Evolution of a (Day)Trader

[brty]

Huitzii,

how do these spammers convince people to let go of the hard earned cash to learn something that is for free if you just apply yourself and set out to learn as much as possible by putting in the hard yards of research.

Firstly let's call them 'educators' not 'spammers' as some actually believe they are selling something worthwhile.

It is very easy. In the advertising they are promising 'the secret' the one magical ingredient that makes you rich. Many people who have been trading without success look for 'the secret', instead of analysing what they are doing and how the market works.

I am probably going to upset you with the following, so I will apologise in advance.

Personally for me after a lot of deliberation/study I have chosen 8 stocks to watch and papertrade with 3 of those 8, if I can see a potential change I may incorperate 1 or 2 of the unused stocks.
4 out of the chosen 8 are for mid to long term and 4 are for a shorter term of trading.

That is just garbage for a trader. You have to have a plan. You have to have something that shows a positive return, no matter what stock if technical. Or if fundamental, certain stocks will turn up on the radar according to some type of defined criteria that has shown a positive expectancy.

"Good stocks" go down in price a lot of the time. "Bad stocks" often go up in price. Choosing some "good stocks" to trade is fine if you have certain criteria as to when there is likely to be a price rise. However you might find that "Bad stocks" have a greater rise given the same criteria.

Choosing 8 stocks means you have some type of attachment to those over others, yet others may offer more opportunity, why limit yourself??

Find a plan that makes money, not stocks you like.

brty

 

[Huitzii]

Sadly rhetoric and deafness abound.
Theory nothing more
Absolutely no idea

tech/a would you like to elaborate and educate me?
I have owned many businesses throughout my life and to this stage I have done well in all of them and sold at the right times ,some will say I've been lucky but I say that you create your own luck, at the end of the day this is just another chapter of business.

Huitzii,



Firstly let's call them 'educators' not 'spammers' as some actually believe they are selling something worthwhile.

It is very easy. In the advertising they are promising 'the secret' the one magical ingredient that makes you rich. Many people who have been trading without success look for 'the secret', instead of analysing what they are doing and how the market works.

I am probably going to upset you with the following, so I will apologise in advance.



That is just garbage for a trader. You have to have a plan. You have to have something that shows a positive return, no matter what stock if technical. Or if fundamental, certain stocks will turn up on the radar according to some type of defined criteria that has shown a positive expectancy.

"Good stocks" go down in price a lot of the time. "Bad stocks" often go up in price. Choosing some "good stocks" to trade is fine if you have certain criteria as to when there is likely to be a price rise. However you might find that "Bad stocks" have a greater rise given the same criteria.

Choosing 8 stocks means you have some type of attachment to those over others, yet others may offer more opportunity, why limit yourself??

Find a plan that makes money, not stocks you like.

brty

Firstly brty I'm not easily offended ,I just want to learn

Only 1 of the 8 stocks that I have chosen has an attachment to me (gut feeling and am prepared for the long haul and even prepared to loose that portfolio fund if it comes to that ...lets call it a hidden faith lol) ,all the others are variable and have a fair track record for a reasonable gain and will hopefully cover any short losses on my priority investment.
Most of my choices will statically provide +22% pa but my prime investment has a lot higher potential given the correct circumstances.
In many cases you need to take a gamble for high returns if this doesn't happen one needs to have it covered does this make sense?
Cheers Huitzii

 

[tech/a]

tech/a would you like to elaborate and educate me

No need plenty here to work with and way way off topic ---My fault---apologies.

 

[Julia]

Only 1 of the 8 stocks that I have chosen has an attachment to me (gut feeling and am prepared for the long haul and even prepared to loose that portfolio fund if it comes to that ...lets call it a hidden faith lol)

What is the basis for this mysterious attachment? I'm not sure what you mean when you say you are 'even prepared to loose (sic) that portfolio fund'?
Do you mean if you buy $10,000 worth of this stock for which you have some sort of emotional attachment, you will be prepared to watch your whole investment disappear?

