Just HOW do you make money in the markets?

This is a discussion on Just HOW do you make money in the markets? within the Trading Systems forums, part of the Methods category; Originally Posted by foroom lluzers .......+ psychobabble 80 % is missing Hurrah...

Reply
 
LinkBack Thread Tools Search this Thread
Old Aug 3, 2017, 3:39pm   #136
 
barjon's Avatar
Joined May 2003
Quote:
Originally Posted by foroom lluzers View Post

.......+ psychobabble 80 % is missing
Hurrah
barjon is online now   Reply With Quote
Thanks! The following members like this post: dbphoenix
Old Aug 3, 2017, 6:14pm   #137
Joined Apr 2017
Quote:
Originally Posted by barjon View Post
Hurrah
Couldn't LL find a practical trader to write it , author is a very good theoretical writer and could write a good story .
foroom lluzers is offline   Reply With Quote
Old Aug 3, 2017, 7:05pm   #138
Joined Apr 2016
Trading needn't be so involved and complex. I like to reduce trading to the bare necessities. To be successful, all you need to do is:

BUY LOW SELL HIGH

99% of the internet traders always end up buying high selling low. Avoid that, and you have made it. It's a rather simple logic+math problem to understand. It shouldn't be impossible to solve.

Trading is especially suited for business minded people. Financial markets are operated by merchants, similar to merchants who operate supermarkets. Their behaviours are more similar than different. Their goals are profit, and you are their customer.
EnlightenedJoe is offline   Reply With Quote
Old Aug 3, 2017, 7:10pm   #139
 
barjon's Avatar
Joined May 2003
Quote:
Originally Posted by foroom lluzers View Post
Couldn't LL find a practical trader to write it , author is a very good theoretical writer and could write a good story .
Doesn't need it. He has strong model and complete understanding of what he is doing so I would guess he finds no difficulty in obeying his trading plan and it's rules without the help of a head doctor.

He stresses the importance of having and obeying that model in the same way that dbp (and others) stress the importance of a strong trading plan. Knowing what you are going to do in whatever circumstances that arrive means that there is no dithering, no hand wringing or whatever, it's just done without second thought.

All the uncertainty, dithering, fear and greed come from ones trading not being supported by such a model/plan. All imho, of course .
barjon is online now   Reply With Quote
Old Aug 3, 2017, 7:21pm   #140
 
dbphoenix's Avatar
Joined Aug 2003
Emotionlessly.
__________________
Trading Price
The Wyckoff Method
dbphoenix is offline Training literature vendor (e.g courses / spreadbetting guides / eBooks)   Reply With Quote
Old Aug 5, 2017, 1:16pm   #141
 
2 Posts
Joined Aug 2017
A requested follow-up

While I did not have intention of responding, a respectful request and being on holiday, I have afforded the time and humbly hope the information is provided useful.

You will not find my strategy and systems in this post. I will not, nor would any reasonable person, just share their business secrets with others. Time is our most valuable commodity, one that I hope to use wisely. However, I will share what I know (or believe to be) the reason for my success. If interested - please read on.

Success in the world of trading/investing comes from first a mindset of objectivity. This, I will admit, is perhaps the hardest of all traits to conquer. For as human’s we all tend to think subjectively, rather than objectively. Looking back, I would say this single trait that has been routinely and rigorously adhered to is a significant contributor to my success.


Objectivity vs. Subjectivity
Objectivity, means we must leave all subjectivity behind – any bias, hope, fears, dreams, ideological, any and all things that are not able to be rigorously proven to the best of our abilities through the scientific method (or similar method).

While initially all my trades were done manually, which contributes to a host of problems, a significant one being subjectivity trumping objectivity, those days are long behind me and for the better.

Subjectivity in the trading world comes in two basic forms.

First the subjectivity of the trade itself, perhaps you don’t like the company, perhaps you use their product, maybe your friend works there, perhaps you are reading someone’s uninformed opinion on the internet, etc. Additionally, you may be making subjective observations about the market action itself, perhaps it is who’s bidding on the shares, something in a technical analysis that gives pause, but without clear reasoning.

The second form is the subjective world around us. It surrounds us and penetrates our daily lives. Sometimes we are aware, but many times it impacts us subconsciously. All of which impact our decision-making skills. It could be a fight with a girlfriend, a hangover, a new girlfriend – pretty much anything that can impact our mood, attitude, and demeanor.

