Trading gurus and trading courses

[nizar]

Risk management, like a entry/exit/trailing stop mechanisms, are all 'hard wired' technical attributes. They are easy to understand and in most cased replicate, although as TH explains, not the secret to success. The reason why many fail, in my humble opinion, is people unwilling to accept the journey of trading, in other words they place too much emphasis on a single trade, or a small sample of trades. One cannot determine the long term outcome of success from 2, 5, 10 or even 50 trades. A small sample of trades is prone to market nuances which are part and parcel of the journey but people are unwilling to trade through those nuances, instead wanting immediate profits. Hardly will a new trader accept a break even result after 10 trades, let alone 50. So at trades and nothing to show for it they divert into some different method that must be better...and around and around they go.

People do not realize that even the greatest traders actually have strings of losing months, even losing years. Bill Eckhardt, arguably one of the best traders has had 4 losing years in the last 20. Yet, each day, each week, each month and again year after year he stands up to the plate, takes the good trade with the bad trade. the good months with the bad months, the good years with the bad years, but intuitively knowing that because he creates a positive expectancy that he can't fail.

That's where the 95% come unstuck.

Great post Nick.

 

[It's Snake Pliskin]

Risk management, like a entry/exit/trailing stop mechanisms, are all 'hard wired' technical attributes. They are easy to understand and in most cased replicate, although as TH explains, not the secret to success. The reason why many fail, in my humble opinion, is people unwilling to accept the journey of trading, in other words they place too much emphasis on a single trade, or a small sample of trades. One cannot determine the long term outcome of success from 2, 5, 10 or even 50 trades. A small sample of trades is prone to market nuances which are part and parcel of the journey but people are unwilling to trade through those nuances, instead wanting immediate profits. Hardly will a new trader accept a break even result after 10 trades, let alone 50. So at trades and nothing to show for it they divert into some different method that must be better...and around and around they go.

People do not realize that even the greatest traders actually have strings of losing months, even losing years. Bill Eckhardt, arguably one of the best traders has had 4 losing years in the last 20. Yet, each day, each week, each month and again year after year he stands up to the plate, takes the good trade with the bad trade. the good months with the bad months, the good years with the bad years, but intuitively knowing that because he creates a positive expectancy that he can't fail.

That's where the 95% come unstuck.

Yes Nick, the journey is what it is all about. Not only the trading journey, but the trading knowledge journey that translates to skills and skill awareness much like the orienteerer that understands the map and the lie of the land.

Is 95% an official statistic?

 

[theasxgorilla]

Is 95% an official statistic?

YES!

https://www.aussiestockforums.com/forums/showthread.php?t=10200&highlight=successful+traders+percent

 

[Nick Radge]

The only reference to 95% was from a survey done by Refco back in 1982 on futures accounts under $5000. It showed 95% failed and since then I think its become folk lore.

 

[motorway]

The only reference to 95% was from a survey done by Refco back in 1982 on futures accounts under $5000. It showed 95% failed and since then I think its become folk lore.

Like most things people think are relatively new

It dates back to at least 1917

Don Guyon's One Way Pockets

Most good things are old
they only look new .

The book is written by someone who worked for a brokerage house in 1917. He analysed the trading accounts of retail customers at the brokerage house and based on the mistakes they make he wrote this book under a pseudonym.

The author details his results in One Way Pockets. He found that 95% of them lost money overall and displayed the same trading pattern. They would enter a trade, it would show a small profit, and they would sell too early. Then seeing the stock leave them behind, buy back in at higher prices. They would hold on too long after the stock peaked. Ride it all the way back down to the bottom. Then finally they would capitulate and sell. That is most cases would become the perfect entry point for the next cycle up

The book offers a simple advise on how to speculate in the market successfully. There are 14 chapters and the first half deals with his analysis of customers account from 1915-1917, the second part offers a plan for ""Coppering" the Public "



The main point to bear in mind is that the public's speculative play is wrong. If an opposite plan of operations can be adhered to, or , in gambling parlance, if the public can be "coppered," there would seem to be a reasonable chance to beat the Wall Street game.