Most of my choices will statically provide +22% pa

Again, what exactly does this mean? That you buy a stock and without any action from you you will passively achieve more than 22% p.a.?
I'm sure we'd be very interested to know more about this.

but my prime investment has a lot higher potential given the correct circumstances.
In many cases you need to take a gamble for high returns if this doesn't happen one needs to have it covered does this make sense?
i

Well, perhaps I'm a bit dim, but no, it doesn't really make sense to me.
Perhaps you could explain exactly how you intend to have covered the stock which doesn't make your anticipated 'high returns'.

 

[So_Cynical]

Find a plan that makes money, not stocks you like.

brty

So is it ok for me to make money going in and out of the 17 stocks i like?



Edit: i really shouldn't comment in day trading threads.

 

[wecanallinvest]

Right on the money baby_swallow!

Personally I think you need to make gains and losses (sometimes many times) to learn what type of trader you are and eventually get ongoing success. Nobody can teach you this - you just have to experience it for yourself to understand.

The most valuable lesson I have learnt, is to protect your capital base to be in the game tomorrow - and yes this means learning to sell at a loss and moving on from a dud trade long before it wipes you out.

 

[Wysiwyg]

The most valuable lesson I have learnt, is to protect your capital base to be in the game tomorrow - and yes this means learning to sell at a loss and moving on from a dud trade long before it wipes you out.

Interested to know when you consider a dud trade is so? Duration below buy price? Percentage below buy price? Dollar value below buy price? Percentage of total equity? Or other?

 

[brty]

Huitzii,

You are heading down the typical newbie trader path....

"I have been successful at......"

Wrong attitude. Trading is a humbling experience, you have to assume your thoughts are wrong.

Only 1 of the 8 stocks that I have chosen has an attachment to me

So why choose the other 7 and not a plan??

gut feeling and am prepared for the long haul

What makes your 'gut' as a newbie, better than other traders opinion on these stocks??

Does 'the long haul' mean that if the price goes down you will hold until they come back and make profit, because your gut must be right and they are 'good stocks'??

Most of my choices will statically provide +22% pa

Does this mean that you have research that shows that stocks that have gone up 22% pa over X years will continue to go up Y% over the next Z years??? Or is it "gut feel" that they are 'good stocks'???

The essence of the above is the difference between successful traders and losers, you need to do the work that proves your theory correct to yourself. Then and only then do you have something to START working with.

In many cases you need to take a gamble for high returns

When you have a statistically proven edge, and appropriate money management, it is not a gamble, just another trade on your way to success, win or lose.
If you believe it to be a 'gamble', don't do it.

brty

 

[Huitzii]

Thank you for finally giving some positive input and something for me to work with.

Right on the money baby_swallow!

The most valuable lesson I have learn't, is to protect your capital base to be in the game tomorrow - and yes this means learning to sell at a loss and moving on from a dud trade long before it wipes you out.

wecanallinvest, when do you think of bailing out to take that loss,is it a percentage based loss or or based on a particular amount of continuous days of downtrend or other based decision making?

Does this mean that you have research that shows that stocks that have gone up 22% pa over X years will continue to go up Y% over the next Z years??? Or is it "gut feel" that they are 'good stocks'???

The essence of the above is the difference between successful traders and losers, you need to do the work that proves your theory correct to yourself. Then and only then do you have something to START working with.

In particular I have concentrated in finding stocks that have a fair to good past history and trying to pick a low point for entry which as you know is easier said than done,trying to pinpoint a change in trend is not so easy,understanding the volume and how it will effect a daily price etc

Nothing is ever a certainty imho but knowing when to exit is something that only the experienced will read and know exactly when to do.

Huitzii,

You are heading down the typical newbie trader path....

"I have been successful at......"

Wrong attitude. Trading is a humbling experience, you have to assume your thoughts are wrong.

