Trading/Daytrading for a living

Ageo · 23 May 2006

Re: Trading / Daytrading for a living

chemist said:
Not sure which words you are talking about and I have barely heard of Peter Lynch. I don't read "hero" investment fiction for the same reason I never paid anyone for gambling advice. If they're writing a book or doing "seminars" or selling a "system" then they are probably snakeoil salesmen and certainly not professional gamblers or traders. People who are genuinely making money gambling on a long term basis hold their cards pretty close to their chest. I never met one who wanted to tell me his system, and I've never told anyone mine. Whether it's gambling or trading, there's only so much stupid money in the market, so why give some of it away?

cheers,
Chemist

lol glad to see your full of help! So what your saying is then these forums are useless? i mean why would someone want to help others right? then what are you doing here?

Chemist just answer me one question mate, are you a multimillionaire and are you in a position to never go back to work if you dont want to?

Yes or No

nizar · 23 May 2006

Re: Trading / Daytrading for a living

chemist said:
Not sure which words you are talking about and I have barely heard of Peter Lynch. I don't read "hero" investment fiction for the same reason I never paid anyone for gambling advice.

Google him

Ran a fund for Fidelity from 1977 to 1990, 10k invested with him at the beginning would have yielded 280k at the end... 29% per year compounded and never a negative year.. yes he made money in 1987.... when he started with the fund it was 20mil, when he left it was well into the billions.. money flooding in...

Was the biggest fund in the world at its peak and hes very famous, im suprised u havent heard of him...

You should read his book, u mite learn sumthing... oh maybe not, since u already know everything

tech/a · 23 May 2006

Re: Trading / Daytrading for a living

why does it matter?

I dont find anything offensive posted by Chemist?

I can understand why pro gamblers would not disclose their methods.
Traders have a massive market with far more players and far more money involved,disclosing methods doesnt detract from ones performance or put them in a position where their disclosure causes them the loss of an edge.

If you were a pro poker player then things could be very different.

chemist · 23 May 2006

Re: Trading / Daytrading for a living

dennisll said:
Thank you for your kind responses.

Strw23, I agree that Leverage is a fantastic tool for wealth accumulation and can be used in conjunction with a trading strategy. Perhaps a new thread showing how Leverage can be used with risk controls would be beneficial?

Professor frink, I did not mean to sound negative so I apoligize if that was the tone of my post. 10% return may appear to be small, but if the average return of the market one has chosen is 10%, I think it is logical to expect that an average trader's return will be around that figure as well, plus or minus some percentage points depending on his skill level. Top traders may be looking at say 2x or 3x that amount. I did say that I was looking from a new trader's point of view which is why I chose to be conservative.

Always be conservative in assessing the prospects of any trading venture. Over confidence kills far more cats than curiosity ever did.

dennisll said:
From another perspective, I would consider 5% as a risk-free return (throw all my money in a high yielding online savings account). A 10% return would be double that and would be much more attractive.

That depends on how variable that 10% return is. You should test the Sharpe ratio.

dennisll said:
...
Bullmarket, was it 10% of traders? I thought it was less actually. Hopefully as we learn more through this forum we can nudge that up to 11%

According to Betfair, the dominant betting exchange, each year approximately 0.15% of their active user base makes a net profit in excess of £15,000. I expect traders have a much higher general aptitude, but sixty times?

cheers,
Chemist

Bobby · 23 May 2006

Re: Trading / Daytrading for a living

Well Chemist I like a original thinker.

Your about to trade with your own ideas ? would you like to discuss your thoughts or debate more .

As you stated you have a maths degree, Like to ask you about a theorem if thats ok ?

Bob.

wayneL · 23 May 2006

Re: Trading / Daytrading for a living

wayneL said:
10 sigmas? Thats a lot of sigmas chemist.

Question: 10 sigmas from what?

Looking forward to your answer to this question.

chemist · 23 May 2006

Re: Trading / Daytrading for a living

wayneL said:
Looking forward to your answer to this question.

