what do you think please

[matty199]

i left a thread a while ago about my mate who has done very well srpead betting on the dow at £20 per point and his method for trading is just news and most importantly gut feeling he turned £5000 into about £8300 in month 1 with about 25 trades now his pot is £14500 after about 40 trades,I know this person very well and know all he has told me is true as i have seen his trades ect,.
At first i thought its luck and all that left messages thought the same.Do you still fell this guy is lucky or good
The reason i ask is i have looked at signals and systems with mixed results.
Any advice appreciated

 

[Trader333]

See how he has performed after a full year of doing this and then make the assessment. It is a little too early to say one way or the other in my view.


Paul

 

[rossored]

I suspect there is a fair amount of luck, but at the same time well done to him for achieving these kind of results.

I too had a system that I ran on the Dow which made a handsome profit for some time, using similar amounts as your friend. Then one day I managed to lose £1500 in an hour and a half, and that proved to be somewhat sobering - similar results followed, after which I decided to learn about money management. Your friend would be well advised to do the same (assuming he has not done so already) before his luck runs out. These kind of win/loss ratios simply do not last.

If, however, he has some kind of 'system' - climb into bed with him.

Oh, and before anyone asks, no I'm not planning to divulge what my 'system' was, so please dont ask.

 

[matty199]

what he does

he has no set stop loss as he watches full time,yes he does risk a large % of capital and has not got a high tech system but when i put that to him he replies "why do i need a system when what i have works very well" not a lot i can say to that, He does take loses when he feels hes got it wrong but as i say you just cant argue with his figures

Well, this looks at first sight like a high risk strategy. You don't go into a lot of detail about how the money was made, but lets suppose for the sake of illustration that his risk was 100 points...then the loss on a bad trade would be £2000 or 40% of his initial capital. Even a 50 point risk would lose a grand in a bad trade.

Many traders will not risk more than 1 or 2 % of capital on each trade, and I am guessing your mate risked much more than this.

You wouldn't have to be wrong very often to get completely wiped out doing this. 3 or 4 consecutive losers and you'd be out of the game.

So he may be brilliant, but unless he is fantastic at reading the signs ( and even then...) the risk seems very high. No-one is right all the time...

 

[matty199]

i agree

i agree but can you be this lucky? over so many trades he only made a small loss of about £500 three times all the rest are winners between £100-£1500

See how he has performed after a full year of doing this and then make the assessment. It is a little too early to say one way or the other in my view.


Paul

 

[Trader333]

matty,

....i agree but can you be this lucky?....

Yes you can or you may find that market conditions have just suited him. There are many examples of people who have had this kind of performance on a short term basis which has not lasted.

You really do need to give it a longer time in my view.


Paul

 

[LION63]

Good luck to the chap. Time will tell if his trading strategy stands up or not. Most traders are chartists and they find it hard to accept that there are other methods that work and in some cases yield higher returns. When you break it down, you are all using the same charts; looking at the same resistance and support levels and have trades massed around the same levels. It thus stands to reason that performance will be average and only a few will exceed this.

 

[Dave1971]

i agree but can you be this lucky? over so many trades he only made a small loss of about £500 three times all the rest are winners between £100-£1500

Been there.... Three years ago I turned 3 zero's into 4 zero's very quickly and the next couple of big trades were going to take me to 5 zero's. Guess what happened next. My greed bit me very hard and I lost the lot, 10's of 000's in three days.

Well done to your friend for doing so well so far, but as others have said I would strongly advise him to cut back on his risk and employ some money management. He has built a decent pot and would kick himself if he blew it.

Dave