Thank you for bringing this up brty I only posted that to try and get something to work with and I really do appreciate the input that has been given.
Im not trying to play a game of 20 questions as it appears that some may think, im only trying to see the how and why of the path of other traders to get a baseline for myself.

What is the basis for this mysterious attachment? I'm not sure what you mean when you say you are 'even prepared to loose (sic) that portfolio fund'?
Do you mean if you buy $10,000 worth of this stock for which you have some sort of emotional attachment, you will be prepared to watch your whole investment disappear?

Julia the amount invested is not important.
$10000 to one person is a lot of money but to another it isn't ,its more about the experience than the cost, but in saying that who wants to loose any amount of money.....I certainly don't but in saying that if I loose my own money with my own stupidity I wont be cutting my wrists over it ,i will just sit down to a nice cold beer with my mates and have a joke about it.

When you have a statistically proven edge, and appropriate money management, it is not a gamble, just another trade on your way to success, win or lose.
If you believe it to be a 'gamble', don't do it.

I'm hearing you loud and clear brty and thank you for your input now i will go back and reassess what I have already done to see if I can make any improvements to my plan with my new found knowledge
Cheers Huitzii

 

[Wysiwyg]

Again, what exactly does this mean? That you buy a stock and without any action from you you will passively achieve more than 22% p.a.?
I'm sure we'd be very interested to know more about this.

That is a grate[sic] return hey. The answer is between the lines with this new act.

 

[Julia]

Julia the amount invested is not important.
$10000 to one person is a lot of money but to another it isn't ,its more about the experience than the cost

Good to have something so obvious pointed out. Of course the amount of itself is irrelevant. I was, however, enquiring about what principle you are adhering to? I just couldn't believe that you would have so much 'gut feel/emotional attachment' to any stock that you'd watch your complete investment go down the drain.

But hey, if it proves something to you (what?) then I suppose that's up to you.

I'd still be interested to know, as previously asked, the meaning of your +22% static investment.

 

[Twiddle]

Totally agree.
People here are way way off line when it comes to trading profitably.
38 conditions or parts to a plan are just plain crazy.

No plan is worth jack if you have no idea if it will be long term profitable.

How often do you see "Stick to your plan?"

"Stick to your plan" ONLY if you can prove Positive expectancy.
You can determine Risk to Ruin from your expectancy AND you can increase your frequency of trading.(ADDING MARKETS OR INSTRUMENTS)

If that's all good THEN add Margin and THEN investigate the power of compounding.

You MUST have the numbers---the blue print---without it you are JUST GAMBLING.

So there are 3
(1) Risk to Ruin
(2) Positive expectancy
(3) Frequency

If you know that then you have a plan---whether that has 3 or 103 components to it!

If you dont you have 3 or 103 useless theories/components in making a profitable trading plan.

Hi tech/a

What you wrote above is very sound advice and makes perfect sense.

However; and please don't take this the wrong way, as I am looking for understanding, not trying to be offensive: Isn't that akin to saying to a basketball player:

-You must be able to put the ball through the hoop successfully more times than not.
-You must be able to do that in any situation.
-You must be able to do it frequently.

Do that, and you will win basketball games.

One might legitimately ask "I realise I need to do that, but How do i acquire the skill to do such things? Shooting a ball with a defenders hand in my face is hard..."


You can have your risk of ruin work out, and on paper have positive expectancy, but at the end of the day it still comes down the skill of being to execute this. Essentially being able to enter at the correct time.

I guess that is where experience and knowledge comes in.

 

[professor_frink]

Hi tech/a

What you wrote above is very sound advice and makes perfect sense.

However; and please don't take this the wrong way, isn't that akin to saying to a basketball player:

-You must be able to put the ball through the hoop successfully more times than not.
-You must be able to do that in any situation.
-You must be able to do it frequently.

Do that, and you will win basketball games.

One might legitimately ask "I realise I need to do that, but How do i acquire the skill to do such things? Shooting a ball with a defenders hand in my face is hard..."


