You can be in the 3% that make a consistant profit

OK.

If you follow the crowd youll just be part of it.
Lets face it to be in the 3% youll have to be doing something different to the other 97%

Lets start with what we "THINK" can make us profitable.

Analysis.
Fundamental or Technical.
Niether are exact sciences and neither can be guarenteed to deliver a profitable trade.

ALL they do is give us a starting point.
Now it maybe percieved that that starting point has a higher probability of success than any other but the reality is that even if its worked 99% of the time THIS ENTRY maybe the one that fails.

So regardless of your analysis the best it can do is give you a point to start.
It cannot GUARENTEE profit.
It can narrow your field, supply you with higher probability prospects or Percieved higher probability trade setups.

Its not the analysis which will determine your profitability.It will however give you a place to start.(Arguably better than Random).

Next topic ENTRY.

tech

Re: You can be in the 3% that make a consistant profit.

Hi Techa,

i like your post and find them informative, but there is something i have honestly learnt and to be quite honest, another reason why some investors/traders do so well is,

that opportunity is brought to them....

but, i just want to share some stories of my own and other people ive seen.

my first story, and can be reflected by many traders/investors is deals brought to them by there broker...

when i first started out trading, with a different broker to whom my step dad used (the guy, i like to call rich dad, and my real dad poor dad.)

what i did find was, that the quality and service of my broker, was quite average, and not too great, but due to over time, and becoming one of his higher net worth clients, the service is completly different, and what i mean by this is, instead of me calling for trades, my broker instead calls me and suggests to me which trades to do and even calls me up on when to exit.

(this is what i mean by opportunity being brought to you) but i can guarantee you, before this, and when i was only getting to know my broker, the trades we were doing were very average, conservative and kinda boring... with little or no return...

though, i have friends, who arent quite traders, but more the type as investors, the trades there broker brings to them, is very conservative, and trades, that normally i woundnt do...

one thing i honestly believe about trading, and this is with your broker, the more net worth, the more probability, you will have more profitable trades than the average trader/investor.

Cheers,
sis

sorry to interrupt your post, but please continue, as your posts are quite interesting to read and learn from... just wanted to point out, why some traders are more successful, in this other reason being.

Re: You can be in the 3% that make a consistant profit.

ENTRY/S and STOPS.

Even applicable to "TIPS from Brokers,mates,cabbies"

Most traders spend hrs if not weeks and months attempting to find or formulate "The Perfect entry".
Their thoughts are 'If I can "Time" my entry Ill be immediately on a winner.'
Realisation that even with months of research that success still cant be guarenteed, comes often amidst great frustration.Some have such conviction in their ENTRY that they will not admit that the market has proven them wrong.
"Many Bottomdraw" stocks are born here!

Understanding that youll often be wrong about your entry in particular the timing of it is a huge leap toward succesful trading.Further understanding that you dont have to be and infact can still trade very profitably being wrong more often than right,will put you way in front of the bottom draw traders.Preserving your capital will keep you in the game!

So the question that now arises is "When am I wrong in my entry".At what point do you stand back and say "got it wrong"!
We can all associate with the feeling that as soon as you take your losses the stock will turn and run in your direction.

In reality I have tested extensively at what point is there more chance that the trade will continue against us than turn for us into a profitable trade.I use a set % stop. There are all sorts of "boutique" methods of setting stops to help maximise the return on your investment.

Using 10% of equity a stop af 10% of Purchase price is 1% of intial capital.

IE if a stock is $1 then the stop is 10C or .90c.
If your using 20% of equity then your risk on the trade is 2%

Now I have tested (and you should too to see if you concure) various % stops.
1% to 3% is too tight whipsaws are most likely, trades need more room than that.
4% to 8% are the most likley range that price could turn back in our direction if its going to.
Beyond 8% the chance of a reversal from its downward spiral is pretty close to zero.

The amount of capital risked on each trade becomes important when we have a string of losses.This will happen and undisciplined traders can find themselves short of trading capital if risking to much.Knowledge of historical maximum number of losses in a row is handy information to have of your trading method.Most methods breakdown when youve lost more than 50% of initial capital as the dynamics of how you would trade (Number of positions and position size) would be forced to alter due to lack of funds.

Lets look at another dynamic.
Before entry YOU have 100% control of your capital.
Once the order is filled the MARKET has 100% control of your capital.
If you execute your stop YOU have then GAINED 100% control of your capital.

