Wall Street = Casino. Minus Sum Game.

This is a discussion on Wall Street = Casino. Minus Sum Game. within the General Trading Chat forums, part of the Reception category; Originally Posted by DionysusToast Sadly, I didn't keep the emails. Try contacting the good Captain asking for a copy of ...

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Old Jan 16, 2010, 3:54am   #76
 
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Re: Wall Street = Casino. Minus Sum Game.

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Originally Posted by DionysusToast View Post
Sadly, I didn't keep the emails. Try contacting the good Captain asking for a copy of the ebook. He'll ask you for an email to send it too & soon you will learn that the free ebook doesn't contain a few 'special ingredients' that make the method even more profitable !

These of course are detailed in a second ebook (and a course too I think) which sadly, cannot be given away for free.

Same story if you get the free ebook from his blog - see how it can't be downloaded - you need to send an email addy first ?

I believe they were coming to me every 2 days until I told hit to cease - which he did straight away.

Now - there is nothing wrong with that, it's just the way that the financial services industry makes it's money - by parting the gullible from it.

We all just need to be aware that this is the game being played.


OK - that wasn't the case when I downloaded it - but that was quite a while ago.



Well, I do use MAs, but not in that way, so I don't use his method anyway.
However, others seemed to, and seemed to be getting something out of it.
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Old Jan 16, 2010, 3:56am   #77
 
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Re: Wall Street = Casino. Minus Sum Game.

Interesting: I regard sentiment as one of the fundamentals, and in a way, so can TA be.
Crudely stated, sentiment could be regarded as the reaction of human beings to the "real" fundamentals (as they perceive them).
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Old Jan 16, 2010, 4:48am   #78
 
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Re: Wall Street = Casino. Minus Sum Game.

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Originally Posted by Xeno View Post
No. The most basic thing that moves the markets (market makers apart) is buying and selling. The second most basic thing is sentiment. The buying, selling, and sentiment can be based on fundamentals, events, technical analysis or numerous factors about which you are aware after the event.

Just because your style of trading suits you, don't make the mistake of assuming that other styles don't suit other people.
Correct - but what drives buying & selling ?

Big, sudden moves that TA cannot catch are driven by world news, economic news, company news, upgrades, downgrades, dividends, earnings releases, change in company status amongst other things.

Of course, other people have other styles.

This got around to style because of the fact that there is a whole INDUSTRY selling you TA, that's why so many people believe TA alone will work for them - because so many other people are saying it.

It's as if something, repeated often enough in books & the internet, will make you money. I don't see much evidence that TA on it's own will make anyone any money, except for the people selling TA in the form of courses, ebooks, web sites etc.

I read market wizards - not a single person in that book said that they learnt to trade from the internet. I read the later books in the series and I can't see it there either.

I don't think there is anything wrong with TA BUT I find it hard to believe that anyone trades profitably just on TA without studying what made their failed trades fail and incorporating that.

When I look at why my failed trades failed, it usually comes down to fundamentals. In many cases, it was things that I really could have seen before my trade want bad. Once you see this, I think it's a natural progression to learn more about the fundamentals.
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Old Jan 16, 2010, 11:16am   #79
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Re: Wall Street = Casino. Minus Sum Game.

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Originally Posted by DionysusToast View Post
Correct - but what drives buying & selling ?
You said that technicals do not drive the market. Your implication was that they never drive the market. The fact that there exist market moves that were a result of technicals disproves this. I'm not going to seek out examples for you, but typically they're in places where prices bounce off a technical level, or a load of stops are fired below a technical level.

Sure, some of the trades at these levels are ultimately based on fundamentals, but not all.

No doubt you're talking more about significant moves too. Well, these shorter moves are significant to someone with a different trading style to you.

Quote:
I read market wizards - not a single person in that book said that they learnt to trade from the internet. I read the later books in the series and I can't see it there either.
Nothing to do with them all having traded since before the internet then...
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Old Jan 16, 2010, 11:25am   #80
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Re: Wall Street = Casino. Minus Sum Game.