The book offers a plan for long term traders on how to trade by determining how trend starts, how one must identify the "bell cow" or the leading stocks, how to be deaf to news and rumors,how to correctly use stops, how to see the first reaction through, when to sell, when and what to short, and when to cover shorts.

The 64 page book has a complete method to successfully speculate in the market. Nothing changes on the street, including the advise to chart readers and technical analyst:

On the other hand, the operating plan is not akin to any of the arbitrary systems of chart play which have been in vogue during recent years. There was a time in Wall Street when chart students could and frequently did make money by playing their various systems, but that was before the Street was surfeited with literature treating of market technique. Now the followers of charts are legions; two out of every three active traders keep either a written or a mental record of tops, bottoms and accumulating and distributing areas, and consequently are fooled persistently by the large operators, who "work" the chart readers and their following at every available opportunity.


Guess what is the last chapter title" The Method and the man" and it outlines the importance of following a method.

Even

"The Game in Wallstreet"

makes a similar point in 1898...

motorway

 

[nunthewiser]

. I know, because I have had two people just this week ask to be taught like TH trades. He i snot seeking it out. People wanting that experience are seeking him out - again, a natural demand.

I ..

Hi nick

was my name mentioned too ?

 

[MRC & Co]

I have had two people just this week ask to be taught like TH trades.

ROLFMAO!!!!!!!!!!!!!!!!!!!

 

[MRC & Co]

Hi nick

was my name mentioned too ?

Too funny!!!!!

 

[nunthewiser]

Too funny!!!!!

i reckon TH slipped nick a cupla bux to say that

 

[tech/a]

I know, because I have had two people just this week ask to be taught like TH trades.
...

I find this amazing!

That people want to learn how to punch in buy and sell orders like a boxer on ice!

And they'll pay for it.

 

[MRC & Co]

I find this amazing!

That people want to learn how to punch in buy and sell orders like a boxer on ice!

And they'll pay for it.

lol.

Yeh, on the PM note, I've been sent random PMs by multiple people asking me if they could ever be a good trader?

WTF, how would I know.

Some of the Qs are seriously funny, we should start a thread about it.

 

[Naked shorts]

Some of the Qs are seriously funny, we should start a thread about it.

Please do, I wanna see some of them

 

[Trembling Hand]

I find this amazing!

Why? you not interested in outlier days any more?

 

[motorway]

Some more
on the 95%

Bob Prechter:

More than 75 years ago, Don Guyon, the pseudonymous author of One Way Pockets, wanted to discover why his clients always lost money in a complete bull-bear cycle. It might be argued, he reasoned, that, at worst, they should have broken even, since at the end, prices were back to where they were at the start.

He found that the answer lay in the clients' temporal orientation to the market's future. At the beginning of a bull market, he found all his clients were traders. At the top, they were all "investors." This is not only precisely the opposite of the correct orientation for making money, but also entirely natural for human beings and a key reason why the market repeatedly behaves as it does.

Hank Pruden:
One report showed the following
telltale results:
• The average price at which each stock was bought was higher than
the average price at which it was sold.

• The trading methods of each account had undergone a pronounced
and obviously unintentional change with the progress of the bull market
from one stage to another.

• Stocks that were purchased at a bear market bottom were sold soon
after at a moderate profit, even though in a few months these starting
prices looked ridiculously cheap.

• As higher levels were established, the same stocks were repurchased
at prices considerably higher than those at which they had previously
been sold.

• At this stage, larger-percentage profits were the rule (evidence that
what was considered a “reasonable gain” had been upped).

• Stop-losses were not in general use at this level, whereas they had
been freely placed when prices were lower.

• The acquired confidence of the buyers seemed to have caused them to
buy extensively on the first major reaction from the extreme highs.

• These were later liquidated at substantially lower prices.

””Don Guyon, One Way Pockets,
first published in 1917

The acquired confidence of the buyers seemed to have caused them to
buy extensively on the first major reaction from the extreme highs.

