I honestly cannot recommend that anyone develop, or follow up an interest in trading.

[shadowninja]

They would indeed apply to manual trading , but most (not all ) of us are not efficient processors of information related to dynamic multiple conditions , especially when operating multiple instruments,strategies and trades.

The human behaves and reacts differently after losses whereas robots do not use any biases and do not have weekly targets pressures ,therefore the comparisons between humans and robots performance are not on equal basis .There are other factors which apply i.e emotions,fear ,greed,energy,desire to win, etc

O D T

I think I see what you are saying, now (in a kind of been there, done that way ).

 

[Splitlink]

They would indeed apply to manual trading , but most (not all ) of us are not efficient processors of information related to dynamic multiple conditions , especially when operating multiple instruments,strategies and trades.

The human behaves and reacts differently after losses whereas robots do not use any biases and do not have weekly targets pressures ,therefore the comparisons between humans and robots performance are not on equal basis .There are other factors which apply i.e emotions,fear ,greed,energy,desire to win, etc

O D T

Would you not agree that robots, also, do not care whether his trader goes bust, or not?

Might there not come a time when the trader could say "If I don't stop it I won't have any money left? I believe that only a trader willing to bury his head inb the sand should trust a robot programme too much.

Of course, I always was a bit windy about some things. Going broke being one of them.

 

[jaspertrademaster]

Farewell and good luck.

 

[oildaytrader]

Would you not agree that robots, also, do not care whether his trader goes bust, or not?

Might there not come a time when the trader could say "If I don't stop it I won't have any money left? I believe that only a trader willing to bury his head inb the sand should trust a robot programme too much.

Of course, I always was a bit windy about some things. Going broke being one of them.

The type of robots I discuss are the ones made by the trader for his own use.Never buy a black box robot programmed by anyone else.

What a robot does is execute what the orignal developer coded , if garbage is coded garbage is the output.If a quality money management system is coded , the chances of a account blow out are zero, here quality was input and quality is output.

A robot is trading the trader's own system.If a trader is a stock trader ,he may use the Zanger breakouts.An example of this is open buy if price breaks consolidation high plus 50 cents , apply a stop loss of 50 cents, calculate maximum risk on trade of 2 % of account(automatically calculate number of shares bought) , take profit target one is 100 cents, second is 200 cents , balance of positions exit at trend exhaustion i.e price stalls within a range of 100 cents for 2 days.

How can the account blow out if only 2% is risked on any one trade?

http://en.wikipedia.org/wiki/Algorithmic_trading

o d t

 

[Trader333]

How can the account blow out if only 2% is risked on any one trade?

When you get 50 consecutive losing trades.


Paul

 

[donaldduke]

When you get 50 consecutive losing trades.


Paul

Depends on what you define as a blowup.

50 losers @ 2% risk = 64% drawdown.

In theory you will never lose it all.. although if your account is on the smallish side you may not have enough margin to buy one contract after a 64% drawdown. In which case you will be out of business. But a large account could still carry on.

 

[Masquerade]

When you get 50 consecutive losing trades.


Paul

You never blow up if you risk 2% of account every trade. Just tend towards 0.

 

[jammixmaster]

Interesting post. While I may have only traded for a few years, and I love the money it makes, trading does not consume me nor does it take over my social life. Actually, I spend a few hours every Sunday night analyzing the markets and placing pre-market orders. I barely look at my account during the week unless I find a break from work or friends/girlfriend. Then I check it again at the close on Friday's before I go out. I'm a swing trader, so I trade AND have a life.

Trading does not have to take over your life, you let it. Sure the money is nice and it's actually what motivates me to trade, but I loathe sitting in front of a screen all day watching charts. I'd much rather be out with friends/girlfriend letting my strategy work for me. Trading is fun but the days of sitting in front of 12 different monitors all day are over. That is a life for day traders and scalpers, that's why I like swing trading. So I do recommend people get into trading, but it's probably because I'm still pretty new to it and young.....maybe in 10 years I'll feel the same as most of you.

 

[oildaytrader]

Hi



For reasons of health, safety, financial security & mental well-being, I really could not & would not recommend to anyone that they develop or follow up an interest in trading - no matter how much they hate their day job, how bright they are, how motivated they are etc.

Is this an implication traders are sick and mentally unsound?

Trading is gambling , and gamblers can be addicted

http://www.youtube.com/watch?v=u6dq6GQS_cA&feature=related

 

[Splitlink]

Reading the title literally, I would not recommend trading, either. This is very much a personal choice.

