Wall Street = Casino. Minus Sum Game.

[oildaytrader]

If you are saying that a fund manager will purposely sell something below it's market value to benefit the buyer at the detriment of his employer, I think you have been misled. This would be a form of embezzlement.

.

Embezzlement and fraud are hallmarks of Wall Street insiders.Out of 60 million people in the U K , only a few thousand get caught and go to prison.The rest are free and the same proportion is free on Wall street.

Multiple fees charged to pension funds

http://www.zimbio.com/Hank+Greenberg/articles/5/Former+AIG+Execs+Agree+Lawsuit+Settlement

 

[oildaytrader]

If some of you don't know , the Wall street insiders have embezzled U S tax payers for around $170bn.

http://info.moneyweek.com/article.p...ut&x=&jtid=7035825&UID=JF+-+Google&p_id=11046

 

[Trader333]

Out of 60 million people in the U K , only a few thousand get caught and go to prison.The rest are free and the same proportion is free on Wall street.

So you think that there are 60 Million fraudsters in the UK ?


Paul

 

[oildaytrader]

So you think that there are 60 Million fraudsters in the UK ?


Paul

No. some of us have committed crimes in our lifetimes.We are not all that innocent.

All those Wall street and RBS bankers would have got the Gallows in another country.They are all free.

 

[Xeno]

How would some guy using pure technicals have intepreted this move ? As a strong open ? A breakout of previous resistance ? A trend continuation ?

Why have you switched from all individual investors to individual investors using pure TA and concerned only with one trade? Personally I couldn't care less what happens with one trade.

 

[DionysusToast]

Xeno - I was asked about trading style.

I used an example from this morning to highlight the difference in perspective between someone that just looks at charts and someone that looks at what the market participants are doing.In this case, there wasn't a trade.

It was a relpy to Trader333 & Timsks comments only.

 

[Xeno]

Good post. Let me take this point by point.

2 - The house cannot be beaten. The financial industry ALWAYS makes money. It is impossible for all investors to make more money than is put in. Now - can a single individual make some money - yes - but not by following the methods put forward by the financial industry.

Now you're changing the story. It's not a casino and the house can be beaten consistently by an individual investor. In a casino, it can't (except for special practices like card counting etc)

3 - Governments as a source of revenue is a poor example. This is simply tax payer’s money being filtered into wall St. Wall St always gains on these transactions.

This is a bit silly. Clearly everyone on the planet is ultimately responsible for the world's finances, but that's widening the debate too far. Besides, you said the investing public was the only source, which is clearly a much more restricted group than the public responsible for governments or corporations.

The sum game entirely depends on where you draw the line. Global finance is a positive sum game if global gdp went up. Draw it at the trading entity like I did, and it can be a positive sum game as I showed. Draw it at the three market participants involved in a trade, and it's exactly zero sum. Draw it at the two, and it's always negative, draw at at the successful retail trader, and it's positive.

Your basic point is fine - that wall street makes a lot of money from the investing public, and they are more likely to make the money in the average trade, and they push the trading tools they want individuals to use. But it simply isn't like a casino, since an individual can beat the house.

If you're saying the investing public as a whole can't beat the house, well, wow, that's not really news is it.

 

[DionysusToast]

Now you're changing the story. It's not a casino and the house can be beaten consistently by an individual investor. In a casino, it can't (except for special practices like card counting etc)

The story is not changing. Wall St always wins. That's the story right there & it wins billions of dollars which come directly from the investing public. It has more money that it knows what to do with.

It has an edge - the house edge.

This is a bit silly. Clearly everyone on the planet is ultimately responsible for the world's finances, but that's widening the debate too far. Besides, you said the investing public was the only source, which is clearly a much more restricted group than the public responsible for governments or corporations.

The sum game entirely depends on where you draw the line. Global finance is a positive sum game if global gdp went up. Draw it at the trading entity like I did, and it can be a positive sum game as I showed. Draw it at the three market participants involved in a trade, and it's exactly zero sum. Draw it at the two, and it's always negative, draw at at the successful retail trader, and it's positive.

Your basic point is fine - that wall street makes a lot of money from the investing public, and they are more likely to make the money in the average trade, and they push the trading tools they want individuals to use. But it simply isn't like a casino, since an individual can beat the house.

If you're saying the investing public as a whole can't beat the house, well, wow, that's not really news is it.

Actually - Wall St, web sites, vendors, book sellers all want you to think you can beat the house. The people telling you this failed to beat the house themselves.

The very place you go to learn how to beat the house is the place you will find people that failed to do it.

 

[timsk]

Actually - Wall St, web sites, vendors, book sellers all want you to think you can beat the house. The people telling you this failed to beat the house themselves.

The very place you go to learn how to beat the house is the place you will find people that failed to do it.

DT,
. . . if all these 'conventional' places are next to useless and little more than a trap to lure (wannabe) traders into a holding pen for the 'house' to then pick off at their leisure, what are the alternatives? Where do you suggest people go - and what should they do - to avoid this inevitable fate of being parted from their money? What would you recommend to an aspiring retail trader?
Tim

 

[DionysusToast]

Here's a good one - it's 9:03 EST right now.

See how there were a few big trades at the end of yesterday WITH price improvement. One through the NYSE & one through the NASDAQ.

Is it possible that the Floor Specialist had to take the other side of that NYSE trade ? That the NYSE had to be seller to match this buyer ?

Is it possible that the first trade for 100 at 8:21 was the floor specialist putting a trade through an ECN attempting to set the tone of the open in such a way that he'd be able to buy the shares back at a lower price ?

