people who know people..


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## Habakkuk (8 March 2015)

Thanks for your detailed response to my post. I didn't expect that.

At first I couldn't really understand this bit



DeepState said:


> It doesn't work like that.  The moment the coin/binary flips, you gap.  If you want to insure that gap risk...you pay for it.  And then some.  SQ's approach is superior and would be worth the extra few minutes.




because I'm no trader. But now I know after giving it some thought. As far as 12.5% v. a dozen, you may be right too. Unfortunately we are not going to find out. That's why I thought of this "more interesting" scenario.

To get anywhere near a 50% chance of success, we could of course not use an informationless entry for our trades.
We would need a very high win rate; something like 80% would be required with 3 trades (80% ^ 3 = 51.2%). Since we will be trading the DAX, we go for mean-reversion. It wouldn't be impossible to find a combination of N-day runs, N-day high/low and maybe some RSI that can be combined to get an extremely selective overbought/oversold entry signal. We only need 3 of those in a year. Exit is either double or bust.
Now I must admit I have never looked at the DAX or even futures for that matter. It may not work as well as it works on ASX stocks.
But is there something fundamentally wrong with the idea?

I also hope to see some more responses to the original survey by DeepState.


----------



## tech/a (9 March 2015)

*I don't want this thread to lose sight of my purpose.*

I see many new people on the forum and young people through life who firmly believe that financial freedom will come when they have millions. The problem is getting anywhere near their first million.

The second group I see a lot of are those who are nearing retirement or are in retirement and are fully aware that their savings in Super just aren't going to see them through---even with pension help. They realize that the next 10/20-30--eek years--- is a long time to support or part support yourself.

It is these people who need to learn how to fish---and then be able to experience of true financial freedom.

This thread* IS NOT SAYING *that shorter term trading will give you vast wealth.

Its an alternative to those who may never be wealthy in terms of their peers.


----------



## skc (9 March 2015)

tech/a said:


> *I don't want this thread to lose sight of my purpose.*
> 
> I see many new people on the forum and young people through life who firmly believe that financial freedom will come when they have millions. The problem is getting anywhere near their first million.
> 
> ...




The current contention is around probability... not whether the actual outcome is achievable.

In your opinion, what percentage of people following your suggestion would achieve what you are suggesting?


----------



## burglar (9 March 2015)

skc said:


> The current contention is around probability...




I think it is about going to a Bus Stop to catch a bus!


----------



## tech/a (9 March 2015)

skc said:


> The current contention is around probability... not whether the actual outcome is achievable.
> 
> In your opinion, what percentage of people following your suggestion would achieve what you are suggesting?




If you serve enough time educating yourself you'll end up with a degree.
Spend enough time on the job and you'll become an expert.

Given the above a high percentage.

From forum to trade desk
Zero.


----------



## Nortorious (9 March 2015)

tech/a said:


> *I don't want this thread to lose sight of my purpose.*
> 
> I see many new people on the forum and young people through life who firmly believe that financial freedom will come when they have millions. The problem is getting anywhere near their first million.
> 
> ...




I think everyone should read the richest man from Babylon. Lots of wisdom in there and certainly should be part of every education (be it formal or informal).


----------



## Skate (9 March 2015)

Nortorious said:


> I think everyone should read the richest man from Babylon. Lots of wisdom in there and certainly should be part of every education (be it formal or informal).




The Richest Man in Babylon is one of the greatest books on accumulating wealth ever written. Its basic premise is that part of all you earn is yours to keep, written in 1926 but still a GEM.

Compounding the *8th* Wonder of the World, Nortorious is spot on when he suggested that this book should be part of everyone's education, and compulsory in our schools curriculum. Its a pity financial education is not taught in schools as it could be introduced in such a way the student wouldn't know that they are being conditioned. 

Financial education is a life skill and immensely important through their teenage years and later on going into their adult life.

REMEMBER there is only one thing money can't buy - and that's *POVERTY *

skate.


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## Nortorious (9 March 2015)

Not only does it cover how to save (for the future) but it also covers off wise investing.

To me, trading vs investing, it means the same. I'm putting my dollars to work (as slaves) so they can earn me a return. Then from any return gained, it joins the slaves already employed by me to do more work. 

