This is a mobile optimized page that loads fast, if you want to load the real page, click this text.

Trading full time - what do you think will happen?

Jump to new

Have just finished reading chapter 7. I was aware of much of what was being said but reading that put it all together in a logical way and showed the links between each of the variables relating to expectancy. Definitely shows how being right is not as important as i and i suspect many other inexperienced traders suspect it would be in achieving positive expectancy.
 
Dear Lost One,

It seems somewhere along the way you missed my point.


I agree, but that's irrelevent because what I said is that theory has rapidly diminishing returns. If our goal is to make money from the markets then continuing to read more and more technical analysis theory is going to have a diminishing effect on performance. In my opinion, at this point in Jersey's trading career creating more time to look at charts has more downside than up - there's enough hours in the day to spend an adequate amount of time reading and analysing charts without having to take time off work.

I don't neccesarily agree that it takes 'many hours' to achieve 'the depth of understanding to succeed consistently'. In my experience, it's more about spending weeks and months thinking in a certain way, slowly conditioning the way we think about a situation, rather than the sum of the hours we spend 'learning'. ie. 1 hour a day for 6 months is worth more than 8 hours a day for 3 weeks.

I'm not advocating a 'simple' approach to analysing the markets as you state - I think 'complex' analysis could definetly form part of a valid trading plan, but ideally you want any method to be as simple as possible without sacrificing performance - which is what parsimony refers to. Unless of course you like analysis for the sake of it...

Jersey's got a valid method in the 'power setups' but has already eluded to the fact that he'd like a higher winning percentage, which is pretty natural if you ask me. Then we've got Nick Radge who publishes the setups stating on a number of occasions that even he can't predict the outcome of the signals. So I'm going to go out on a limb and say that it's probably not going to be the most effecient use of Jerseys time to look for ways to improve the accuracy.

Where did I say I don't think he will succeed? Actually I think he's got a much better chance of succeeding than 90% of the other 'starting-to-trade' posters. If his aim really is to trade full time, then I think 1. he is going to need more cash to be adequately capitalised, and 2. should start with a bread & butter method to fall back on.


You've taken almost everything I've said completely out of context. I'm talking about the best approach for a beginner, not trading as a whole. Although, if you want to start another thread about 'predictive' methodologies, I'd be happy to argue the topic into the ground.

I'm also saying now that you need to be more careful about making statements that influence others.
Click to expand...

So in effect what I'm saying is, stick with a proven method provided by a legally qualified advisor. What your saying is, I disagree, go out and explore the world of T/A, you might lose your capital but it will be worth it for the experience. Actually Magdoran, you need to be more careful about making statements that influence others.
 

Ha ha. I think most of us probably started out like this. I know I did, until I stumbled across a note in some charting information somewhere. It hit me like the proverbial kick in the head when I finally got it.
 
julius-

i agree in the 1 hour a day x 6 months- rather then 8 hours x 3 weeks-

that to me is so true- i have a mate who just walk into it with 1- month knowledge only to sook and complain that he has no money or running out of money-

Nick--
 
Without correct application of analysis and correct application of trade management,dont care how you analyse your trades,consistent profit will elude you.
 
I traded full time for 8 months and know i work part time as to be honest trading is boring and if your at home pretty lonely and for me almost soul destroying.

I found myself spending hours at the Gym or at the local park whacking golf balls just for something less monotonous to do, these days with hand held devices i can see whats happening in the market when ever or were ever iam, also i found i made no more money by staring at a screen all day than by sending my broker all my orders with entry's, exits, stops, profit targets, break even stops etc etc.

Maybe i should have persevered with very short term day trading but its not all that its cracked up to be, doing for a day or a few hours is one thing, day in day quite another.
 


I suppose this is another consideration when planning to trade for your income eventually. Personally, i believe i am the type of person who could spend 5 - 6 hours per day in front of my laptop trading or researching. The ultimate would be to work towards a system where you can spend less time trading which still pays your income giving you time for other things.

I was interested in what Trembling Hand said in an earlier post about trading more not for the money but for the challenge of trading.

I wonder how many people start trading purely to make money and without much interest in the actual subject of share trading. I am sure these people would not last long doing it.
 
Consider CFD's with guaranteed stop loss orders, do lots of research, I recommend Benjamin Graham's book on value investing, its the basics of how to be a Buffett since he was a student of Graham.
 
jersey10 said:
I was interested in what Trembling Hand said in an earlier post about trading more not for the money but for the challenge of trading.
Click to expand...

Yes thinking about trading process's and enjoying that aspect and not thinking about money or getting excited about how much you will make is the key, one makes money the other creates bad habits and empty accounts.

To start in this game and if you have to put money into the market at this point spreading your risk across 5 or more positions is recommended as you will likely make mistakes along the way.

