Wall Street = Casino. Minus Sum Game.

[DionysusToast]

I see - so by stating the obvious, that the massive financial services industry (including this site) exists to suck money from investors and NOT to give them a return, I am somehow attempting to make myself superior ?

As for 'actions speak louder' - what actions can you actually take on a forum other than actually posting ?

Let's consider another industry - the Bodybuilding industry.

- Magazines telling people how to get huuuuge with the latest workout/super supplement
- Crappy ebooks & courses on how to get the ripped bod you always wanted
- A whole industry selling products that don't work - pills, powders & creams that do nothing
- Internet forums attracting skinny little twinks and selling advertising space, with lots of skinny twinks posing as experts advising other skinny twinks.
- conferences, training courses, personal trainers

All of this & very rarely do you hear the straightforward fact that the huge guy on stage at the Mr O takes a sh1tload of drugs and is blessed with a good genetic response to those drugs.

Why don't we hear that? Because the magazines, the supplement companies, the personal trainers, the ebook sellers and the forums wouldn't make a cent if everyone realised what was actually going on.

Are any parallels evident here?

 

[DionysusToast]

BTW - at this point, it may be wise to point out that a vendor was 99% responsible for making me profitable...

The other 1% was me listening & practising.

 

[timsk]

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 ??

Hi DT,
I've paid for various courses, some good and some bad. I won't go into detail as I've posted my views on the subject many times and at great length and don't want to repeat myself here. Websites are too numerous to mention. However, there's only ever been one that I look at most days - and that's T2W (before I started working here). I concluded years ago that my best bet was to get to know one site and its members really well and, gradually, try to work out who walks the walk, as opposed to just talking the talk. I understand just how difficult this task is, especially for newbies. This is part of my motivation to do the job I'm doing here, to help new members filter the massive quantities of threads and seperate the wheat from the chaff. As for books, a similar story. My 'library' has abround 45 titles, most (but not all) of the big name titles are included.

Can you now tell us which of those made you profitable?

I'm not making any claims of consistent profitability which is (or will be), I presume, your point. I had a period of profitability in the early days and it went to my head and I blew up, fairly spectacularly. I then went back to 'school', reading and learning what I could from the sources mentioned above. This resulted in me trading full time for a year in 2008. It ended in me being just the right side of B/E before commissions and the wrong side of it after commissions, (some USD $2,740.00). However, I got lucky with the USD/GBP rate and I ended the year net positive. Last year, I didn't trade at all and went back to square one. This year, I'm starting over, so it's a little too soon to tell how successful - or otherwise - I'll be.

Your point, no doubt, is that T2W, the courses and the books haven't got me very far. I would disagree. I maintain that it's through the knowledge that I've gained from them that I'm still in the game. I believe that I'll be able to trade for a long time and it will cost me less than most people spend on their hobbies. Not that I think of trading as a hobby you understand! Without them, I would have either given up or blown my account long ago. The other point is, I am just one trader. Even if I blow my entire account tomorrow, it doesn't invalidate this place or the books or the courses. We know this because there are people who have gone down the same path as me who are now making consistent gains from their trading.

I agree with most of the other points in your post and that's among the reasons I've switched from trading U.S. stocks to the YM e-mini futures contract. Many of the issues you mention are removed in an instant!
Tim.

 

[DionysusToast]

I understand what you are saying Timsk - one unprofitable trader learning from books/internet does not prove that you can't learn to trade from books/internet.

The thing is - where are all the people who did get profitable that way ? I know I didn't. I know that the advice from those who helped me was not in any of the 50 or so books I read.

I can reverse the logic of trading special situations.

Lets say one of the situations occurs where the outcome is tradeable. A pure TA guy would not trade on that information because it is not yet built into the price. On the other hand, a pure TA guy may be in a trade and blissfully unware that something is happening that will impact the price of the instrument he is trading. How can a TA purist ignore such things ?

In fact, I would say that a TA purist should be looking or these things when analysing why a trade failed. Let's say you are long a stock and it gaps down through your stop. As a TA purist would it be right to just write it off OR would the right thing be to look at why it gapped down so much and learn from it ?

This is why I think pure TA or pure FA is a dangerous thing to do. You should assimilate all information regardless of how it is categorised in order to make the best decision.

Earnings season and dividend dates for stocks are some of the most obvious things that come to mind. They can blow a pure TA trade out of the water.

