Why do they do it?

This is a discussion on Why do they do it? within the General Trading Chat forums, part of the Reception category; Originally Posted by trader_dante The biggest mistake in thinking about trading is that "if you are a great trader you ...

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Old Jan 25, 2011, 3:08pm   #46
 
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Re: Why do they do it?

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Originally Posted by trader_dante View Post
The biggest mistake in thinking about trading is that "if you are a great trader you should be able to make millions".

People that think this are complete beginners.
Educate us mere mortals why a great trader can't make large sums of money.
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Old Jan 25, 2011, 3:10pm   #47
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Re: Why do they do it?

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Educate us mere mortals why a great trader can't make large sums of money.
do you even trade?
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Old Jan 25, 2011, 3:25pm   #48
 
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Re: Why do they do it?

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do you even trade?
No, I spend my life on T2W trying to sell courses. Why?

What's the answer to my question?
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Old Jan 25, 2011, 3:30pm   #49
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Re: Why do they do it?

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Originally Posted by DashRiprock View Post
do you even trade?
sorry i did not mean that in a nasty way

but you said things like "a trade either being wright or wrong and" and "nobody that coaches can be a good trader cos if they were they be on a yacht with babes instead of helping soemone else" and "all successful traders are millionaires" and really this is not what i have seen in trading at all

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Old Jan 25, 2011, 3:32pm   #50
 
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Re: Why do they do it?

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Originally Posted by Masquerade View Post
Educate us mere mortals why a great trader can't make large sums of money.
Lack of courage to handle huge equity swings?

If I inherited £10M tomorrow I would not hesitate to deposit it all and bet my usual 5-10% per trade. I have no qualms about taking large losers because I cannot stand to have a large edge and not really go for the jugular. I always have had the confidence to bounce back no matter what. Thats my personality, which is probably the exception not the rule.

Presupposing that you have a similarly good edge (which you most likely dont) could you say the same?

One things for sure, I know overly cautious traders like Dante or Dion certainly couldn't. Which is why they will never be making millions from trading. So they will be confined to the realms of pnl mediocrity, despite being good traders. Thats ok i guess, making £40k a year whilst sitting at home as your own boss is cool. Not everyone is willing to risk it all to try to become the next Soros..
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Old Jan 25, 2011, 3:37pm   #51
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Re: Why do they do it?

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Originally Posted by Masquerade View Post
No, I spend my life on T2W trying to sell courses. Why?

What's the answer to my question?
I will give you 1/10th of the answer, you can find it on my vendors link. The rest can be found on my site www.givemeyomoney.com where you can check out my 100% success rate.

It's a capital allocation thing I reckon. Most don;t start off with large capital and or the emotional capital to trade well. There's nothing wrong with getting by trading once the dreams of millions are long gone
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Old Jan 25, 2011, 3:37pm   #52
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Re: Why do they do it?

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Lack of courage to handle huge equity swings?
bet my usual 5-10% per trade.


I dont know how good your edge is but mate you must have balls of brass

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Old Jan 25, 2011, 3:43pm   #53
 
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Re: Why do they do it?

Quote:
Originally Posted by BlackBison View Post
Lack of courage to handle huge equity swings?

If I inherited £10M tomorrow I would not hesitate to deposit it all and bet my usual 5-10% per trade. I have no qualms about taking large losers because I cannot stand to have a large edge and not really go for the jugular. I always have had the confidence to bounce back no matter what. Thats my personality, which is probably the exception not the rule.

Presupposing that you have a similarly good edge (which you most likely dont) could you say the same?

One things for sure, I know overly cautious traders like Dante or Dion certainly couldn't. Which is why they will never be making millions from trading. So they will be confined to the realms of pnl mediocrity, despite being good traders. Thats ok i guess, making £40k a year whilst sitting at home as your own boss is cool. Not everyone is willing to risk it all to try to become the next Soros..
The statement in question was this:

'The biggest mistake in thinking about trading is that "if you are a great trader you should be able to make millions".

People that think this are complete beginners.'

If you are a great trader, you will be capable of turning small sums into large sums. All you will need is some time and patience. This is assuming the person is capable of detaching themselves from the money and a great trader will be able to, because even if they blow their account, they can get some money together and turn that into a large sum with a bit of time.

Turning £100k into £2m will be an easier task than turning £10m into £200m and this is obvious as trading is scaleable to a point but then it becomes a much more complex exercise.

Regarding your question to me: if I happened to stumble upon £10m, I wouldn't bother trading. What would be the point of it to me? £20m would not make more difference to my life than £10m. Neither would £30m, at this point we're talking about a stupid sum of money which would not be used for anything useful.
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Old Jan 25, 2011, 3:53pm   #54
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Re: Why do they do it?

Quote:
Originally Posted by Masquerade View Post
The statement in question was this:

'The biggest mistake in thinking about trading is that "if you are a great trader you should be able to make millions".

People that think this are complete beginners.'

If you are a great trader, you will be capable of turning small sums into large sums. All you will need is some time and patience. This is assuming the person is capable of detaching themselves from the money and a great trader will be able to, because even if they blow their account, they can get some money together and turn that into a large sum with a bit of time.

Turning £100k into £2m will be an easier task than turning £10m into £200m and this is obvious as trading is scaleable to a point but then it becomes a much more complex exercise.

Regarding your question to me: if I happened to stumble upon £10m, I wouldn't bother trading. What would be the point of it to me? £20m would not make more difference to my life than £10m. Neither would £30m, at this point we're talking about a stupid sum of money which would not be used for anything useful.


yes there are some great traders who get small money and make big money (some just get lucky).

but there also great traders in banks who can work multiple sizeable orders in a fast market while talking to the salesmen who want impossible prices

or option market makers who can do sums and think so amazingly quickly it waskes your eyes water

and traders whos strategy is more about income generation than capital gains and they have exhausted the liquidity for their strategy

or traders who dont make amazin 1000% returns but have a pnl smoother than a babies bum.
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Old Jan 25, 2011, 3:58pm   #55
 
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Re: Why do they do it?