By accepting a 1-2% loss you remain in control of your capital to live again.NO CAPITAL and its GAME OVER.

Another Statistic.
Of the methods I know trade profitably(IE I have developed or been introduced to)maximum consecutive losses is 13.Of those I use Ive never come close to this.

Now of course if your entry kicks straight away then you will have no concern.
The market proved you right!

Short term traders need to have closer stops as they are in trades for shorter periods of time.
Their return Reward to Risk is often much less than longer term traders.They need to have more winning trades than longer term traders.They will also trade more often.
NO STOP generally is the death of the short term trader.

In summary.
An entry is a starting point it will be right or it will be wrong.On its own it WONT make you a PROFIT.
If your entry is wrong and you dont set or act upon your exit,then your entry could become the most expensive point of your trade.
To ensure success you need to protect your capital.This is done best at ENTRY.

Next topic EXITS

tech

Re: You can be in the 3% that make a consistant profit.

>>Their return Reward to Risk is often much less than longer term traders.They need to have more winning trades than longer term traders.<<

Just one short term traders stats;

Win/loss 56%
risk/reward 3.4:1

I have been pretty consistant with this for about 3 years.

But a lot of short term traders...particularly day traders, have risk/rewards as low as 1.5:1 (after expenses)

They do alright (the profitable ones) because of the shears number of trades... sometimes dozens of trades per day.

Re: You can be in the 3% that make a consistant profit.

Wayne.

Wonder if you can help me a bit.

While Im attempting to keep this as simple as possible, from here on explaination becomes a little more complex.

I am intending to use stats from the Longer term method which I know works (techtrader) and am wondering if you have the following info on your short term method so I can include this as a secondary veiw.If you havent got the detail no problem.I dont know if you trade Stock or Futures but likely futures so Pips rather than $ value would suffice.
Pip value would be also needed.

(1)Average Winning trade.
(2)Average losing Trade.
(3)Maximum consectuive losses.
(4)Average no trades/ (whatever----your timeframe).
(5)Average days/hrs in a winning trade.
(6)Average Days/hrs in a losing trade.
(7)Average positive risk reward ratio
(8)Max % drawdown (relative drawdown as against peak to valley).

Thanks.

To those watching dont be daunted by the above all will be kept in a clear and concise manner.I urge you though that if you have any questions no matter how simplistic please ASK.
My aim is to help you become a more profitable trader.

tech

Re: You can be in the 3% that make a consistant profit.

What is a 'pip'? Last time I heard of it was in a Sherlock Holmes' Adventure- The Mystery of the Five Orange Pips- well there, you learned something...

Re: You can be in the 3% that make a consistant profit.

Pip is similar to a tick.(Tick is refered to in stocks---Tick chart,Ticker tape).

Its any increment of chart movement relative to a Commodity/Index or Future.Pip value alters with the instrument being traded.

tech

Re: You can be in the 3% that make a consistant profit.

Understanding that youll often be wrong about your entry in particular the timing of it is a huge leap toward succesful trading.Further understanding that you dont have to be and infact can still trade very profitably being wrong more often than right,will put you way in front of the bottom draw traders.Preserving your capital will keep you in the game!

Click to expand...

Very well put indeed! Almost worth framing.

Happy trading

Stefan

Re: You can be in the 3% that make a consistant profit.

Tech,

I don't keep all that info on my P/L spreadsheet.

But it wouldn't be too much work to construct at least some of that. Will see what I can do.

Re: You can be in the 3% that make a consistant profit.

Just thought (Dangerous!).

Some may find it benificial to go into explaination of each of the area like
Risk reward Ratios
Drawdown
Consecutive losses.

Etc as I go through the process.All are important to the serious trader.
All will also gel as time goes by unfortunately things may seem a little disjointed as I work through the process.

Im always aware that few have the software I do so I will where possible post charts with explaination and tables.
I also have some free software which you may find helpful.

So my question to you all is would you find a more indepth tutorial more benificial.Remembering that this thread will be around a while and hopefully new people will get use out of it and we can bump the number of profitable traders up to 4%!!

So we dont fill this thread up with un related discussion perhaps sending me a private reply would be more appropriate.

Thanks
Tech

Re: You can be in the 3% that make a consistant profit.

Mate if you have some free soft ware i would be interested in that,as I is the price I like!!
Any way I may be able to use it to expand my knowledge.
Peter

Re: You can be in the 3% that make a consistant profit.