Despite this, there is a pure TA mantra with very little evidence that pure TA can make you consistent profits. In fact - if you take someone making money from pure TA and ask them why they pass on certain setups that look good - you'll probably find that discretion is actually a large part of their method.

 

[timsk]

Hi DT,
It sounds to me as if you've been around the block a few times and, like anyone who's been trading for more that five minutes, has found a bunch of things that don't work. For you. But, that's not to say they don't work for everyone else. Although you haven't said it explicitly, you sound like you're of the school of thought that says unless a trader can prove to your 100% satisfaction that they're profitable (e.g. by providing audited and verified broker statements) - then you assume that they're not. I guess I'm more trusting than you and will accept a much lower threshold of evidence of a trader's proficiency!

It's horses for courses at the end of the day. And, although I subscribe to the basic premise of your thread, I'm much more aligned to Xeno's school of thought that says the little guy can beat Wall St at it's own game. I've met enough people on here who have proved to me that it's entirely possible, using little more than pretty basic TA, trend and S&R etc. Examples? Off the top of my head: Newtron Bomb, Mr. Charts, trader_dante, Naz, bbmac and Captain Currency. And then there's the pro's who grace us with their presence who, doubtless, use more sophisticated tools, such as TWI and GammerJammer.

In spite of all that the pro's have going for them, the veeeeery deep pockets, state of the art kit and Mensa intellects etc., they can still make a complete pigs ear of things occasionally. Last year's banking fiasco is proof of that. While it cost us all billions, it nonetheless puts a wry smile on the face of minnows like me. Wall St isn't infallible. Beating it isn't easy, it certainly isn't get rich quick, but I'm totally convinced that it is very possible.
Tim.

 

[DionysusToast]

Look at Dante's most recent thread.

He details in there how his methods don't work on some markets. He had decided not to trade those markets - that's the discretionary part making the final decision.

I think you will find Mr Charts does the same thing.

I think Captain Currency spends his time sending out spam emails to sell his ebooks.

In my opinion - it's the discretion that makes the $$$ and that is what everyone that isn't making money does not want to hear.

It is, after all, much easier to have a cookie cutter, mechanical approach and much more daunting to look at a situation and try to read meaning into it. This is why most people are being sold a cookie cutter approach.

In any case - JPM made over $2bn this quarter.

The financial services industry is a casino and until Wall St has a losing quarter (where the govt doesn't bail them out), I can't see how anyone can say that the odds are not tipped in their favour.

 

[timsk]

DT,
I don't disagree with you about the discretionary aspect at all. For me, that means knowing when to obey one's indicators and when to ignore them. By indicators, I don't just mean EMA's and Bolly Bands etc., I mean any tool or analysis technique which helps you determine which direction to trade in and, indeed, whether to take a trade at all. The problem of course, is that this is an unquantifiable variable. So, if one's trading goes off piste, it will be next to impossible to identify where the mistakes were made and what needs to be done to put them right. For this reason, talking personally, while I want to include a discretionary element in my trading, I want to keep it pretty small.

Like you, I noted trader_dante's comments about dropping unprofitable markets. I had the same thing when trading stocks in 2008. A couple of stocks I did really well on compared to some others that I did very badly on. No rhyme or reason for it that I could see. In fact, the one I did best on (POT) was a lot more erratic, often with a wide spread, compared to the one I did badly on (AAPL). The exact opposite of what one might expect. Anyway, I'm happy for you that you've found your niche and are doing well.

Btw, Captain Currency's e-book is free!

Tim.

 

[D70]

Look at Dante's most recent thread.

He details in there how his methods don't work on some markets. He had decided not to trade those markets - that's the discretionary part making the final decision.

I think you will find Mr Charts does the same thing.

I think Captain Currency spends his time sending out spam emails to sell his ebooks.

In my opinion - it's the discretion that makes the $$$ and that is what everyone that isn't making money does not want to hear.

It is, after all, much easier to have a cookie cutter, mechanical approach and much more daunting to look at a situation and try to read meaning into it. This is why most people are being sold a cookie cutter approach.

In any case - JPM made over $2bn this quarter.

The financial services industry is a casino and until Wall St has a losing quarter (where the govt doesn't bail them out), I can't see how anyone can say that the odds are not tipped in their favour.

Hi DionysusToast,
Regarding your posts and thoughts. I have a slightly different angle on it that doesnt often come up when people talk about markets and making a profit.