Reading the statistics which are that 90% of traders fail, although I don't know if it is true, or not, I could not recommend it as a career choice! In fact, I would be very clear that the new trader would know that he could become completely wiped out.

Remember the Lloyds "names" of a decade or more ago? All sorts of wealthy people were "recommended" into Lloyd's brokerage and a lot lost fortunes at the time. I can't remember the case, now. In the latest bubble thousands have lost their houses, supposedly a safe investment. But I should think that trading futures is much riskier than buying a house!

No, everyone has to decide for himself and should take into consideration what safeguards should be in place. Even that does not seem to do the trick, in many cases.

 

[oildaytrader]

Reading the title literally, I would not recommend trading, either. This is very much a personal choice.

Reading the statistics which are that 90% of traders fail, although I don't know if it is true, or not, I could not recommend it as a career choice! In fact, I would be very clear that the new trader would know that he could become completely wiped out.

Remember the Lloyds "names" of a decade or more ago? All sorts of wealthy people were "recommended" into Lloyd's brokerage and a lot lost fortunes at the time. I can't remember the case, now. In the latest bubble thousands have lost their houses, supposedly a safe investment. But I should think that trading futures is much riskier than buying a house!

No, everyone has to decide for himself and should take into consideration what safeguards should be in place. Even that does not seem to do the trick, in many cases.

The difference between trading and other forms of speculation like property , tulips and cdos etc , is trading instruments like euro/usd have intra day volatility of 23% on a daily basis.Trader can make a fortune on a daily basis on trading , or lose a fortune very frequently.The other forms of investments have a annual volatility of 23% , therefore less people lose less frequently.Houses offer accommodation and shelter benefits .

 

[Splitlink]

The difference between trading and other forms of speculation like property , tulips and cdos etc , is trading instruments like euro/usd have intra day volatility of 23% on a daily basis.Trader can make a fortune on a daily basis on trading , or lose a fortune very frequently.The other forms of investments have a annual volatility of 23% , therefore less people lose less frequently.Houses offer accommodation and shelter benefits .

This , IMO, is why it cannot be recommended. Although I do it, myself, I am very conscious of the risk factor. You and I, and all other traders who have managed to survive, do not need this recommendation. New guys do.

Anyway, as long as this market exists there will always be a flow of cash from losers to winners. Most of those who enter the markets think that they can do it. Losers are always somebody else, just like the soldier always thinks that he will not be the one to receive the bullet.

 

[redart]

I definitely wouldn't recommend it either, but im in too deep now to quit! I'll probably never give up. Im too fascinated with it.
The amount of time that i've put into it so far is a little depressing. I sometimes think that if I put that amount of effort and time into practically anything else, I would have definitely succeeded in whatever that thing (business???) was.

My dad made rather a lot of money daytrading over the course of about 2 years, although he puts it down to luck!

 

[Splitlink]

I definitely wouldn't recommend it either, but im in too deep now to quit! I'll probably never give up. Im too fascinated with it.
The amount of time that i've put into it so far is a little depressing. I sometimes think that if I put that amount of effort and time into practically anything else, I would have definitely succeeded in whatever that thing (business???) was.

My dad made rather a lot of money daytrading over the course of about 2 years, although he puts it down to luck!

A father successful at trading! That's a temptation for any son and for the father, too. I toyed with the idea of trying to persuade my kids but, so far, as they haven't shown much interest in it, I am inclined to get as perfect as I can, myself, before mentioning it. Maybe, one day, I shall consider myself so expert that I might think it a pity to let the secret die with me! I have not got to that desired state, yet.

 

[oildaytrader]

A father successful at trading! That's a temptation for any son and for the father, too. I toyed with the idea of trying to persuade my kids but, so far, as they haven't shown much interest in it, I am inclined to get as perfect as I can, myself, before mentioning it. Maybe, one day, I shall consider myself so expert that I might think it a pity to let the secret die with me! I have not got to that desired state, yet.

Please educate your kids and keep them away from trading , for God's sake.If you love your kids and care for them find them an easier profession.Please do not answer back .

I have heard kids curse their fathers for encouraging them to gamble.

 

[spinola]

I honestly cannot recommend that anyone develop, or follow up an interest in trading.

Thanks for that, is it not the same for all other businesses too though ? So why do people bother doing anything in terms of wanting to become professional at a pursuit ?

And surely one is better, or should , by the very awareness of knowing they have free will, do something they want to be doing ?

In fact is their not an advantage with trading, in that there is an instant availability of customers to buy and sell to, whereas many conventional business do not often have the opportunity presented to them, so they can fail due to lack of this present.