2007 & early 2008



motorway

 

[lindsayf]

Risk management, like a entry/exit/trailing stop mechanisms, are all 'hard wired' technical attributes. They are easy to understand and in most cased replicate, although as TH explains, not the secret to success. The reason why many fail, in my humble opinion, is people unwilling to accept the journey of trading, in other words they place too much emphasis on a single trade, or a small sample of trades. One cannot determine the long term outcome of success from 2, 5, 10 or even 50 trades. A small sample of trades is prone to market nuances which are part and parcel of the journey but people are unwilling to trade through those nuances, instead wanting immediate profits. Hardly will a new trader accept a break even result after 10 trades, let alone 50. So at trades and nothing to show for it they divert into some different method that must be better...and around and around they go.

People do not realize that even the greatest traders actually have strings of losing months, even losing years. Bill Eckhardt, arguably one of the best traders has had 4 losing years in the last 20. Yet, each day, each week, each month and again year after year he stands up to the plate, takes the good trade with the bad trade. the good months with the bad months, the good years with the bad years, but intuitively knowing that because he creates a positive expectancy that he can't fail.

That's where the 95% come unstuck.

so Nick..what would you advise is the minimum dataset to establish whether a method has a positive expectancy or not..do you look at 100+ consequitive trades...or more...can it be done without automating and back testing then?..your post implies that anyone who trades with an element of discretion ( ie cant be automated) may be on a very very long road to find + expectancy..especially as you suggest that it needs to be tested over varied market condtions..and persevered with through long losing periods...

 

[Cartman]

I find this amazing!

That people want to learn how to punch in buy and sell orders like a boxer on ice!

And they'll pay for it.

Haha ..... U r a funny fella Tech ..........

PS I know u were stirring .....

BUT ...

The ability to take trades ... and be happy to lose on a squillion of them to take the benefit of catching the "runner" is an artform most will probably never understand .............. the secret is .............. the old cliche .... "cut your losers quickly" ................ still a work in progress for me Im unhappy to admit ..... but at least Im aware of the benefit of getting it right .................. The old saying ..... "Little fish are sweet" has a great significance .......... IF ...... you (I) can work out how to a) Minimise losing trades .............. and b) Maximise "runners" .................. Gotta love Percentages (%%) .....

PS ...... TH ..... Be interested in your Win/Loss % (number of trades) relative to your Index Points gained .... on any "average" day ........... might be an interesting Stat for us mere mortals

 

[tech/a]

PS I know u were stirring .....

Sprung!

 

[Nick Radge]

lindsayf,
Don't confuse validation of a sample with the journey of trading. 100 trades - depending on variables, will probably be enough sample to validate a positive expectancy. But that is not what I'm saying. Probability Theory, not backtesting, will dictate a losing streak. How ever you choose to back test and use Monte Carlo, forward test, back test, in sample, out sample, blah blah blah, the end result is probability theory is the absolute answer that should be anticipated. It may never occur but being in readiness for it will allow you to be realistic.

Many people on this forum promote in sample/ out sample testing. I think that's all bollocks.

1. Understand WHY your system makes money
2. Understand, via probability theory, what can really go wrong

Then you have realistic outcomes to consider.

In sample/out sample is rubbish unless you need to rely on some form of optimization or curve fit to make a method work. To me that's a recipe for failure.

But, getting back to the question at hand, a sample of 100 trades may suggest 10 losses in a row, but probability theory will suggest 21 is possible. You need to go with expecting 21.

I'm not sure if this makes sense. Happy to try to clarify better.

 

[tech/a]

Happy to try to clarify better.

The obvious question here is how do you apply (Physically---what formulas) to a 100 test case sample to derive figures like those you suggest you need?

 

[MichaelD]

Firstly I'd say that if educators were not of use they wouldn't be in business.

Let me preface this reply with the statement that I believe you are both a successful trader and a successful educator (in my view an extreme rarity)...but...I strongly disagree with your point.

There are many, many examples of shoddy spruikers taking a fortune from the general public for valueless "education". The willingness of the general public to part with enormous sums of money appears in thread after thread on this forum.

$20,000 x 100 suckers - not a bad way to make a few years wages in a short space of time. After all, if it costs $20,000, reasons Joe or Jill Public, it MUST be "the" secret, and MUST be worth far more than a book priced at $35 or a CD priced at $500.