Wall Street = Casino. Minus Sum Game.

Originally Posted by DionysusToast

That's a very interesting way of looking at things.

One of the things I look at now, which occurs every few weeks would be the provision of a service too. That's me buying things from institutions that didn't want those things in the first place. They just got saddled with them.

This sounds like a poor service to provide but it's actually a decent trade.

Originally Posted by D70

Hi DionysusToast,
I think you are spot on here.

Buying or selling to "institutions" is an awesome service.

As an example. Many people close out positions at the end of the day, or end of a week. Buying those positions off them and selling them back to them the next day / next week is providing a service that is a profitable one. You are effectively being paid a premium to hold that risk overnight. A trade many dont want to do. Which is why it is a good one!

This, in my opinion, is how you make money, provide a service.

And it makes me grin regarding the chat about trading "teachers". Why do they teach?? Most peoples aim is to trade so they can have more time to do things they enjoy, i am sure teaching others isnt one of those things.... so to me, all trading coaches/ teachers are somewhat dubious! The only explanation in defence of them is that maybe they do it because they want to be loved / respected / prayed to... and so on. Maybe they dont get that in their day to day life so fill the gap by selling their trading ideas?

Originally Posted by Splitlink

But that does not make the market a casino. It is only a casino if the individual trader makes it so. If the market provides a service it is the individual who treats it as a casino, if he wants.

Originally Posted by counter_violent

The problem is that everyone thinks they understand what TA is....nothing could be further from the truth.

Originally Posted by DionysusToast

Well - there are some parallels.

- the house does not lose. As in roulette, blackjack etc - they have an edge.
- some punters may win. Overall the majority must lose.
- when discussing psychology of trading, especially when trying to outguess what the 'masses' will think and do, the implication is that you can outhink your opponents. A bit like poker
- there's a bunch of bottom feeders selling courses, books, mentorships - showing how to beat the house, which they would do themselves if it were possible for them

I would say that in order to beat the house, you really have to do something different to what all of those courses, web sites, ebooks preach. You also have to fully understand that the house has the egde and you also have to understand that the money you win will come from other players and not the house itself.

I think you have to grasp discretion with both hands, pull it close to you and give it a big hug because that's where your edge is.

I was scared of actually making a decision on my own merits and also looked for something mechanical to trade off. The thing is - the discretionary part is actually not very hard, probably even easier than undersanding all of the technical stuff.

Originally Posted by DionysusToast

everyonerich...

I am not saying that no-one makes money. In fact, the financial industry always makes money.

For every money manager that has made money for the past 5 years, there are hundreds that failed. By the laws of probability there will be some that make money forever just by sheer luck.

The thing is - those that failed are out of business, are no longer trading. A lot of what you see with succesful money managers is simply the survivors. Also by sheer luck, these people may continue to make money for decades or suddenly stop. It's the nature of survivorship bias that it appears that a higher percentage of people are making money because there's no sight of the losers.

Now - of course there will be people making money because they are skilled. The problem you have is in determining those that made it through skill and whose methods are still relevant and those who made it through sheer luck.

For someone to manage my money, I would want to know:
- how they manage it in detail
- what kind of risks they think they are taking and why
- what changes have gone on in their organisation in terms of mangers
- why they are managing other people's money instead of their own

It is unlikely that they would provide this information in sufficient detail to satisfy me.

Then you could make an assessment (albeit a bit crude) on whether you think this bunch of people, following the same methods have a chance of continuing to make money. You also have to look at how they assess risk as there have been some stupendous mistakes in risk analysis of late.