So this constant opportunity existence is one advantage over a shop (for example) waiting to have a customer stumble in in order for the shop owner to begin to "make a trade" .

All the trader has to do is to observe and become expert on value of his chosen asset on a continual basis and execute trades at perceived favourable value points.

I suspect the average trader fails to perceive "What is value in this market" relative to the continual markets perception of historic value . If this is known and monitored on a continual basis and sensible risk applied to opportunities as they present themselves, then the customer is waiting to do a deal with you.

Perhaps traders fail because they do not learn to value assets accurately, their market accurately. Like any business, if this skill is not developed then the likely end result of the business is already known. It will lose more money than it makes.

So whats value in this market I'm trying to make a trade in ? In order to maximise ones chance of making a trade that yields positive dollar outcome, then one is better off knowing or learning to perceive what good value is as measured and monitored against constant trending values in that market. This will be decided by other people, the market, the trader observes this and is told when to exchange risk at this point to maximise his success of a trade that yields a positive dollar outcome.


Traditional business people not only need this skill, but also they need to attract customers to do a trade with in the first place. No good the shop owner having the latest hot flying product if no customers walk in , no they also have to become expert or appoint one, who are at marketing and advertising. More work and risk ! And perhaps if they cannot understand this, then they shouldn't attempt to go into any form of business for themselves, trading or otherwise.

So to sum up, the better and quicker the trader learns ( that he needs or should do ) to perceive value in his market, then, the sooner he will be ready to do business with and in it.

Performance of buying and selling any product within a business can only improve, if an accurate observation of its trending value can be observed, known and understood.


Perhaps if traders find it difficult to trade, then it is because they most likely do not know its accurate trending value. I think traders who have a trade with not knowing or not caring of valuation trends are likely to suffer in performance , but as the markets need ignorant traders, and by that I mean "lack of knowledge through unenlightenment " then perhaps it comes down to the individual asking " how bad do I want to learn this business ? "

Do I care about wanting to know trending values ?

Does it matter ?

What is best for me if I do not want to learn this or do not think value trends count, what should I learn then ?


Spinola, putting pen to paper !

 

[TRADEFUTURES]

This game is not difficult at all. No disrepect intended to those that are struggling.

The key is to do less work. Sitting infront of a screen 14 hours a day does not make good trading. Risking more than 1.5%-2% on any trading idea is just plain silly. Exposing more than 8-10% of your trading account in a period of 4 weeks is silly.

Intra day / short term trading should be considered a hobby...not an occupation, unless you're flipping 8 to 9 figure transactions, which is highly unlikely if you're a retail player.

There is good volatility and bad volatility. Avoid bad volatility...and yes thats intra day volatilty that must be avoided otherwise you will lose again and again even though your view of the market will probably be spot on.

Harness and exploit good volatility, and yes i'm referring to setting yourself up to capture larger moves in a multitude of markets over periods of weeks and months.

Setting yourself up for good volatiilty means that you must make drastic changes...1st change is to STOP intra day trading.

2nd. Cut your stakes right down.
3rd. Utilise much larger stops while ensuring that no more than 1-2% of your trading account is at risk for any given trade.
4th. Expect to be holding positions for potentially months...yes this is boring...but successful trading is boring...if you want thrills go to the casino or start to day trade with leverage (tight stops / high stakes).
5th. Do your research and analysis when the markets are closed.
6th. Make your descisions & Order your trades on the weekend - its really OK to ONLY order 1 trade a week.
7th. Let your losing trades stop out at the predefined risk tollerances.
8th. Let your winning trades run...yes expect them to run for potentially months.
9th. NEVER manually close a winning trade. If the trade is in profit, move stops up to eliminate risk. Move stops up to lock in profit...but there is no rush to do this as you will be relaxed knowing that you only have 1-2% at risk. This 1-2% risk can potentially return 5-25%..maybe more.

TAKE SOME TIME TO BUILD A SMALL PORTFOLIO TO WORK ON. - Research / analysis should not take more than 2-3 hours on the weekend.

AIM TO BUILD A PORTFOLIO OF 'OPEN' PROFITABLE POSITIONS...LET LOSING TRADES STOP OUT.

DON'T WASTE YOUR TIME WATCHING THE MARKETS DURING THE WEEK.

DON'T EVEN WASTE YOUR TIME TRYING TO TRADE THE MARKETS IF YOU HAVE LESS THAN £15K-£20K OF CASH FUNDS THAT YOU CAN AFFORD TO FORGET ABOUT FOR ATLEAST 6-12 MONTHS.