You can have your risk of ruin work out, and on paper have positive expectancy, but at the end of the day it still comes down the skill of being to execute this. Essentially being able to enter at the correct time.

I guess that is where experience and knowledge comes in.

Not tech/a, but thought I'd chime in anyway.

Have a look at this thread:

becoming an expert at anything

This blog:

traderfeed

Then go and buy this book:

enhancing trader performance

and you'll have your answer

 

[tech/a]

Twiddle

If you don't have trading software and or you don't have the ability or your method cannot be coded then the only way you will know is to record every trade and forward test your trading method using the statistics gained from your trading to define your numbers.(expectancy,winning trades/losing trades,largest string of losses/winners,etc)

Unfortunately you wont have a great deal of trades to give you any results that are statistically meaningful----as the years go by you'll likely have gone broke or realise you dont have an edge.

The hard fact is that the vast majority of traders never know their "numbers" and the vast majority of traders stay in a large group who Fail or at best struggle to survive.

Best to
(1) Find/develop a method you can test
(2) If you cant code it then find someone who can.
(3) Trade your proven method keeping an eye on YOUR numbers.
(4) If your trading results fall outside your tested numbers then stop trading.
(5) Re check your method on up dated data each year to maintain your numbers.

Its worth the effort---the effort very few take.

 

[Trembling Hand]

Sorry Tech I cannot agree . The vast majority of system traders that I have seen couldn't touch the good discretionary traders I know in a raging bull market with twice the capital.

Implicit knowledge shouldn't be discredited just because it cannot be tested in Amnibroker. True that most traders never know what they are trying to achieve. Or whether they have evidence worthy of putting money on the line but you cannot make a blanket statement that a method must be a system based one.

The best business man I personally know has never done a business plan but that doesn't mean his abilities are below others who can put together 10 pages of theoretical gumph of hopeful outcomes.

 

[tech/a]

Sorry Tech I cannot agree . The vast majority of system traders that I have seen couldn't touch the good discretionary traders I know in a raging bull market with twice the capital.

Implicit knowledge shouldn't be discredited just because it cannot be tested in Amibroker. True that most traders never know what they are trying to achieve. Or whether they have evidence worthy of putting money on the line but you cannot make a blanket statement that a method must be a system based one.

The best business man I personally know has never done a business plan but that doesn't mean his abilities are below others who can put together 10 pages of theoretical gumph of hopeful outcomes.

I'd be disappointed if you didn't (disagree).

You have 'knowledge' of your numbers.
You know how to skew your numbers.
You probably have enough past history to be able to have a full set of numbers.

I doubt you ever determine your numbers or refer to them.

But you do make it clear on your posts that traders should Sim themselves till blue in the face.

I don't disagree with the principals you use nor espouse.
but your not Joe Trader.

Joe Trader doesn't know what you know.
He doesn't even know what he has to know (no offense twiddle but perfect example).

The quickest way I know for traders to understand WHAT MAKES a method/Idea/Hypothesis Profitable is to test it.
Even rudimentary and not statistically reliable forward live or Sim trading will teach traders massive amounts.

While software and the ability to use it will be of great benefit (and very high frequency short term trading is done with software) hand recording will at least give people to ability to see whats happening with the addition of a condition or stop or position size change.----Importantly they WILL be able to know if they are on the road to reward or ruin.

However Those with basic understanding will be able to trade albeit not at their full potential. The larger majority do for a time---either becoming disillusioned or broke!

Many wing it.

I did in Trading and business.
Both altered dramatically (For me) when I understood exactly what I needed to achieve/why and how I could benchmark progress.
The result was even more dramatic when my employees understood the concept of business and what (From a numbers perspective) we needed to achieve and indeed exceed.

The choice is the traders.

All I'm doing is advocating the addition of a new (And to me the most important) dynamic in the search for consistent profit.(Business/trading/ property/antiques/art/collectibles----whatever).