Subjectivity will be your ruin, if your head is not in the game they the game is already lost.

A private trading operation I was familiar with decades ago had two head traders that were excellent, but on occasion they would show up with their subjective baggage that would inhibit their abilities. It was eventually decided – if you were “not in the zone, then you are blown!” – funny, but rules to live by.

Technology solves todays subjectivity problem.
Today, subjectivity impacts can be totally adverted. With the advances in technology, there is no reason to ever click a mouse or use a keyboard to make trades. Of course – one may need to – to adjust a position, if/when necessary. However, today I can’t imagine trading manually anymore. About 10% is manual, when something needs to be adjusted.

This brings me back to objectivity. If you have faith and trust your model, then let your model trade. With APIs, data, executive gateways, etc. I can’t imagine anyone not taking advantage of technology, which increases speed and management of order handling. When I started, it was by phone, then by mouse clicks, today it is automated.

(Note: For some long-term investments, with less short-term price sensitivity, I have executed some of them manually. Of course this is NOT trading and one should not conflate the two.)


Skills and Understanding.

I was fortunate to learn from a couple of professional traders, which helped honed my understanding of real-world application. Additionally, my previous experience and enjoyment came from game playing – for money, which translated well. (Poker, Bridge, Backgammon).

The professional traders who I learned from, were also successful Backgammon, Bridge, and Poker players. This skill in managing capital based on outcome of probabilities translates well into the finance world, or so I believe. It also creates two important characteristics for trading: Getting use to losing money and knowing how/when to apply your capital stack. Sometimes it is just about staying in the game.

I do believe that humans are not inherently born with the understanding of probabilities, perhaps a few are – but the majority of us are not. If so, Las Vegas, Lotteries, and a host of gambling (odds not in the favor of the player) would never exist. Humans are driven by greed and fear, which I believe blinds them to probabilities. Again – a subjectivity problem and the reason that the objective player will always beat the subjective player. A common saying in the poker world, “If you can’t spot the fish at the table, you are the fish!”

Note: Poker, Backgammon, Bridge are games of chance – but it is ONLY “Gambling” when the odds are not in your favor and especially if you do not know the odds to begin with.


You can make a living playing Poker, Backgammon, and Bridge. Just like you can make a living trading in the market.

You can NOT make a living playing Roulette, Slots, Craps or any game offered in a Casino (some would argue on Craps depending on odds stacks and the dark-side betting – but I believe it to be a such a low probability that it is not worth the effort). The reason is math and probabilities. The odds are never in the favor of the player.

Note: I did not include Black Jack, because you can count cards and move the odds in your favor. While not illegal, you will be asked to leave.

I mention all this because it is important that we distinguish games of change and gambling -which all comes down to odds.

Skills are:
managing capital stacks,
managing risk,
understanding probabilities,
understanding risk/reward ratios.

KNOWING WHY and HOW.
My mentor always said – if you don’t understand WHY, then you are blind and will never be successful. The worst thing for a newbie trader is to make money on day one, because a reasonable assertion is they don’t know WHY. Much like a newbie poker player winning a pot.

Know why you made and lost money, if you cannot exactly articulate HOW/WHY – with absolute objective certainty back with provable math, then there is a very good chance you don’t really know what you are doing and long-term success will forever elude you.

There is significant difference between the theoretical world and the real world. One must understand the theoretical world, but one must RESPECT the real world. As the saying goes, “you can’t cash a check at the bank of theo’”

COSTS
All businesses cost money. Trading is no different. Data, computers, execution fees, taxes, etc. One should have a detailed accounting of both fixed costs and run costs of your trading operation – even if you are a solo trader at home. If you do NOT know to the penny your operational and fix costs, you are not being responsible or accountable to yourself and more importantly to your hard earned money.

Your trading must certainly cover your costs.

Know how your trading costs apply to your type of trading.

The few traders I have spoken too are on a never-ending search for low cost execution. When I ask as to their general trading strategy, I am surprised that they are prioritizing costs over quality and information order flow.

Unless you are churning volume, where costs become prohibited, then quality of execution / market access and informational order flow made be worth far more to your success.

I use a few execution providers. None of which are low costs solutions. However, I am paying for quality, particular market access, or informational order flow – of which (for my strategy) is far more valuable then saving a fraction of a cent on execution. In one particular case I paid a premium for execution, because the order handler was also the execution firm for the largest player in that market. Thus, I was able to participate as well as receive valuable informational order flow. Was the high cost worth it, absolutely. Valuable information is worth the cost, if put to use.