Market risk comes from many angles its not just about your stoploss position.

Lets say you go short 1 stock with your $40K and your stock is a take over target thats normally 30% ish price jump $12K ish loss. Lets say you go long 1 stock with $40K and its has a surprise profit warning bad news.............. get the picture.

Jersey as RH has already said you have asked some good questions and engaged some very experienced people on this forum well done.

Good luck in your trading
 
julius:

Let's spell this out clearly, one more time for everyone who missed it in a nutshell. My best shot guess is that there are four key pillars to successful trading – Psychology, Analysis, System and Strategy (please see all my posts for a full explanation of what these are in depth). Mastering all of these and meshing them together effectively is part of the challenge to improve the chances of success (but never a guarantee).

So, I did not miss your primary point about system approaches and aiming for a positive expectancy (even though you didn't elucidate this very well). I understand and fully agree with the whole line of thinking that having a system which is designed to deliver a positive expectancy is one of the four cornerstones to success (which comes mainly under the “System” category). I was taking issue with your biased viewpoint about one aspect of the four pillars – analysis, and your “advice”.

The primary issue is about technical analysis. Your view is that “Making MORE time to look at charts when your [sic] new is an absolute trap”. My view is that it takes years to fully master trading, especially technical analysis, and fully embrace McLaren's line of thinking that “the more you study markets, the better off you'll be”. Which means really studying markets. Going through indexes, commodities, FOREX, equities, studying different epochs, bear markets, bull markets, consolidating markets, etc.

The core idea is that you have to study markets in depth, and spending an hour a week for 6 months respectfully won't cut it unless you are truly gifted. The same goes for 8 hours a day for 3 weeks, but I'd argue, that for some, learning effectively in a focused way like this can be very beneficial, especially if you are starting off in the right direction. It may not get you there, but if it establishes a solid framework for the future it can make a significant impact early on, so I do disagree with you here.

The people I have helped who have focused heavily on learning and invested the majority of their time and effort really studying markets, have on average from my experience way outperformed the path you are suggesting. Now this is not a proof that this is universally so, and is not scientifically conducted, but from a practical standpoint I have known many people who became full time traders who succeeded and did so because they made a 100% commitment to study all aspects of trading and to develop effective methods.

Predictive Methodologies:
The other core polemic is that I fully support the validity and effectiveness of “predictive” methodologies and you don't. I have demonstrated enough to give the wiser readers food for thought on this issue without revisiting this here. Some of my calls have been made a month in advance for example. Let's see you call pivot points say at least 2 weeks in advance. You won't do this of course because you are closed to this possibility. Interestingly Nick's approach is based on a Elliott Wave, a “predictive methodology” which Jersey is looking to subscribe to, but we don't see you taking issue with this.

Your comments for example are biased against Elliott Wave for example, aren't they? Your contention is that this school of thinking is a waste of time, and that knowledge of this theory has “rapidly diminishing returns” necessarily for a new player, correct? My view is that it may, or may not be true. It depends on the individual, and their ability to absorb a theory, and also to effectively use it, and select the best theory available that they can utilize. The innate quality of any theory is difficult to measure. But again, from experience, people like wavepicker for example stress the importance of dedicated study to a discipline, as I think Nick would also agree with.

Atomic theory for example is very powerful for a physicist, but probably not very useful for a painter wishing to learn how to paint. But theories on perspective may be highly beneficial, and studying these in a determined and focused way may provide the foundations for becoming a master painter. Does this point make sense to you? If so, what you are doing is saying to the novice student, “awww don't waste too much time on perspective, or on types of pigments, just get a brush and splash a dab of paint for an hour once a week”, “theory has rapidly diminishing returns”. Really? This is just nonsense.


How do you know for sure? Studying technical analysis may or may not effect performance in any number of ways. This statement draws a conclusion from a false premise. It may be the case that spending 3 weeks intense study from the right source for the individual's aptitude may be highly beneficial. It's up to the individual to decide, not you. You may be right, but forcing the issue is what I'm having a problem with.

This is once again your cavalier “I know best” unqualified sweeping approach purporting to be the absolute truth. People like you worry me when “advising” others, who espouse such arrogant certainty about one of the most challenging and complex areas anyone can attempt.

I agree that there are many facets to trading, and analysis is just one of them. But who are you to determine the best path with such limited knowledge about the individual in question? If you're a qualified advisor you really should know better, especially if you know the ASIC rules on this. But I somehow don't think you are, are you?

I'm suggesting that if people like Jersey are going to use technical analysis as their method to analyse, they really should master it. I would also say though that they should master the other three pillars too before even contemplating trading critical capital. How they should break their time into each facet, and how much time they are going to allocate is highly variable depending on the individual. You just don't seem to see this, hence you keep making sweeping statements that can be misleading.

