SIUYA

only 40% ?? another "statistic" to throw around. when it comes to who to listen to, and who says what...... listen to a lot and make your own mind up based on what works for you. If you cant do that then trading is not likely to be the hooby/pastime/profession for you. You would be better off being a broker....they figure heavily in who makes the money.

someone sent me this....interesting thoughts on page 6............ Fitness landscapes and the role of the inductive process. We believe the idea of a fitness landscape, or “adaptive landscape” is a good way to think about success and failure in the money management business. The notion is that certain individuals within a population are endowed with a physical or mental makeup that allows them to thrive versus the rest of the population in a given context. A fitness landscape is a standard way of representing such differences. Said bluntly, some people are better suited to succeed in money management than others, based on how their brain processes information. Paul Samuelson, the famed economist, has called it the “performance quotient”: “It is not ordered in heaven, or by the second law of thermodynamics, that a small group of intelligent and informed investors cannot systematically achieve higher mean portfolio gains with lower average variabilities. People differ in their heights, pulchritude, and acidity. Why not their P.Q. or performance quotient?”17 Once again, it is good news and bad news. The good news is that some investors can systematically outperform the market. The bad news is that the skill sets of these individuals are non-transferable. Reading those Berkshire Hathaway annual reports is certainly pleasurable, but most people cannot put the ideas to work successfully. The main reason money management skill sets are nontransferable is that humans largely operate inductively, not deductively.18 While economics in general— and finance theory in particular— has been defined through deductive models (including rational agents, equilibrium, linearity), we know that humans attempt to reason based on incomplete and fragmented information. While there is only one way to be purely rational, there are infinite ways to be non-rational— and humans almost always operate in the latter space. As the differences between investors hinge on largely unconscious, innate and inductive factors, positive-alpha-generating money management skills are difficult to pinpoint and to convey. It follows that various aptitudes for investing need not be associated with formal education or intelligence quotients. Whether individuals who are predisposed to excel do find success is likely heavily influenced by personal effort and coaching. Michael Jordan, the basketball star, serves as a good example. Jordan certainly would not have been a superstar basketball player had he not been endowed with certain physical attributes. However, he is the greatest player in the world because his well-suited genotype was married to hard work and good coaching. Mauboussin- What Have You Learned in the Past 2 Seconds.pdf

The SPI is a bit like the DOW in that 80% of it is made up of the top twenty stocks or so, and those twenty are dominated by about 5-6 stocks and so is not necessarily the best measure of the market, but it can be profitable once you get the hang of it. Becareful of the SYCOM night sessions after 4.30pm - they can get very very thin

its a numbers game and like many rewarding experiences there is a pointy end at the top of the pyramid. (I would like to know how much money the top 1% make)

great comments Steve. This becomes particularly relevant when trading equities where the margins are not quite as favourable as futures or FX. Often a question asked is - do I need to be here, and are there better opportunities to which to deploy my money. You want to be putting it to work with the winners, and to where the best opportunities present themselves. Not as relevant to a single futures market participant trading smaller contract sizes, but still a good habit to get into.

electric cattle prod at the ready

MM - I agree with you regards survivorship bias, and the fact that wall street is there to line their own pockets (what industry isn't). however I dont think you give enough credit to the likes of Soros and Jones for its the effect of compounding that is important. These guys maybe would not have the fortunes they have if they did not have funds - as they get to leverage other peoples money as well, but they would still have been spectacularly successful at the same time.....plus I lot of their funds under management for some of these guys is their own. I for one would like to have access to more of these guys, place small amounts of money with them and watch it grow over the 10-20 years. (not over a few years)

I saw the end of what looked like a great program on TV last night - the secret world of chaos. I plan to watch a download or repeat. However the interesting point for this thread was that very very complex systems can evolve from very simple rules. There was a particularly interesting segment on computer systems evolving and how by dropping simple rules that dont work, keeping simple rules that do work you end up with a complex system that works after very few generations...... trading so easy yet so hard.... so KISS is probably appropriate.

true - there are differences. One where you are employing people is quite a different proposition to just teaching someone as a mentor. If they are paying you in some way then its a completely different proposition again. While there are different variations in mindset between institutional trading and retail day trading, regards size, I actually think that the basic skills are the same. My experience comes from employing people to work as market makers, and later as a few traders who would help me expand my trading as I was busy at the time.....not institutional but definitely not just day trading. Most of the feedback I have received as mentioned was from friends who have hired and fired many more people, and the years I have seen people come and go through various trading rooms. Plus I now sit with 14 other people in a room all who are very experienced traders - we more do it for the company now.....and have a policy on no a...holes allowed in the door, which keeps it very social.

