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Profit Guilt
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Profit Guilt

  #61 (permalink)
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tigertrader View Post
the lone trader does his analysis and doesn't worry about being taken because he is just one guy trying to make a few trades. and then his setup happens and he takes his position…and the market does exactly the thing that will cause him the biggest loss. how can this be? he thinks. He is just one clown trying to clip a few ticks or points, here and there, not worthy of being a target. But he starts to suspect that maybe he is just one of a thousand clowns, or ten thousand, who are all doing exactly the same analysis at precisely the same time and taking the same positions, which are exploited by a better algo in a co-located box somewhere with huge backing. this "thousandth clown theory" starts to gnaw at him, makes him doubt - quoted from vic tor niederhoffer

a trader puts on a bond position only to learn later that day that the minutes of the fomc were released secretly to 100 politicians and bank officials, on a "need-to-know basis, and they were acting on it 10 hours before the release.

you're trade opm and you are long up the wazoo, and the market is against you. the floor governors at the cme are well aware of this fact, and fade your position, right before they raise margins, and force you out of your position.

the market exacts a toll from your every action. you take less risk, there is a premium you must pay to the market, in reduced profits. the fact that you can eerily predict your average return and that your returns are not "lumpy" implies that very scenario. you are paying a premium to the market to ensure that your profits conform to an average, at the expense of potential larger profits.

you have no control over the market environment, only yourself. but, to a great degree the market does exert an influence over the way you approach and trade it.

A Victor Niederhoffer quote… thanks for the laugh! I find it very ironic that you chose to lecture me on humility in your first post and then use a quote from quite possibly the most pompous ass to ever place a trade. A man who went on full tilt, trading in areas where he himself admitted he had no reason being, causing him to blow up not once but twice in less than a decade and losing over $100 million of OPM the first time… and we don’t really know how much the second time because he only managed “off shore clients”. Plus the quote you selected is the best! Do you think he donned a rainbow wig, red nose and big floppy shoes when he said it? But enough about Victor “everyone who doesn’t think/trade like me is a clown” Niederhoffer… let’s get to the real point; your musings on my trading and risk management.

Exactly where/when did I say I don’t have lumpy returns? If you’ll take the time to read what I actually wrote you’ll see I said the numbers were eerily correct AFTER 8 years, not DURING the 8 years. I would think referring to the law of large numbers would make that clear, but to make it even easier for you to understand it means having 8 years worth of live trading data (all at once) to compare to the original models’ 30 year historical data set. I never said my returns were smooth. They are lumpy as hell. That's why most people can't do what I do... not because I'm some sort of market genius but because I can stand the pain and believe in my methods.

Good job inferring what I’m probably doing wrong to fit your viewpoint though. Should I call your comments the most specious argument I’ve ever read and then advise you to check your ego at the door? Not just because I don’t agree with an analogy but because they really are flat out wrong?

Look… I know I’ve only been trading for a decade and I haven’t had the opportunity to really prove myself by losing who knows how many millions or billions of OPM, but maybe there’s the most minuscule chance you should consider some friendly advice from me.

The next time you decide to “help” someone, please take the time to comprehend what they actually said, or at least ask for clarification instead of “inferring” what they are “implying”. I prefer to call it what it actually is, rushing to judgment without the facts. It’s probably never the best idea to use crystal balls, tea leaves or chicken bones to conjure up your images. Perhaps you should spend some time reflecting on your need to do this. (Even a big ol’ jungle cat market veteran like yourself can still develop and learn, can’t he?).

Since you like quotes from money managers here's one of my favorites:

It’s OK to be wrong… it’s not OK to stay wrong. – Barry Ritholtz

Jim

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  #62 (permalink)
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JerseyJim View Post
Look… I know I’ve only been trading for a decade and I haven’t had the opportunity to really prove myself by losing who knows how many millions or billions of OPM, but maybe there’s the most minuscule chance you should consider some friendly advice from me.

Gary has been trading for 40 years, and routinely makes more in a few weeks (and chronicles it here on this forum, as it happens--see his $250K spoos trade earlier this year for an example) than most decent traders do in a year.

You can call vic whatever you like, but aren't you a little above your pay grade to be insulting anyone who has been as successful as vic, despite having blown up more than once? I mean, if you make as much money as he did, and can then not blow up, then you'd have room to point fingers. But I doubt you've made anywhere near what he did, or traded anywhere near the size that he trades, even now, as an "old guy." Isn't that worth some level of respect, regardless of other factors, at the very least to not call someone who has no idea who you even are, a "pompous ass"?

Isn't that a bit like a pinch hitter who consistently has 40 ABs a year, with a .280 average, calling out an all star who plays every day and routinely hits .300, but has a few down years, hitting .250, a "has been," when he is a "never was"?

Do you realize that you're insulting people who were actually meaningfully big players in their heyday (Gary has turned over a couple hundred million daily in stocks back when he wasn't such an old fogey, now he only leverages a few million in notional per day), when you're calling yourself "the house," despite your presence in the market not being a significant factor in any way?

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  #63 (permalink)
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josh View Post
Gary has been trading for 40 years, and routinely makes more in a few weeks (and chronicles it here on this forum, as it happens--see his $250K spoos trade earlier this year for an example) than most decent traders do in a year.

