jamescummins
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Hello,
I just wanted to add my thoughts on a range of topics that seem to get discussed quite a bit, particularly with people new to trading...
I am sure everyone knows, but it seems there are a load of people with there head in the sands. Trading is not an everyday blokes game. There are some that make very large money, but the vast vast vast majority dont. In order to trade profitably, say you want to make 5000k a month, so about 50-60k a year. Otherwise, I would suggest you get a job in the back office, and work you way up a bit and earn it there with the massive amount of job security that would provide as well.
If you wanted to trade copper, you are looking at contracts with a nominal of around 200k, and you would be making 25USD per dollar move in the contract price. You need to be making roughly 250 pounds a day, and that equates to accurately calling +20 dollar moves everyday. Now this volatility is more than there, but is it worth the capital you are risking? Say 20,000 sterling in margin fees, to make 50k a year? I am not so sure, even if you were likely to make money.
You are trading against people that have far superior access to information, to liquidity, and to technology. People trading professionally are not just allowed to start on day one. They know the markets inside out, have studied them intensively, they are quite probably very bright, and highly academic. Technicals are known!! It is not like the market makers are unaware that people trade off them. This is your main downside. If you trade as the market expects, and as most of the suggestions here suggest, from techincals of whatever sort you like, you are not surprising the market.
It is incredibly difficult to make money consistently in these markets. Equally, the more you make, the more you are having to risk in order to achieve that growth. Ultimately, most new traders would be better off simply sticking everything they have into gold and betting up or down. At least then 50% would win
I dont mean to be really negative, but I think sometimes there is a massive lack of appreciation of how skilled professional traders are, and what it takes to be one. Most of the resources mentioned here are really really basic! No-one has ever mentioned J Hull as far as I know, and that is regarded as a bible within investment banks and the bigger firms. It is always risky to be trading derivatives. When you are not sure how they are even valued, I think you are either going to be very fortunate, or you will lose all your money eventually. How can you asses fair value, if you dont know how something is valued?? If you dont know somethings value, compared to what it is trading at, how do you know if it is cheap or expensive? To buy or to sell?
I have seen I think one post where someone mentioned Matlab, a couple where people have looked at option valuations, and I am sure there are a load of people on here that are very knowledgeable. If you are looking to trade based on market action, I think you will fail - just think, your model has to be more reliable, and more efficient, and more profitable than the host of hedge funds, black box, grey box trades, and every other quant trader out there. For the vast majority of us, that is not the case. Is the model you have thought of really original?? Is it really long term profitable without undue risk?? I think if we were honest, very very few people could say that.
Anyway, I firmly expect to be torn to shreds, but I thought I would spend a few minutes explaining my take on this...
I just wanted to add my thoughts on a range of topics that seem to get discussed quite a bit, particularly with people new to trading...
I am sure everyone knows, but it seems there are a load of people with there head in the sands. Trading is not an everyday blokes game. There are some that make very large money, but the vast vast vast majority dont. In order to trade profitably, say you want to make 5000k a month, so about 50-60k a year. Otherwise, I would suggest you get a job in the back office, and work you way up a bit and earn it there with the massive amount of job security that would provide as well.
If you wanted to trade copper, you are looking at contracts with a nominal of around 200k, and you would be making 25USD per dollar move in the contract price. You need to be making roughly 250 pounds a day, and that equates to accurately calling +20 dollar moves everyday. Now this volatility is more than there, but is it worth the capital you are risking? Say 20,000 sterling in margin fees, to make 50k a year? I am not so sure, even if you were likely to make money.
You are trading against people that have far superior access to information, to liquidity, and to technology. People trading professionally are not just allowed to start on day one. They know the markets inside out, have studied them intensively, they are quite probably very bright, and highly academic. Technicals are known!! It is not like the market makers are unaware that people trade off them. This is your main downside. If you trade as the market expects, and as most of the suggestions here suggest, from techincals of whatever sort you like, you are not surprising the market.
It is incredibly difficult to make money consistently in these markets. Equally, the more you make, the more you are having to risk in order to achieve that growth. Ultimately, most new traders would be better off simply sticking everything they have into gold and betting up or down. At least then 50% would win
I dont mean to be really negative, but I think sometimes there is a massive lack of appreciation of how skilled professional traders are, and what it takes to be one. Most of the resources mentioned here are really really basic! No-one has ever mentioned J Hull as far as I know, and that is regarded as a bible within investment banks and the bigger firms. It is always risky to be trading derivatives. When you are not sure how they are even valued, I think you are either going to be very fortunate, or you will lose all your money eventually. How can you asses fair value, if you dont know how something is valued?? If you dont know somethings value, compared to what it is trading at, how do you know if it is cheap or expensive? To buy or to sell?
I have seen I think one post where someone mentioned Matlab, a couple where people have looked at option valuations, and I am sure there are a load of people on here that are very knowledgeable. If you are looking to trade based on market action, I think you will fail - just think, your model has to be more reliable, and more efficient, and more profitable than the host of hedge funds, black box, grey box trades, and every other quant trader out there. For the vast majority of us, that is not the case. Is the model you have thought of really original?? Is it really long term profitable without undue risk?? I think if we were honest, very very few people could say that.
Anyway, I firmly expect to be torn to shreds, but I thought I would spend a few minutes explaining my take on this...