 

[DionysusToast]

DT,
. . . if all these 'conventional' places are next to useless and little more than a trap to lure (wannabe) traders into a holding pen for the 'house' to then pick off at their leisure, what are the alternatives? Where do you suggest people go - and what should they do - to avoid this inevitable fate of being parted from their money? What would you recommend to an aspiring retail trader?
Tim

Depends what you mean by 'aspiring trader'.

If you mean a guy with $2,000 with hopes of turning it into $1,000,000 and starting with position sizes way too big for his account. I'd advise buying lottery tickets.

If you mean a guy with $25,000. I'd advise buying a property.

If you mean a guy with a few properties and no skills with which to start their own business - I'd advise avoiding training.

For anyone left, I'd not advise anything - they obviously don't listen to me anyway

 

[zupcon]

What would you recommend to an aspiring retail trader?

What would you reccomend, and why ?

 

[robster970]

What would you reccomend, and why ?

Why would you recommend and when?

 

[timsk]

What would you reccomend, and why ?

Hi zup',
All the things that DT advises against, for two reasons:
1. I'm not aware of any other alternatives (excluding things like getting a position with a good IB or prop firm etc.)
2. I don't share DT's views that books, sites like T2W and (some) courses etc. are a waste of time.
How about you?
TIm.

 

[Black Swan]

Hi DionysusToast,
Broadly speaking, i agree with your 'in the round' view. However, Xeno's point - as I understand it - is that as individual retail traders, we have the potential to be the thorn in the thigh of the Wall St Casino and beat the 'house'. You're macro and Xeno is micro, so both of you are correct, I think. Be that as it may, having painted this somewhat gloomy picture, other than to suggest that we give up the game, I trust that you're going to provide some clear direction so that we can all avoid being fodder for the Wall St casino?

Tim.

Good section in Street Smarts covers this...I think DT has got the DTs... Is it me, or do I notice a pattern were so many of the *new* posters always arrive like Malificent from Snow White; giving it large, telling every one 'how it is' and how we're all "doing it wrong" to then do a flounce off a bit later on..?

 

[zupcon]

How about you?

I'm Broadly with DT. Its not that there's an absense of information, everything you need is probably out there, but noise is a big problem. In the complete absense of any information then anything that a book or forum, or system or mentor provides that can be evaluated, and gets people immersed in the process (even if its complete nonsense) is probably useful to a limited extent.

Unfortunately even the very best advice is context sensitve, and it can therefore be counter productive.

My advice to people would be that you need a full time committment. I've never met anyone who was able to achieve consistant profitability from part time study, although that doesnt mean it cant be done. I'd strongly advise against focussing on trade entries. I'd advise brushing up on basic statistics and probability theory. I'd advise getting some programming and data analysis skills. I'd advise people start by trading a system with a random entry, with an exit after X bars (where X is determined by personal psychology, tempered by market reality). I'd advise the retrospective analysis of all trades, and the development of appropriate metrics for the classification of "good" and "bad" trades. I'd advice gaining an understanding of the importance of trend. I'd advise gaining an understanding of basic TA, price action etc and how that might be used to modify reward and risk. I'd advise against reading anything writen after around 1930 ! I may even advise buying a few books and systems. I'd strongly advise people to keep a diary. I'd advise people to set realistic expecations.

I'd strongly advise against collabarative projects

Thats the problem though, my advice is possibly perfect for anyone who shares similar traits to me. I reckon I could put a training program together that would have them up and running within 18 months, and that they'd be totally self sufficient. The problem is that the majority of people dont share my traits, and therefore they wont benefit from the process. They need a different path, and possibly a path thats diametrically opposite what I would reccommend.

they tell me that there's more than one way to skin a cat

 

[DionysusToast]

Timsk - I'm not sure how many books you've read, sites you've visited or courses you've taken.
Could you perhaps provide us with an estimate of that ?
Can you now tell us which of those made you profitable ?

My opinion is that 'situational' investing on stocks is one of the few ways to become profitable. By that, I mean looking for real-world situations that are likely to see a move in an instrument/sector/industry.

I also think that you have to have a good grasp of the structure of the markets, in particular what a Market Maker/Specialist does, what the company owners do and how they get rewarded, what stock analysts are there for, what institutional ownership can do (what they hold, what they wont hold, when they may dump), what dividend payments do to price, how fund managers and brokers earn commissions etc. etc.

I believe that you need not seperate fundamentals and technicals. It's all just information you can use to build a picture of the current situation.

I believe you need to use discretion and not have some technical, rule-based entry. Your short MA may have crossed over your long MA but if the CEO has just been found to be best mates with Bernie Madoff, you might want to stay well away.

It appears that most people want a set of mechanical rules and fear trading that involves discretion. I think this is what causes most people to fail.

Of course - I am sure there are people that will disagree with all of this & still be profitable. For me though - it's the discretion that's the icing on the cake.

 

[DionysusToast]

Good section in Street Smarts covers this...I think DT has got the DTs... Is it me, or do I notice a pattern were so many of the *new* posters always arrive like Malificent from Snow White; giving it large, telling every one 'how it is' and how we're all "doing it wrong" to then do a flounce off a bit later on..?

Well - if you keep looking for repeatable patterns in everything, you are bound to find some evidence of repitition just through sheer luck

 

[squall321]

Good section in Street Smarts covers this...I think DT has got the DTs... Is it me, or do I notice a pattern were so many of the *new* posters always arrive like Malificent from Snow White; giving it large, telling every one 'how it is' and how we're all "doing it wrong" to then do a flounce off a bit later on..?

http://en.wikipedia.org/wiki/Dunning-Kruger_effect

 

[Black Swan]

http://en.wikipedia.org/wiki/Dunning-Kruger_effect

Thanks for that, great link, actions speak louder etc... Some good links on that wiki entry highly relevant to trading and the opinions constantly offered up; self serving bias, illusory superiority and my particular *favourite* imposter syndrome...