And that is how my empire will be created....


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## tech/a (9 March 2015)

> REMEMBER their is only one thing money can't buy - POVERTY




Oh it can certainly do that!



> it joins the slaves already employed by me to do more work.




Who is smarter
Those with a degree 
OR
Those who employ those with a degree?


----------



## DeepState (9 March 2015)

Skate said:


> REMEMBER there is only one thing money can't buy - and that's *POVERTY *




Yep. Sort of. Apart from revolutions and overthrows that happen because those without money don't like being in poverty on their own. Misery loves company and all that. But, then, in one of those internally water-tight things, once you are in poverty, you don't have money. If you are rich, you are not poor. This is wisdom? Actually, thanks for the suggestion on the book.  It does sound interesting. I'll read it next up.

Remember: The chase for money via trading on inflated belief in underlying skill can lead to poverty.





tech/a said:


> If you serve enough time educating yourself you'll end up with a degree.
> Spend enough time on the job and you'll become an expert.
> 
> Given the above a high percentage.




What is the percentage for an expert like yourself?  'High' is about as useful to this question as saying sell the DAX when it is 'high'.


----------



## craft (9 March 2015)

DeepState said:


> ...as would a highly skilled coin.  It too would blow the investor out of the water.  The hard part being to know that the coin was highly skilled at the outset, unlike its lesser skilled siblings.  Perhaps the coin that tossed three all-in binaries in a row to achieve the above outcome is 'highly skilled' and we should back it accordingly?
> 
> At a starting line on 9 Mar 2015, 1000 traders from ASF (incl lurkers) who have had more than three years on the site following various threads over time and, presumably, have a couple of hundred hours of flying time and sim time logged, start with $25-30k.  The Institute of Highly-Skilled Traders gave this to them, so it is not even their capital.  They are running a turtle experiment, X-Factor for traders.  They get to keep the money only if they convert this to $200k in less than a year.  If not, they walk with nothing.  For the purposes, this money is presumed to be noticable as supplemental income and considered to be worth 2-hours a day of spare time by each candidate.  Nothing stops them from trading on their own account either....etc. add legal stuff to close off the loopholes to the clear intent of this question.  Multiply the dollar figures by 1000x if you feel the need to make the traders stupendously motivated for the chance to make $200m.
> 
> ...




If you make the system closed so the 1000 ($25K) only trade with each other (and expense free) and make it that everybody has to continue until you reach 200K or zero then 12.5% will achieve the 200K and 87.5% will achieve zero.

Add expenses and the winning % has to be less 12.5%; allow the winners to accumulate beyond 200K and the winning % has to be less than 12.5%; Allow the losers to shut up shop before losing everything and the winners percentage again has to be less than 12.5%. The drags on the pool are cumulative –so real world is way less than 12.5%.


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## DeepState (9 March 2015)

craft said:


> ....so real world is way less than 12.5%.




Yep. Under that scenario.  Although the experiment won't actually be run (per Habakkuk), the central issue to hand is actually the nominated probabilities.  

Just to give it some flex, the system in the set-up I described is not closed.  This allows the ASF trading league the opportunity to take or give from the entire market including the project funders (who have given them a head-start via the stake).  Hence, the figure can be above 12.5%. In a random coin situation without frictions, the figure would be higher than this.  If they are all expert traders, even 100% is possible.  Heck, it's possible even if they are not.  The expected figure isn't zero straight off the forum either. Or, at least, it is less likely to be zero than some positive figure. 

So, let's see what world we are in.... I'm curious.  To the advocates of trading as a means of supplementing income etc. ($200k is not a 'vast wealth' figure) what is the probability/proportion you think is about right? What does 'high' mean?  50%? 60%? 12.5%?


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## skc (9 March 2015)

DeepState said:


> in one of those internally water-tight things




I think the chance of success at trading is another example. 

If you work hard and diligently and purposefully... you will be a successful trader.

If you can't become a successful trader, you didn't work hard and diligently and purposefully.



DeepState said:


> 'High' is about as useful to this question as saying sell the DAX when it is 'high'.




So by that definition, the answer is not just "high"... it's almost an absolute certainty.