Odd, I posted an answer earlier today. My wireless link can be a little unreliable in the den.

In the systems evaluation context in which it was used, 10 sigmas from the expected returns of a random trader with the same number of transactions.

cheers,
Chemist

wayneL · 23 May 2006

Re: Trading / Daytrading for a living

chemist said:
Odd, I posted an answer earlier today. My wireless link can be a little unreliable in the den.

In the systems evaluation context in which it was used, 10 sigmas from the expected returns of a random trader with the same number of transactions.

cheers,
Chemist

OK

Then it may be assumed that a random trader would achieve returns within 1 Sigma of the Broad based index, yes?

1 sigma on the XJO is approximately 10%, so you are looking for returns in excess of 100% per annum, to statistically verify positive expectancy? (Is how you are looking at it?)

A handsome goal, and certainly achievable whithin a certain account size, but a little over the top for verification purposes. 2 Sigmas (unleveraged), on a consistent basis (though not suggesting this should be the ultimate goal) should be ample to prove positive expectancy I would have thought.

Just my AUD$0.02

Cheers

chemist · 23 May 2006

Re: Trading / Daytrading for a living

wayneL said:
OK

Then it may be assumed that a random trader would achieve returns within 1 Sigma of the Broad based index, yes?

1 sigma on the XJO is approximately 10%, so you are looking for returns in excess of 100% per annum, to statistically verify positive expectancy? (Is how you are looking at it?)

A handsome goal, and certainly achievable whithin a certain account size, but a little over the top for verification purposes. 2 Sigmas (unleveraged), on a consistent basis (though not suggesting this should be the ultimate goal) should be ample to prove positive expectancy I would have thought.

Just my AUD$0.02

Cheers

Correction: I'm not looking for 10 sigma anything.

The correct calculation is to compute the statistics of the matching random trader. This can be done by montecarlo methods or just calculated.

Let's imagine you traded XJO futures. If you did N trades in the year and were average absolute delta d, then its annual variance is something like d.V(XJO). The commission and bid-ask spread components don't change the variance, they just make expectation go negative. E = E(XJO) - N.c, where c is the average round trip transaction cost.

So if N=100 (daytrader), d=0.25 (average trade duration about half the day on half the days), c=0.002 (0.2% costs), then we're looking at expected under-performance of the XJO of 20% with a standard deviation of about 5%, so just matching the XJO for the year is a four sigma event. Even over only one year high sigmages are possible for methods with a high transaction rate.

cheers,
Chemist

wayneL · 23 May 2006

Re: Trading / Daytrading for a living

chemist said:
Correction: I'm not looking for 10 sigma anything.

The correct calculation is to compute the statistics of the matching random trader. This can be done by montecarlo methods or just calculated.

Let's imagine you traded XJO futures. If you did N trades in the year and were average absolute delta d, then its annual variance is something like d.V(XJO). The commission and bid-ask spread components don't change the variance, they just make expectation go negative. E = E(XJO) - N.c, where c is the average round trip transaction cost.

So if N=100 (daytrader), d=0.25 (average trade duration about half the day on half the days), c=0.002 (0.2% costs), then we're looking at expected under-performance of the XJO of 20% with a standard deviation of about 5%, so just matching the XJO for the year is a four sigma event. Even over only one year high sigmages are possible for methods with a high transaction rate.

cheers,
Chemist

OK, 10 sigmas it is.

Bobby · 23 May 2006

Re: Trading / Daytrading for a living

Hey Chemist its time to prove You !

Show us the formula to work this out .

Three urns contain respectively 1 white, 3 red, & 2 black balls; 3 white, 1 red, & 1 black ball; 3 white, 3 red, & 3 red, & 3 black balls.
Two balls are chosen from a randomly selected urn.

If the two balls are a white and a red, what is the probability that they came from the second urn ?

Don't try to bull **** me

Bob.