DON'T EVEN THINK ABOUT TRADING AS A MEANS TO PAY FOR ROUTINE EXPENDITURE SUCH AS LIVING EXPENSES FOR ATLEAST THE FIRST 12 MONTHS.

90-95% of intra day / short term traders lose...This is a realistic statistic

The 5-10% that succeed and that will continue to succeed...well you know how they trade now!...expect 150-300% annual returns...day traders / short term traders try to make 150-300% returns quarterly...thats why they blow up time and time again....

peace!!!

 

[Splitlink]

This game is not difficult at all. No disrepect intended to those that are struggling.

The key is to do less work. Sitting infront of a screen 14 hours a day does not make good trading. Risking more than 1.5%-2% on any trading idea is just plain silly. Exposing more than 8-10% of your trading account in a period of 4 weeks is silly.

Intra day / short term trading should be considered a hobby...not an occupation, unless you're flipping 8 to 9 figure transactions, which is highly unlikely if you're a retail player.

There is good volatility and bad volatility. Avoid bad volatility...and yes thats intra day volatilty that must be avoided otherwise you will lose again and again even though your view of the market will probably be spot on.

Harness and exploit good volatility, and yes i'm referring to setting yourself up to capture larger moves in a multitude of markets over periods of weeks and months.

Setting yourself up for good volatiilty means that you must make drastic changes...1st change is to STOP intra day trading.

2nd. Cut your stakes right down.
3rd. Utilise much larger stops while ensuring that no more than 1-2% of your trading account is at risk for any given trade.
4th. Expect to be holding positions for potentially months...yes this is boring...but successful trading is boring...if you want thrills go to the casino or start to day trade with leverage (tight stops / high stakes).
5th. Do your research and analysis when the markets are closed.
6th. Make your descisions & Order your trades on the weekend - its really OK to ONLY order 1 trade a week.
7th. Let your losing trades stop out at the predefined risk tollerances.
8th. Let your winning trades run...yes expect them to run for potentially months.
9th. NEVER manually close a winning trade. If the trade is in profit, move stops up to eliminate risk. Move stops up to lock in profit...but there is no rush to do this as you will be relaxed knowing that you only have 1-2% at risk. This 1-2% risk can potentially return 5-25%..maybe more.

TAKE SOME TIME TO BUILD A SMALL PORTFOLIO TO WORK ON. - Research / analysis should not take more than 2-3 hours on the weekend.

AIM TO BUILD A PORTFOLIO OF 'OPEN' PROFITABLE POSITIONS...LET LOSING TRADES STOP OUT.

DON'T WASTE YOUR TIME WATCHING THE MARKETS DURING THE WEEK.

DON'T EVEN WASTE YOUR TIME TRYING TO TRADE THE MARKETS IF YOU HAVE LESS THAN £15K-£20K OF CASH FUNDS THAT YOU CAN AFFORD TO FORGET ABOUT FOR ATLEAST 6-12 MONTHS.

DON'T EVEN THINK ABOUT TRADING AS A MEANS TO PAY FOR ROUTINE EXPENDITURE SUCH AS LIVING EXPENSES FOR ATLEAST THE FIRST 12 MONTHS.

90-95% of intra day / short term traders lose...This is a realistic statistic

The 5-10% that succeed and that will continue to succeed...well you know how they trade now!...expect 150-300% annual returns...day traders / short term traders try to make 150-300% returns quarterly...thats why they blow up time and time again....

peace!!!

Longer term trading is the way to go, although it has taken me time to see that. I am, now, trading (or trying to--old habits die hard) for more than a few days. Weeks and months are easier said than done, for me, but we`ll see. Getting used to farther stops is a difficult task. I trade with a lot less money than that but yours is a good post that merits a close read by everyone.

 

[meanreversion]

What do you mean by longer term trading? For some people on this site, that would mean holding a position for a couple of days..

 

[Splitlink]

What do you mean by longer term trading? For some people on this site, that would mean holding a position for a couple of days..

Everything is relative, right? At my level, anything overnight is longer term, since I still have the mentality of a morning trader, used to using 5M timeframes.

I would like to get out of that, mainly because, although I like trading, I am not getting any younger and so am looking at larger timeframes which, in turn, carry larger risk, just so that I don't have the necessity to look at the screen so often.

Once the trade has gone overnight and towards the close of the next day, with a good profit, It can be decided whether there is a case for leaving it open the next night, etc.

That's how I see it, at present, and is not to say that it will work. I am trying it out.