I find it astounding that you draw this twisted interpretation of my comments: “go out and explore the world of T/A, you might lose your capital but it will be worth it for the experience” (which is just not true at all) and then have the audacity to say I'm misleading people by taking issue with your dangerous and ill thought out personal opinions as if they were indisputable facts. This comment alone clearly displays your quality as a commentator.
 

Good to see you posting again, Magdoran! Hope the weather is warming up a little over there?

Interesting that psychology is first on your list. In hindsight, I can now see that the methods I was initially using to trade did not suit my personality at all. With an inbuilt risk aversion, trying to “short term” trade potential reversal points in the market was way too stressful. While many of the trade setups were correct, the ones that didn't meant a resumption of the trend where one risked a lot of slippage when getting out. So the fear of being wrong was a huge obstacle to successful trading and led to freezing at taking all trade setups and also closing winners too early to lock in a little profit.

Eventually, I did go to a psychologist which helped with techniques to reduce stress while trading. Interestingly as time passed, my style of trading began to change and found other methods that are much less stressful and leaves the brain far more “emotion free” for better decision making. Also, understanding and utilizing risk management techniques has been another factor in reducing trading stresses.

I understand some of the red flags of trading outside of one’s risk tolerance are:
1. Letting losses run in the “hope” the market will recover.
2. Cutting winners short in the “fear” of losing that little profit.
3. Freezing at pulling the trigger at trade entry set-ups for “fear” it might be wrong only to watch in disgust as it powers off in your direction. When one does pluck up the courage to pull the trigger, good chance it will be a loser!

Sharing this in all honesty should it help anyone else recognise these symptoms in their trading and realise that trading against one’s personality is something that needs to be addressed.
 

Hi J, What TH is saying here is of paramount importance. Others have also commented that this is the wrong way to trade, but without explaining what can happen if you do this .............. I'll try and keep it brief ...........

1) You bet your total capital (40 grand) on your "winner" stock
2) You wake up to find your stock in trading halt/trading suspension
3) Your stock re-opens a few days later and gaps down past your stop loss
4) You are now minus 40% of your capital "on paper" ........ believe me it does happen !!

Enter "Trading Psychology" stage left ......

5) How do you cope with this situation ........ Big decision ......... If you sell, you have just lost $16,000
6) You panick ........... you hang on "hoping" the stock will improve
7) The stock continues to slide and is now worth 20% of your original buy price ................ You have now lost $32,000 ............

I'm sure you get the picture .............. and this can theoretically happen to any stock (unlikely on BHP or CBA etc etc .......... thats why I suggested earlier that you stay way from spec's)

Simple ........... Don't put all your money on one stock .......... quick way to the poor house if it goes wrong ........... Good luck with it.
 
Thanks Barney, i absolutely understand this point now. I think was underestimating the likelihood of getting a number of losing trades in a row as well as underestimating the risk of a stock gapping me out well beyond my stop loss - both of which are definitely possible and not worth risking your total capital on.

Jersey10
 
Magdoran,

I've already had several PM's telling me not to bother replying...

You've gone off on an 1100 word quasi-philosophical rant (read: sermon) about the tenants of technical analysis - and quite frankly this isn't a discussion I want to be a part of.

Clearly you're emotional about the topic. I can only assume you must find the idea of trading successfully (making $money consistently, not being 'right) using a simple method quite insulting.

Your obviously clueless to the concept of 'diminishing returns' - of course theory isn't useless, but the benefits of gaining extra theory diminish with the more theory that you already know. It's the same for any field of study.
If you get it then great. If you can't grasp the idea, I can't help you there.

Why do I think this is particuarly relevent to someone who is new to trading (as per the original post? It doesn't matter if Jersey decides to trade full time or part time, I'll bet he's still going to find many hours to read about something new, review the charts, play around with a new system idea, etc, etc. ; it's just one of those things everyone seems to go through when they start trading, call it 'un-directed learning' - 'you don't know what you don't know'. After a while you start to develop a critical eye (also a nose for bullsh*t) for particular topics and then you start to direct you're own learning - consciously incompetent, hoorah!

Jersey has a great opportunity to 'fake it till he makes it' using Nick Radge's subscription service - give himself a damn good chance of making some dosh while he finds his feet at trading. The last thing I would be doing is putting extra pressure on myself by taking time off work. But that's just me, I want to trade well and end up with $coin in the bank, maybe Jersey wants to become learned in all the schools of technical analysis...

My understanding of the 'power setups' is they are pattern based, while Radge's own discretionary analysis includes E.W. - which from what I've seen uses E.W. to establish the context of the market rather than for primary trading decisions. I don't want to put words in someone else's mouth, so Nick can comment on that or else you can have the debate with someone who enjoys this type of banter.