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Originally Posted by Masquerade View Post
Educate us mere mortals why a great trader can't make large sums of money.
Many great traders can make large sums of money but the blanket statement: "a great trader should be able to make millions" is ignorant.

There are so many reasons why this is the case that I would be here all day if I listed them.

Bison's point is not a bad one, I guess.

Here's another one: Liquidity.

My best mate in prop was one of the best traders I saw there. He made money almost every single day and he was one of the firms favoured traders because of that. However, he scalped the FTSE and his edge meant that for liquidity reasons he had a "glass ceiling" in the number of lots he could trade without pushing the market too far in order to be able to get in and out effectively for profit.

If you make £1,000 four days a week and lose £500 on the fifth day you are up £3,500 a week. Not bad at almost £170,000 per year but remember that compounding can't help him. So thats almost six years to make a million without factoring in withdrawing a good salary to live off. And that is knowing his market inside out and being what anyone would admit is an excellent trader.

And let's look at withdrawing while we are on the subject...

Let's presume you AVERAGE 100% per year. Most people might even turn their nose up at this (usually they are bragging about making 60% per week and trading 5 cents a point whilst averaging positions with no stop) but 100% a year is an incredible return. Most of the market wizards weren't getting anywhere near this.

Then start with a decent pot e.g. 20k that you ran up from nothing whilst doing your full time job. Then pay yourself a good yearly salary of lets say £40k to be conservative.

Let's do the math:

Year 1: £20k - £40k. (If you withdraw, you just zeroed your account. But lets cheat and say you maybe saved a buffer salary from your job so you withdraw nothing in the whole of your first year as a full time trader)

Year 2: £40k - £80k. You have to start withdrawing to live - that is after all why you trade. To make a living. Subtract £40k.

Year 3: £40k - £80k. You did it again...nice one. You earn a living from your trading. Subtract £40k...

Year 4: £40k...you see where I am going with this, yet?

And you better hope that you don't get a below average year. God forbid if you only make 90% you are really up sh*t creek. Your expenses outweigh your returns and your pot starts SHRINKING.

Is this guy a great trader? Yes .

Is this guy ever going to make millions? No.

When newbies say "great traders should be able to make millions" they are thinking about the theory not about the actual reality.

As usual I am trying to argue that not everything is black and white.

Yes, a great trader can make millions.

But there are plenty of great traders that WILL NEVER make millions.

That is as clear as day.
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Last edited by trader_dante; Jan 25, 2011 at 4:07pm.
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Old Jan 25, 2011, 4:13pm   #56
 
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Re: Why do they do it?

Liquidity: If a market's not liquid enough, trade more/trade different markets? It's pretty easy to move large chunks of money around on the FX markets. As I said before there's a ceiling with all these things but you have to get pretty high up before you have to start worrying about that.

As for these market wizards, I addressed that with the example of turning £100k into £2m and £10m into £200m. If you are trading with £20k and hope to make 100-200% that year you're wasting your time if you intend to take the money out. You would be better off becoming an accountant.
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Old Jan 25, 2011, 4:26pm   #57
 
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Re: Why do they do it?

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Originally Posted by Masquerade View Post
Liquidity: If a market's not liquid enough, trade more/trade different markets? It's pretty easy to move large chunks of money around on the FX markets. As I said before there's a ceiling with all these things but you have to get pretty high up before you have to start worrying about that.
OK. I will pass the info on. I'm sure he will agree with you. He has spent years studying the FTSE and knows the ins and outs of it like nothing I've ever seen. I'm sure he will find it a breath of fresh to just change his market completely and take loads of time out to learn the idiosyncracies of the next one.

Quote:
Originally Posted by Masquerade View Post
As for these market wizards, I addressed that with the example of turning £100k into £2m and £10m into £200m. If you are trading with £20k and hope to make 100-200% that year you're wasting your time if you intend to take the money out. You would be better off becoming an accountant.
I agree. You would be better of getting a better paying job. But that doesn't take away from the fact that you could still be an excellent trader and unable to make millions because your capital wasn't enough when you got to the stage in your life/career where you needed to withdraw.
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Old Jan 25, 2011, 4:33pm   #58
 
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Re: Why do they do it?

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OK. I will pass the info on. I'm sure he will agree with you. He has spent years studying the FTSE and knows the ins and outs of it like nothing I've ever seen. I'm sure he will find it a breath of fresh to just change his market completely and take loads of time out to learn the idiosyncracies of the next one.
If he needs a coach i'll be happy to do it for a fee. If he can think about the real world and understand the impacts on various things then switching market shouldn't be such an issue.
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Old Jan 25, 2011, 4:38pm   #59
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Re: Why do they do it?

There is 1 alternative and you see a lot of Twitter traders do this, which is they mentor or publish their own journal logs to better their own trading. For example, you might mentor someone else to control certain aspects of your trading that you would like to do better at, eg discipline. These guys then get more interest and then start charging. Still goes back to what I was saying before in that it's not regulated and they have no qualifications per se but people are desperate to make money/make money back in this game they they'll hand over money to anyone in the hope they can.
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Old Jan 25, 2011, 4:50pm   #60
 
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Re: Why do they do it?

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If he needs a coach i'll be happy to do it for a fee. If he can think about the real world and understand the impacts on various things then switching market shouldn't be such an issue.
As new_trader would say. Unsubscribed! ;-)
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