 

[Trembling Hand]

I'd be disappointed if you didn't (disagree).

You have 'knowledge' of your numbers.
You know how to skew your numbers.
You probably have enough past history to be able to have a full set of numbers.

I doubt you ever determine your numbers or refer to them.

But you do make it clear on your posts that traders should Sim themselves till blue in the face.

The quickest way I know for traders to understand WHAT MAKES a method/Idea/Hypothesis Profitable is to test it.
Even rudimentary and not statistically reliable forward live or Sim trading will teach traders massive amounts.

Many wing it.

Ok Tech I will have to disappoint you and now agree with you.

Yes most wing it. Most never know if they had something that has previously worked let alone if its now broken.

Back to the original list of 38 miss-steps the problem I have with it is that its a disastrous list of how not to develop expertise. Its simply stumbling from one mistake to the next without any planing or aim to implement what you know works(and you only need to know 1 or 2 things to get started). How do you do that. Yes back-test and forward test on sim until the method is proven & you know under what conditions it works or doesn't.

Oh on the 'determine your numbers or refer to them' my bet would be that I do more than anyone else around here. Besides the hundreds of test & stats I play with and trading results, how many have collected diaries & trade examples & plans for trade approaches and how it panned out that would be more than this collection below??

(this is for this fin year to date Pretty anal but far better than the 38 step to failure IMNSHO)

 

[tech/a]

Ok Tech I will have to disappoint you and now agree with you.

How disappointing.
We will just have to agree to agree then!

Id be interested in your numbers.
Just on a curiosity thing though if you feel inclined you can private mail me if thats better.

 

[Twiddle]

Twiddle

If you don't have trading software and or you don't have the ability or your method cannot be coded then the only way you will know is to record every trade and forward test your trading method using the statistics gained from your trading to define your numbers.(expectancy,winning trades/losing trades,largest string of losses/winners,etc)

Unfortunately you wont have a great deal of trades to give you any results that are statistically meaningful----as the years go by you'll likely have gone broke or realise you dont have an edge.

The hard fact is that the vast majority of traders never know their "numbers" and the vast majority of traders stay in a large group who Fail or at best struggle to survive.

Best to
(1) Find/develop a method you can test
(2) If you cant code it then find someone who can.
(3) Trade your proven method keeping an eye on YOUR numbers.
(4) If your trading results fall outside your tested numbers then stop trading.
(5) Re check your method on up dated data each year to maintain your numbers.

Its worth the effort---the effort very few take.

OK, that makes sense.

I guess it comes down to testing so thoroughly that your risk of ruin etc, is actually validated as being more than just calculations. They become verified as representative or reality.

Presently I am struggling with how I would build a system that mimics the way I want to enter trades.

Currently all of my trading (sim, CL futures and index futures using ninjatrader and mirus/Zen fire) is done on a discretionary basis. I know what I want to do when I am looking at a chart, but I struggle with how I translate that to a mechanical system.

BTW; the book you recommended "The universal principles of successful trading", seems good so far.

 

[tech/a]

OK, that makes sense.

I guess it comes down to testing so thoroughly that your risk of ruin etc, is actually validated as being more than just calculations. They become verified as representative or reality.

Presently I am struggling with how I would build a system that mimics the way I want to enter trades.

Currently all of my trading (sim, CL futures and index futures using ninjatrader and mirus/Zen fire) is done on a discretionary basis. I know what I want to do when I am looking at a chart, but I struggle with how I translate that to a mechanical system.
BTW; the book you recommended "The universal principles of successful trading", seems good so far.

If you have a record of all trades then you have a very rudimentary testing of the way you trade.
You will have from these trades numbers.

If you wish to invest a few $s and the time to record every trade STATOR portfolio organiser is an excellent tool to run dozens of portfolios which you can enter and exit as you wish---it will automatically update each day and spit out ALL the numbers you ever need to determine how your systems/or method of trading is performing.

http://www.stator-afm.com/