Most people are looking for a "strategy" or "system" or my least favourite term, an "edge".

But I think people should look to "provide a service", only then will you be likely to make the minus sum game into a positive sum game (in my humble opinion).

So, for example, spreadbetting firms provide a service, and take 2 pips (or whatever per trade), thanks very much, profit. Banks run a similar setup. They are middle men in the most part and make a handsome profit providing that service.

So how do traders provide a service?

Well, some traders buy when things are priced incorrectly (the warren buffett's of this world take the long term, swing traders the short term). Some traders provide liquidity (scalpers)... some traders trap animals (bears / bulls), some traders provide momentum (big swinging diks)... etc etc. i am definitely of the thinking that you have to provide a service. Otherwise you are just another guy plugging dollars into the banks / spreadbetters / profitable traders pockets.

So question to ask yourself.... what service does my trading provide the market?

 

[DionysusToast]

Timsk - Captain Currencies ebook is a fluff piece created to collect your email addy & spam you the sales pitch for the ebook with the REAL secrets in it (not to mention the mentorships).

As for keeping the discretionary/fundamental part small - I think if you expanded this, you would have more succesful trades.

Events move the markets, not technicals.

A Goldman Sachs upgrade will move price a lot more than any whizz bang MACD, Stochastics, pin bar or support and resistance ever will.

Of course, Wall St will benefir from anyone who refuses to believe this as the TA mantra is all part of the house edge.

 

[DionysusToast]

Hi DionysusToast,
Regarding your posts and thoughts. I have a slightly different angle on it that doesnt often come up when people talk about markets and making a profit.

Most people are looking for a "strategy" or "system" or my least favourite term, an "edge".

But I think people should look to "provide a service", only then will you be likely to make the minus sum game into a positive sum game (in my humble opinion).

So, for example, spreadbetting firms provide a service, and take 2 pips (or whatever per trade), thanks very much, profit. Banks run a similar setup. They are middle men in the most part and make a handsome profit providing that service.

So how do traders provide a service?

Well, some traders buy when things are priced incorrectly (the warren buffett's of this world take the long term, swing traders the short term). Some traders provide liquidity (scalpers)... some traders trap animals (bears / bulls), some traders provide momentum (big swinging diks)... etc etc. i am definitely of the thinking that you have to provide a service. Otherwise you are just another guy plugging dollars into the banks / spreadbetters / profitable traders pockets.

So question to ask yourself.... what service does my trading provide the market?

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.

 

[counter_violent]

Events move the markets, not technicals.

I can quite safely say without any shaddow of a doubt that these "events" do show up technically.
The problem is sorting the meaningful "events" from the noise.
Once this is achieved then the game is easy.

 

[DionysusToast]

I can quite safely say without any shaddow of a doubt that these "events" do show up technically.
The problem is sorting the meaningful "events" from the noise.
Once this is achieved then the game is easy.

Events generally show up on the chart after the market has reacted to them.

For instance, if you know an institution is dumping something because carrying it is against their rules, the chart will show you a down move. What the chart won't show you is when this has led to something being pushed well below it's true value, especially if this instrument is new.

In my opinion, nothing in the price action will tell you that a price rise is due.

Anyway - Wall St still skims off pennies off all of our trades, book sellers still profit from selling books, web sites still profit from advertising, fund managers still get guaranteed percentages of capital, system sellers still get money from selling systems.

If trading were so profitable - why don't the above people focus on trading instead of all these other activities that generate guaranteed cash ?

Far more money is pulled out by the sum of these companies/individuals than is taken back out by the investors that put it there in the first place.

 

[montmorencyt2w]

I think Captain Currency spends his time sending out spam emails to sell his ebooks.

More than a little unfair I think. As Tim has pointed out, his most famous e-book (in the context of T2W anyway), is free. I don't know about any others.

Do you have any evidence of these spam emails? (Or is this some sort of standing joke between you two...?).

 

[DionysusToast]

More than a little unfair I think. As Tim has pointed out, his most famous e-book (in the context of T2W anyway), is free. I don't know about any others.

Do you have any evidence of these spam emails? (Or is this some sort of standing joke between you two...?).

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.

 

[Xeno]

Events move the markets, not technicals.

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.

 

[montmorencyt2w]

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.

 

[montmorencyt2w]

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).

 

[DionysusToast]

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.

 

[Xeno]

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.

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...

 

[Trader333]

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.


Paul