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I don't see much evidence that TA on it's own will make anyone any money
Are you saying this in respect to the trading of a single instrument or single stock ? The reason I ask is that many of us here have seen TA consistently work on an intra-day basis by trading a basket of stocks.

Unfortunately the proponent of this approach has left the site but we did see consistent profits made day in and day out for over 6 weeks with profits ranging from between $2K and $10K a day. In all of this time there were only around 2 losing days and the losses were small by comparison.


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Old Jan 16, 2010, 11:46am   #81
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Re: Wall Street = Casino. Minus Sum Game.

The problem is that everyone thinks they understand what TA is....nothing could be further from the truth.
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Old Jan 16, 2010, 12:57pm   #82
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Re: Wall Street = Casino. Minus Sum Game.

I would go further. I would say that many people teach what they think is TA and many more think that those teachers have more ability than they should be given credit for.

It is very difficult to teach a skill. Only the apprentice becomes skillful and that, normally, takes many years.

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Old Jan 16, 2010, 1:17pm   #83
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Re: Wall Street = Casino. Minus Sum Game.

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Originally Posted by DionysusToast View Post
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.
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?
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Old Jan 16, 2010, 2:12pm   #84
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Re: Wall Street = Casino. Minus Sum Game.

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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?
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.
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Old Jan 17, 2010, 5:45am   #85
 
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Re: Wall Street = Casino. Minus Sum Game.

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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.
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.
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Old Jan 17, 2010, 5:47am   #86
 
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Re: Wall Street = Casino. Minus Sum Game.

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Originally Posted by counter_violent View Post
The problem is that everyone thinks they understand what TA is....nothing could be further from the truth.
Why not educate us then ?
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Old Jan 17, 2010, 9:41am   #87
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Re: Wall Street = Casino. Minus Sum Game.

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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.
I'll agree to disagree with you on this, as I see that we are both poles apart. Do you remember the crash of Barings and the Leesom business? Leesom was a "professional" who got greedy. It happens all the time.
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Old Jan 17, 2010, 10:55am   #88
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Re: Wall Street = Casino. Minus Sum Game.

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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.
i've highlighted your words in red, the reason is because conservative and low return.

around 3 -4% gain monthly.

lowest drawdown was -1.51% and -1.0%
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Old Jan 17, 2010, 12:37pm   #89
 
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Re: Wall Street = Casino. Minus Sum Game.

DT

There are two themes running here. One about the minus sum game and the other about whether TA "works".

minus sum game

You seem to be putting all the different kinds of fruit into one big basket and drawing conclusions without regard to the individual fruits.

In the equity markets (the underlying not all the various proxies) it is money flow that sets the overall expectancy. If there is an influx of new money then prices must rise. There will be winners and losers but an overall positive expectancy, although not as much as there should be because of the new money siphoned off by the industry by way of "charges".

Similarly, when money is removed from the market prices must fall. There will be winners and losers but an overall loss which will be greater than it should be because of those industry "charges".

Over the long term, economic growth (and a bit of money printing ) has ensured a constant influx of new money - despite the occasional blip - and that is why there has been an upward bias in share prices for over 200 years.

That's how I see it anyway.

TA

In my view TA "works" only to the extent that it gives people a reason to enter. The real skill lies in how people manage that trade from that point forward.

good trading

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Old Jan 17, 2010, 12:54pm   #90
 
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Re: Wall Street = Casino. Minus Sum Game.

DionysusToast started this thread Barjon

Minu Sum - whatever market, whatever the direction, the house wins. It's very simple. Take this website for instance, it generates revenue from advertising and the advertisers take money from investors. What market conditions exist where this site and its advertisers do not make that revenue ?

Let's all just be aware that the spread, salaries, commissions etc. are all part of the house edge and the reason that everyone cannot win. The house has an edge.

TA - TA may well give you a reason to enter - the problem is, if you don't even take a peek at the fundamentals, you would have to be a fool to place anything other than a day trade. Let's say TA gives you a perfect swing entry on the stock, yet in 3 days time that stock had an earnings announcement. Are you saying such an event should be ignored.
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