I am not saying they are mutually exclusive at all. Just that in my experience having a lot of degrees is not a good measure of trading prowess and that often the finance mathematical guys want everything to be perfect. At a few interviews I was shown models they had done disproving things etc etc; when asked what relevance this was to making money in the real world and how it related to trading the answers were more about protecting and defending their idea/model rather than answering the question. One guy came back with the perfect answer - "Probably none, as I dont have experience in the real world trading and this is all theoretical"

yep - just two of the classic issues trader have among many, and when you are hiring people you cant necessarily afford nor want to waste the time sending them to some course that may or may not help them, when there are plenty of others who may fit the profile. As my friends who have hired and fired many say - fire them quicker....then when they are working for you after a period and are profitable then it may warrant sending them to better their skills. Otherwise once again, trying to turn a monkey into a race horse may work but its often not worth the effort, better to work with a horse first Plus when it comes to engineers MM - I have to agree - their mind does often work that way, however often they verge on the too perfectionist issue as they like the maths. A few friends who tried trading wanted to make everything perfect - they were not afraid to trade, they just liked a little less chaos......plus another crucial issue is what to do when everything around you is falling to pieces - often the guys who are quickest to react and assess the situation and be flexible enough to recognize the situation has changed are great ---- not sure who fits into this profile. I hope to re-employ someone again in about a years time, but this time I will look for an assistant first and foremost, then if they look like they could trade I will give them the opportunity with out hesitation.

This comes from my own experience and from discussion with others who have employed and fired more than me. traits which on the surface would not help your success as a trader....these are things that you would find on a cv, or in an interview.....they are specific to shorter term trading. (my personal opinion only) lots of finance/mathematical related degrees (unless you are looking for a programmer) big picture people (they seem to forget that its often the little details that make all the difference in trading, these guys often think they dont need to cut losses) People who make assumptions (too many preconceived ideas, that are not flexible enough) People who dont have a passion for sitting down in a room and switching off whats going on around them. There are some people who still want to get involved in meetings, presentations etc; - stick to sales if this is the case. People with too much hindsight. Its generally better to have someone who says - I dont know, or say I was wrong While it seems next to impossible to really vet for some of this, if I got hints of these it did not seem to work. However, there is one extremely important turning point for a lot of these people that you just dont know, until they do or dont do it. You want to see them pull the trigger a few times, some people just cant - they want too much perfection, others are too eager to start gambling...there is that fine line of being happy and eager to pull the trigger but only when they need to..... such is trading. In response to the second question......But surely you wouldn't employ and train people on a random basis would you??? I would not like to, nor think this is optimal, but I know of some guys who hired and fired a lot of market makers and short term frame traders, they all said that they learnt that it is a numbers game, the more people you hire and fire the better and the one thing they all said was that they should fire people quicker, the training is simple and after a simple vetting process it is not until they start trading can you tell....so I guess those with more experience than me in this field would answer yes - to a certain extent.

This is the mumbo jumbo referred to....plus what I would see as the original insult to anyone in this thread:2c: It happened post 42..... To me when someone tries to attack another by saying "you must be threatened by others etc", or let me help you find a better way, your world is not sound....etc; etc; etc; this is the problem with cultish like comment. If I have mis interpreted it, then I apologise, but I have seen enough folks who are true believers of something try and say its the best and the rest is wrong. For me end of story.

two points.... 1) at a guess most people here definitely dont have silver spoons.....I once did but mummy ran away with the milkman, but after your rant I am not sure I would PM you for help 2)....I have employed some people, very talented people in fact.....none of them made good traders, and I went through a thoughtful trading orientated vetting process. I dont think you can tell who is going to be any good until they are sitting and trading. period.

One of the things a lot of new traders miss, is that often they are underfunded and would be better off working, and giving their money to those that trade for a living..... assuming you get someone not in the 95% of unprofitable traders. Often they dont do the very straightforward maths and work out that to make more trading than working they either need to return 100s % or take excessive risks to get a satisfactory absolute return on their trades. not likely to end in a happy story.....which is probably why a lot end up selling systems.

I speak for myself here, and am not threatened by anything. The point is that there are many ways to do things, and different things work for different people, but when it comes down to trading........ the touchy feely i have come to know more about myself and feel like a better human being stuff is bollocks. :2c: The market does not care. I actually know what works for me and my personality in the markets and I have adopted my strategies for that, and guess what it works! I dont need to make my self change, I cant make the market change, but i can adapt to how I approach the market. What Rande may be offering is something that can help some people, but I think the trap is a lot of people mainly struggling traders will then then think he is just another quick fix that will improve their trading. I think Rande may be of help to some people but like many cults (I use the term loosely Rande ) the devotees become blinkered. Your response is starting to border on that as it has delved into the religious mumbo jumbo of threatened belief systems, when its not. Its a discussion, with questions answers and debates. Now if my belief system was one such as you mention....which it largely is, then why would I be aggravated by Randes approach. I would say, come on fresh meat and take their money..... but I dont. I think there just needs to be two sides in every debate.

poorly worded on my behalf.... Basically, just because a market is being volatile does not mean it does not offer opportunities. Many trending markets are actually low volatility, but high risk reward The speed of the market, as you rightly point out can cause problems and a lot of people look at how fast they can make money forgetting that they can loose it just as quick....they get tricked into thinking high volatility is a good thing. While it can be good it also has to be recognized for what it is....a greater chance of losing money if you are wrong. The key is realizing that you still need to measure the risk reward of the trade and not try and pick the markets just because they are volatile.