G'day all,
First posting. Here goes. I've been trading for approx. one year, and done reasonably well. I use my made up programme and don't read anything to do with how you trade this way or that way etc.
I don't want anything to destroy my trading method. Not even using experts software. My programme is very childish, it works for me.
The less I know about everyone's systems the better!
A couple of years ago I created a new way to build wealth through share buying. It was my original idea. Only thing wrong with my idea was the fact that Ben Graham thought of it in the 1920's. Damn!!
In the year that I've been trading I've not lost one penny, so I'm pretty pleased with myself.

bruham.

Re: You can be in the 3% that make a consistant profit.

bruham,

I have no intentions of being a smart ass here, so please don't get the wrong idea.

In the year that I've been trading I've not lost one penny, so I'm pretty pleased with myself.

Click to expand...

You will have to ask yourself whether this result was due to your knowledge of things or because the market was rather forgiving over the last 12 months and turned everything you touched into gold. In my view it's of little benefit to trade profitable for a year during which almost anything had a run. It will give you the false impression that your system is working when in fact even a monkey could have made money (There was an experiment where they had monkeys buy and sell shares to compare the results with the professionals).

My programme is very childish, it works for me.

Click to expand...

Again, are you really sure it works?

The less I know about everyone's systems the better!

Click to expand...

I can't support that statement. It rather indicates that you don't have the knowledge and experience to analyze other systems to see if they work or not, so you decide to ignore them completely, fearing you may get confused. That's fine, but what are you going to do once you find out that your own method wasn't that good after all? You'll be stuck. Sorry to say, but you're on the highway to trading hell and you don't know where the breaks are.

Once this market turns sour, you will find yourself stranded with 4 flat tyres and no knowledge of how to change them and even if you did you wouldn't have a single spare with you.

Ignorance is bliss... Until you get the wake up call.

Happy trading

Stefan

Re: You can be in the 3% that make a consistant profit.

Stef

97% of people veiwing this tutorial will gain nothing from it.

Simply the tutorial is not targeted at those people.

tech

Re: You can be in the 3% that make a consistant profit.

tech,

97% of people veiwing this tutorial will gain nothing from it. Simply the tutorial is not targeted at those people.

Click to expand...

Hang on, it should be 96% because you aim to increase the 3% to 4%

Anyway, it won't change the core message you had in mind and I have to agree with you. (Damn, that's hard.. )

Happy trading

Stefan

Re: You can be in the 3% that make a consistant profit.

stefan said:

(Damn, that's hard.. )

Stefan

Click to expand...

Perhaps when you realise Im not about competing and more about sorting out the trees from the forest.

You wont find it necessary find fault.

Im always interested and take part in constructive discussion and have had a few with Wayne and hopefully more with you and others.

These little guys are clever.

:jump:

Re: You can be in the 3% that make a consistant profit.

G'day Stefan,
What you say is probably right. As you said my ignorance is bliss. I hope to my advantage.
But I do know quite a lot about the companies that I trade in.
Puting me in the 3% of consistant profit earners would be a perfect dream.
Come to think of it, I'll be happy if I'm in the top 10% or 20% or 30% or 40%!!!

Stefan, thankyou for your advice. I'll take it seriously.And no, I don't think that you are a "smart ass".

bruham. : :iamwithst

Re: You can be in the 3% that make a consistant profit.

A very interesting topic....keep going guys.....someone is reading it.

Thanks Tech/a and Wayne

Re: You can be in the 3% that make a consistant profit.

Re planning a stop before you enter a trade....

I trade full time and make lots of little profits that add up over time. EXCEPT three times over the last year, I have had all of my profits wiped out because I shorted a stock which never stopped rising. Now I thought I was being conservative in my trading. I watched a stock go up and up and up and then when I thought it was ridiculously high, I shorted it - only to see it rise to meteoric heights. The only reason I am still in the game is because I get lots of dividends from the shares that I happen to own when it goes ex-dividend. I have been aware of my problem of not being able to put on a stop for a long time now but I can not master it. There is something depressing about accepting that you made a mistake on a trade and taking a loss. Has anyone got any hints on how I can overcome this problem?

Re: You can be in the 3% that make a consistant profit.

Sam Ive decided to go into this as part of Risk Reward before moving on with the tutorial.

Your confession took some courage!

To help think of executing a stop loss as a

"Cost of doing business."

Failing to set or take a stop as

"Business suicide."

I know you can associate with one of these!!

tech