It is important to value the cost of your business. As noted, sometimes what seems like an immediate cost savings may mean lower performance or even lost opportunity.


Core Product = Listed Options and their underlying asset classes.

Since the very beginning (3 decades) I have used options for the following reasons (but not limited to):

1. I can set predefined risk factors on any position I take.
2. I can take advantage of GAMMA, which is principally the best tool for directional momentum.
3. I can generate additional yield to off-set costs.
4. I can take exceedingly large positions with not only the fractional amount of capital, but a fractional amount of risk.
5. I can afford to be wrong in the short-term and correct in the long-term.
6. I can take advantage of mispricing of volatility risk of the underlying asset.

In fact, if I didn’t trade options as a core product, along with the underlying asset, I probably would not be making money – nor venture into the world of trading.

I thank you for reading and responding to my previous post. I hope that my efforts and information bare other fruits for their labor. I wish you all good fortune, now I must return to my book and enjoy what little time I have left of this holiday.
LionFish42 is offline   Reply With Quote
Thanks! The following members like this post: sminicooper , Lee Shepherd , foroom lluzers
Old Aug 7, 2017, 8:09am   #142
 
sminicooper's Avatar
Joined Jun 2016
LionFish42 - thank you for your invaluable post #141 and for taking the time and trouble to do so. This is the sort of information that an inexperienced trader could take years (if ever) to learn on his own – and here it is served up on a plate!

One of the things I have noticed over the years is that the writings of people who trade for a living ergo successfully, are well worth taking note of. Thanks very much and do enjoy the rest of your holiday.
__________________
We are defined by our past!
sminicooper is online now   Reply With Quote
Old Aug 8, 2017, 8:03am   #143
Joined Apr 2017
Quote:
Originally Posted by barjon View Post
Hurrah
There you dismiss this as psychobabble , but he has only summarized the subject.The minute you believe this , you will get off the forums and on your yachts.Very good post BTW.

Quote:
Originally Posted by LionFish42 View Post
The second form is the subjective world around us. It surrounds us and penetrates our daily lives. Sometimes we are aware, but many times it impacts us subconsciously. All of which impact our decision-making skills. It could be a fight with a girlfriend, a hangover, a new girlfriend – pretty much anything that can impact our mood, attitude, and demeanor.

Subjectivity will be your ruin, if your head is not in the game they the game is already lost.
foroom lluzers is offline   Reply With Quote
Old Aug 8, 2017, 9:40am   #144
 
barjon's Avatar
Joined May 2003
Quote:
Originally Posted by foroom lluzers View Post
There you dismiss this as psychobabble , but he has only summarized the subject.The minute you believe this , you will get off the forums and on your yachts.Very good post BTW.
Nobody said it wasn't important, just that it's not the be all and end all as you depict it.

Once again it is the strength of his trading model and plan that enables him to deal with it a lot more easily than you often make out.
barjon is online now   Reply With Quote
Old Aug 10, 2017, 3:20pm   #145
 
3 Posts
Joined Aug 2017
Just stick to your rules and you will succeed. The greedy and fearful character inside everybody is the worst enemy from anybody. Be greedy when others are fearful and be greedy when others are fearful.
brovic38 is offline   Reply With Quote
Old Aug 10, 2017, 5:36pm   #146
Joined Aug 2017
Objective TA ?

Quote:
Originally Posted by LionFish42 View Post


Objectivity vs. Subjectivity .

Be nice too, to have some objectively calculated TA tools which are based on more than kiddie maths.

Last edited by wisefoolx; Aug 10, 2017 at 5:37pm. Reason: jjjmdjdmgh
wisefoolx is offline   Reply With Quote
Reply

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Similar Threads
Thread Thread Starter Forum Replies Last Post
Best Thread: How To Make Money Trading The Markets. Mr. Charts Stocks 707 Apr 28, 2011 6:27pm
Make Pocket Money From the Markets? LostPigeonCoo General Trading Chat 36 Feb 23, 2010 3:54pm
Article: Why Can’t Johnny and Jane Make Money in the Markets? T2W Bot Educational Resources 28 Nov 2, 2009 8:09am
How not to make money trading the markets Hotch Trading Journals 56 Oct 7, 2009 3:57pm
How do market makers make money in futures markets femi73 Futures & Options 4 May 14, 2007 12:25pm

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)