You've accused me of making all these 'sweeping' statements as if I think I'm some kind of authority on the subject ? Not the case, nor do I have any 'pride' about it - I'm the first to approach others much more knowledgable than myself ; Frank D, motorway, Howard Bandy, Trembling H, tech/a, et al. Apologies to everyone if my posts read this way, it was unintended.

Over to you Moggi, I won't post anything else on this thread.
 

Thats good J, Its a tougher game than it looks. The fact that you are doing your reseach prior to entering the market will hopefully get you started on the right foot. (Wish I'd done that ..... )

There are a lot of knowledgeable people on this Forum, (I'm not one of them, lol ) Some have already posted on this thread .......... so I'd recommend you check out their posts on other threads ...... sometimes you have to read between the lines, but there are many pearls of wisdom ...

Julius and Mag,.... From my point of view, you are both correct. Tech analysis is the basis from which most of us choose our entry/exit points etc, and if J is to become a successful stand alone trader, he will need to be proficient at it, but, if he is content at this point to follow Nick's selections (and more importantly Nick's Money Mangement rules), then T/A is of less importance at the moment ...........

Sound money management is the key to eliminating the psychological roller coaster of making poor trading decisions, and for that reason I think it is THE most important ingredient of the three ............ I should know cause up till recently, I was pretty bludy awful at the whole three :bonk:
 
Hey Margaret,

Nice to hear from you too. Yes it is getting warmer here now thankfully, and some friends from Australia are looking to visit during the summer here.

Completely agree with your comments, and can relate to your experiences too. I still draw a lot on Mark Douglas.

As for my posting, this is probably more of a guest appearance. A friend had sent an email on a post on ASF, and while having a quick look around came across this thread.

All the Best

Mag
 


julius said:
I've already had several PM's telling me not to bother replying...
Click to expand...
- nice! And did you take their advice?

julius said:
You've gone off on an 1100 word quasi-philosophical rant (read: sermon) about the tenants of technical analysis
Click to expand...
Yup, I have a tendency to do that sometimes... but with good intentions. But I know I can be bloody annoying sometimes – but you can still learn something from someone even though you disagree with them. I also have the moral spine to raise question marks over questionable “advice”.

julius said:
I can only assume you must find the idea of trading successfully (making $money consistently, not being 'right) using a simple method quite insulting.
Click to expand...
Ahhh... No. No problem with people who find what works for them. What I do want is for people to get the full story and choose for themselves from an informed position.

julius said:
Your obviously clueless to the concept of 'diminishing returns'
Click to expand...
No, I get the diminishing returns concept. But the way you conveyed your viewpoint was subjective, and I think people should know there is a choice here each with benefits and drawbacks.

julius said:
I'm the first to approach others much more knowledgable [sic] than myself ; Frank D, motorway, Howard Bandy, Trembling H, tech/a, et al.
Click to expand...
Some of the posters you list I'm on excellent terms with, some I don't know, and some of the others somewhat less so, so I wouldn't be surprised if there were some comments from the PM peanut gallery given we have been debating each other fervently for quite a few years now.

Respectfully, julius, my original intention was a one off brief comment to bring balance. I agree, I think we've both presented our cases sufficiently to move on now.

Mag
 
since i feeling the topic has gone from helping jersey-its come down to what he wants to do-

what ever road he takes is a gamble-

1.trade for a living=might make heaps vs might have nothing left-(boring)
2.works a normal job=working at his normal job for the rest of his life vs getting the sacked soon-(also boring doing the same thing everyday)

they are just basic examples but they are facts that we all know-

jersey get some basic info under your belt and see what u want to do-at least u know and understand some rule's--

its your money-others including i can only tell u what to do and what not to do-what we can't do for u is to do the work for u---


jersey dont get me wrong - i am in the same boat has u i got 40-75 k lying around-so i am just kicking back making note's asking questions and when i am ready i will go in-when i am ready

i am not worried about making money -i just dont want to have nothing because i have worked hard to save the ^^ above figure and will do anything in my power to retain it--

p.s.-- u got to spend money to make money-

Nick--
 

Isn't EW pattern based??
 
You must log in or register to reply here.

Similar threads

T
Trender's Price and Volume trading
2
Replies
22
Views
2K
trender
T
2025 Full Year Stock Tipping Competiton
7 8 9
Replies
177
Views
13K
mullokintyre
R
My strategy/plan going forward
Replies
13
Views
981
RbNEO
R
T
Intro and question
Replies
3
Views
1K
divs4ever
S
  • Question
Advice on developing trading strategy
Replies
10
Views
3K
DrBourse
Menu
Log in
Register
Cookies are required to use this site. You must accept them to continue using the site. Learn more...