Some people I know watch a small basket of instruments. Others look for the hot sector, others stick to 1-2 instruments, others are more systematized and trade a massive basket. How to do it is the issue - who knows. There is as tradewinds says a trade off between time and effort. Do you wish to have a rough and ready scan and then focus in, do you want to click through and analyse 100 instruments.... it does not take that long each day, but it can become monotonous. Personally I flick through what seems hot, using long term time frames and alerts, then narrow down. I am working on something better, but its incredibly difficult to get this information in one spot, and I have found just flicking through charts is often quicker. There is also the other consideration......time frame for trading. If you are scalping, or intraday trading, you only need a few instruments, if its longer term more are required.

no....this just means that the volatility is high, and that you are likely to make or loose money in a quicker period of time. Too many people confuse volatility with risk and reward. A lot of trades you want to get set when there is low volatility in anticipation of an expanse in volatility. (sorry I know this thread is in regards scalping, but it is still a relevant point.)

[quote name=Tradewinds;115933 So I guess the question is; what is the point of having training for golf' date=' F1 racing, painting or trading if the vast majority of the students will fail? It seems that it is just a money making opportunity for the business owner at the expense of the students. It could be a way of finding talent, and giving people the opportunity, knowing that only a small percentage will succeed.[/quote] Tradewinds......your approach/mindset is all wrong......there is not a matter of failure. In many sports/artistic endeavours its the participation that is the key......you seem to be approaching it from a why bother if you cannot be number one. There is no first, second third place in trading.....there is profit and loss. It is inevitable that only a few will succeed to the top....that is why it is called the top.

Just in from the back of the boat - beautiful day here in Sydney. I think I might fire someone on Monday! ....... I wonder if I can fire myself and claim a reduced tax payment on my retrenchment package This is an interesting discussion - unlike many - and it does again go down the different strokes for different folks and there are many ways to skin a cat path I am on the side of MM and Steve46 - you trade, you eat what you kill, you just do it. You work out what works for you and take responsibility. I get my therapy from my own analysis and talking to other traders. However thats not to say I cannot see value in what Rande and tradewinds talk about....for SOME people......and I would dare say I would consider that for a lot of those types of people trading is a hard slog, and maybe they would be best not doing it. (my two cents) Now here is another interesting thought (at least for me) to throw into the mix..... while the market will instantaneously and ultimately tell you if you are doing something right or wrong, how many people have you said down with Rande and said - "maybe this gig is not for you"....try something else", or in your opinion can everyone be saved/redeemed/become profitable? I mean we only have one life and for some people trading can ultimately be a complete waste of time/effort/money and emotionally draining.

I look at it this way..... if I was employing Steve I would do so as an analyst, and then employ someone who may not be very good at the analysis but has no fear about the markets. Sometimes people are just not designed to do certain things very well. Now while it could be argued that all it takes is training/handholding/whatever..... often you cant make a monkey into a race horse and while the effort to do so may eventually work out, maybe that effort is better applied elsewhere. I would also like to add, and its an often avoided topic, is that there are many traders who dont have fear, and when you combine that with the ignorance Steve46 mentions'....disaster. I have seen more blowups because of this than with issues of fear of the market. How do you deal with those people who dont have enough fear Rande?

depending on your location and internet providers and how much information and speed you need for your trading style, worst case you could probably go independently wireless? I used to run some equity data over a lot of stocks this way and it worked fine, and the cost was pretty low.

stocks - as thats where I started, there are always many different opportunities, different stocks, and possibilities, they get bigger percentage moves, and so you can trade it as a portfolio reducing each individual instrument exposure. FX - because its liquid, and makes no sense Equity futures - as they fit in with the stocks occasionally commodity futures. I do it to make money as thats my business.

I usually think this and assess it against my ideas/rules/entry parameters. But then I apply context - this comes from years of experience.There is nothing scientific about it. I would like to automate everything - but this seems to be a dream for me to date.....if so then I could back test and show you a set of possible scenarios.....but this is still not scientific. But even after the entry the rest for me is then ""Hmmm should I exit or keep this trade"" again while a lot of rules can be used, in reality a lot of the time there is a certain amount of feel. So much the same as the great post by Steve46, everything is largely process driven, but there is also lot of feel. example; I trade stocks, today, a rare earths miner LYC - ASX raised capital. The first instance in many cases such as this is the share price goes down. However in this case the share price was likely to rally for a number of reasons..... 1) that area of the market is hot, 2) the capital raised is used to double production 3) it was well received and expected. So in this case I expected the stock to go up.....and it did. For me the trade was to find a highly correlated related stock ARU-ASX..... this was what I bought on the open ....as the open was not too far from the close.....this then rose another 3-4% on the day.....I sold 1/3 of my position, and I will decide what to do again tomorrow, as I expect it will continue to rally - how hard who knows, but I am also quite happy to cut it at breakeven or a small loss. I dont think it would be easy to make a scientific study of this, as you might be able to see my trades but not my rationale.