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## craft (9 March 2015)

DeepState said:


> Yep. Under that scenario.  Although the experiment won't actually be run (per Habakkuk), the central issue to hand is actually the nominated probabilities.
> 
> Just to give it some flex, the system in the set-up I described is not closed.  This allows the ASF trading league the opportunity to take or give from the entire market including the project funders (who have given them a head-start via the stake).  Hence, the figure can be above 12.5%. In a random coin situation without frictions, the figure would be higher than this.  If they are all expert traders, even 100% is possible.  Heck, it's possible even if they are not.  The expected figure isn't zero straight off the forum either. Or, at least, it is less likely to be zero than some positive figure.
> 
> So, let's see what world we are in.... I'm curious.  To the advocates of trading as a means of supplementing income etc. ($200k is not a 'vast wealth' figure) what is the probability/proportion you think is about right? What does 'high' mean?  50%? 60%? 12.5%?




As far as outperformance goes the entire system is closed.  But with your rules the 1000 can be a niche in that big system – so the question then becomes – is the forum 1000 above average so as to be more represented in a winner’s portion of a say typical Pareto distribution from the overall system.

Personally I reckon that most of the forum 1000 would be fools following bigger fools, so any theoretical % of winners would be lower than the overall market participant population.

Nominating a % would be a false indication of certainty – but the probability is that only a very small % of people will achieve the objective, and ongoing data would be needed to establish skill from luck to determine repeatability.


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## DeepState (9 March 2015)

craft said:


> Personally I reckon that most of the forum 1000 would be fools following bigger fools, so any theoretical % of winners would be lower than the overall market participant population.




Hehe...and what are the characteristics that distinguish run-of-the-mill fools from the bigger fools they follow?




craft said:


> Nominating a % would be a false indication of certainty – but the probability is that only a very small % of people will achieve the objective, and ongoing data would be needed to establish skill from luck to determine repeatability.




In a perfectly frictionless system, the chances of blind luck leading to the target is 25% in an open system. If you get given this chance, you expect to take home $50k just for showing up and whacking on a few random trades.  I guess your general estimate, without false precision, is 'somewhat lower'. As was mine.   But, then, given I don't see what they see either, I'm no expert at this money making stuff.


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## craft (9 March 2015)

DeepState said:


> Hehe...and what are the characteristics that distinguish run-of-the-mill fools from the bigger fools they follow?




I'm not too sure ....  but I have heard that it takes 10,000 hours to become an 'expert' fool.


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## DeepState (9 March 2015)

craft said:


> I'm not too sure ....  but I have heard that it takes 10,000 hours to become an 'expert' fool.




There is so much gold coming out here that I am going to take a massive short....


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## burglar (10 March 2015)

craft said:


> I'm not too sure ....  but I have heard that it takes 10,000 hours to become an 'expert' fool.




You're allowed to learn along the way!


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## tech/a (10 March 2015)

Your right
Very few will invest the time.
So very few will have success.


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## craft (10 March 2015)

tech/a said:


> Your right
> Very few will invest the time.
> So very few will have success.




I hope you are only implying “your right” to the outcome that most if not all that follow this thread will fail and not the reason why, because I didn’t think it’s just a lack of time invested that can lead to failure. 

Practice doesn’t make perfect – practice makes permanent!  Better make sure you’re using your time wisely and heading in the right direction – heading in the wrong direction and having to backtrack is an exercise in futility. 

Be very careful who you listen to and emulate – that’s hard when you’re starting out. My suggestion is to look for  documented success – can’t get a better score card than this and what’s more he’s happy  (and able) to simply lay out the core principals for anybody that wants’ to listen.

http://www.berkshirehathaway.com/letters/2014ltr.pdf


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## tech/a (10 March 2015)

Yep
Don't disagree.


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## fiftyeight (10 March 2015)

Me personally, I would love to achieve $200k but it is not my aim to do so and definitely not my aim to do so off of $25-30k

I have no idea if I will be a successful trader, I have to assume I wont be and will keep my job until something leads me to a different conclusion. 

Should this prevent me from trying? I enjoy it and all it has cost me is a bit of time and at some stage if sim proves successful a small amount of capital to test live.

I am awesome at Two-Up will this help haha?


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## pettlepop (26 January 2017)

You could always save money on expensive wine by making your own.


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