It's Snake Pliskin · 23 May 2006

Re: Trading / Daytrading for a living

tech/a said:
Bobby.

Yes it is a no,no.
I got caught with the gap down so changed the play.
what I'm doing is risky (if I get filled,still 3rd in the que at 12.5)
My intention is to mitigate loss. I may well add to it!!

I certainly dont recommend averaging down,this is a situation which fortunately I find myself in rarely as I take the loss.

Will see how it pans out.Now 13.5,will not chase the buy.

Well, well, well. Tech averaging down. How discretionary is that!
How's the psychology?

Bobby · 24 May 2006

Re: Trading / Daytrading for a living

Snake Pliskin said:
Well, well, well. Tech averaging down. How discretionary is that!
How's the psychology?

Snake no need to rub it in, he had the guts to say its bad & thats good for all the new traders who now know that its a crap play !

You do agree I hope ?

Bob.

tech/a · 24 May 2006

Re: Trading / Daytrading for a living

Snake Pliskin said:
Well, well, well. Tech averaging down. How discretionary is that!
How's the psychology?

Yeh Thought Id excelled.
Psychology,touch and go,sweaty palms,constant pacing,Cash Converters on Speed dial.

Hahaha
Theres a few K at risk here,no need to make funeral arrangements just yet.

wayneL · 24 May 2006

Re: Trading / Daytrading for a living

tech/a said:
Yeh Thought Id excelled.
Psychology,touch and go,sweaty palms,constant pacing,Cash Converters on Speed dial.

Hahaha
Theres a few K at risk here,no need to make funeral arrangements just yet.

hehehe

macca · 24 May 2006

Re: Trading / Daytrading for a living

Hi Tech,

Could be old age sneaking up on you here mate.

Mid life crisis, seeking excitement outside the usual behaviour pattern, sounds bad mate !!

We insiders know that you are just trying to get enough drinking silver to keep up with Steve in the UK

It's Snake Pliskin · 24 May 2006

Re: Trading / Daytrading for a living

Bobby said:
Snake no need to rub it in, he had the guts to say its bad & thats good for all the new traders who now know that its a crap play !

You do agree I hope ?

Bob.

It sounds like a desperation play Bobby.

It's Snake Pliskin · 24 May 2006

Re: Trading / Daytrading for a living

tech/a said:
Yeh Thought Id excelled.
Psychology,touch and go,sweaty palms,constant pacing,Cash Converters on Speed dial.

Hahaha
Theres a few K at risk here,no need to make funeral arrangements just yet.

Maybe you could lead us through your thoughts when doing it Tech.

tech/a · 24 May 2006

Re: Trading / Daytrading for a living

Snake Pliskin said:
Maybe you could lead us through your thoughts when doing it Tech.

Snake

Thought I was doing that.

Anyway.
Annoying that I didnt get filled as it would have averaged me at 17c.
Now 15c and only 4c off the pace.
Still holding and will let you know how I intend playing this as price developes.

chemist · 24 May 2006

Re: Trading / Daytrading for a living

Snake Pliskin said:
Maybe you could elaborate on the opposite side of the equation that you didn't mention.

If you don't cut losses, do you cut winners? Or would that be inverted?

Snake,

I don't think it helps to consider whether you are winning or losing. Your best estimate of what the market will do today is the same regardless, and that is what you should be paying attention to.

cheers,
Chemist

Trading/Daytrading for a living

Ageo

nizar

tech/a

No Ordinary Duck

chemist

Bobby

wayneL

VIVA LA LIBERTAD, CARAJO!

chemist

wayneL

VIVA LA LIBERTAD, CARAJO!

chemist

wayneL

VIVA LA LIBERTAD, CARAJO!

Bobby

It's Snake Pliskin

Bobby

tech/a

No Ordinary Duck

wayneL

VIVA LA LIBERTAD, CARAJO!

macca

It's Snake Pliskin

It's Snake Pliskin

tech/a

No Ordinary Duck

chemist

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