You can call vic whatever you like, but aren't you a little above your pay grade to be insulting anyone who has been as successful as vic, despite having blown up more than once? I mean, if you make as much money as he did, and can then not blow up, then you'd have room to point fingers. But I doubt you've made anywhere near what he did, or traded anywhere near the size that he trades, even now, as an "old guy." Isn't that worth some level of respect, regardless of other factors, at the very least to not call someone who has no idea who you even are, a "pompous ass"?

Isn't that a bit like a pinch hitter who consistently has 40 ABs a year, with a .280 average, calling out an all star who plays every day and routinely hits .300, but has a few down years, hitting .250, a "has been," when he is a "never was"?

Do you realize that you're insulting people who were actually meaningfully big players in their heyday (Gary has turned over a couple hundred million daily in stocks back when he wasn't such an old fogey, now he only leverages a few million in notional per day), when you're calling yourself "the house," despite your presence in the market not being a significant factor in any way?

Vic and Gary have lost more then some of us will ever see...

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  #64 (permalink)
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@JerseyJim,

I see you list your favorite instrument as "forex"....

Still, before you start insulting others, why don't you show us your real-time trades (no delay BS) as well as share your wisdom on the macro view of markets -- and show us just how much better you are than the guy you insult. @tigertrader does that nearly every day for years. Whereas you've been here for all of five minutes. If you want to make it to ten minutes, then you'll need an attitude adjustment.

Mike

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  #65 (permalink)
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Big Mike View Post
I would say the Exchanges are the house.

Mike

The thread has now shifted from this topic a bit (perhaps I should let it lie...), but I just noticed your comment, Mike, and I completely agree (here's the house).

The entity that controls the play & sets the rules of any game should be considered the house.

It sounds like some are erroneously confusing the house with the house edge that casinos build into many of their games.

As the two aren't synonymous, a lone trader suggesting that he/she is the house is a bit ridiculous.

Of course, all of this talk is just anecdotal crap.

**Edit: An argument could perhaps be made for the CFTC / SEC, as well (something to think about, at least).

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  #66 (permalink)
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zander931 View Post
The thread has now shifted from this topic a bit (perhaps I should let it lie...), but I just noticed your comment, Mike, and I completely agree (here's the house).

The entity that controls the play & sets the rules of any game should be considered the house.

It sounds like some are erroneously confusing the house with the house edge that casinos build into many of their games.

As the two aren't synonymous, a lone trader suggesting that he/she is the house is a bit ridiculous.

Of course, all of this talk is just anecdotal crap.

**Edit: An argument could perhaps be made for the CFTC / SEC, as well (something to think about, at least).

exactly alex,

the house makes the rules, sets the odds to it's own advantage, and controls the distribution of returns of the game and the game's players; and, if, by some wrinkle of skill or fate the gambler wins consistently, the house will summarily eject him from the game as a cheat. the player has no control over the game itself, nor any of it's players other than himself, and does not control the distribution of returns of the game. a trader only has full control over his own destiny, but must still pay a vig to the market; real work involves friction.

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  #67 (permalink)
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zander931 View Post
The thread has now shifted from this topic a bit (perhaps I should let it lie...), but I just noticed your comment, Mike, and I completely agree (here's the house).

The entity that controls the play & sets the rules of any game should be considered the house.

It sounds like some are erroneously confusing the house with the house edge that casinos build into many of their games.

As the two aren't synonymous, a lone trader suggesting that he/she is the house is a bit ridiculous.

Of course, all of this talk is just anecdotal crap.

**Edit: An argument could perhaps be made for the CFTC / SEC, as well (something to think about, at least).

The OP topic was too stupid to continue... so it morphed into something worth talking about...

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  #68 (permalink)
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JerseyJim View Post
A Victor Niederhoffer quote… thanks for the laugh! I find it very ironic that you chose to lecture me on humility in your first post and then use a quote from quite possibly the most pompous ass to ever place a trade. A man who went on full tilt, trading in areas where he himself admitted he had no reason being, causing him to blow up not once but twice in less than a decade and losing over $100 million of OPM the first time… and we don’t really know how much the second time because he only managed “off shore clients”. Plus the quote you selected is the best! Do you think he donned a rainbow wig, red nose and big floppy shoes when he said it? But enough about Victor “everyone who doesn’t think/trade like me is a clown” Niederhoffer… let’s get to the real point; your musings on my trading and risk management.
Jim

what i don't find ironic, but completely predictable instead, is that in lieu of using logic in your argument, you are instead, resorting to ad hominem attacks against a person you have never met, and who is not there to defend himself. victor is probably the most humble, self-effacing, and gracious human beings i have ever met. he is also one of the most successful and brilliant individuals i know. so, please allow me to return the favor in kind, which i don't believe anybody who has read your posts would find fault with; and in your case, there is no need to qualify the statement with "quite possibly"; because, it is definitely YOU, who is the most pompous ass to ever place a trade.


Last edited by tigertrader; March 31st, 2015 at 10:04 PM.
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Big Mike View Post
I would say the Exchanges are the house.

Mike


FORTUNE -- Something about the Hunt brothers just doesn't inspire public sympathy. After taking a financial drubbing in their recent struggle to hang on to $4 billion worth of silver, both Nelson Bunker and brother William Herbert cried foul before congressional committees. They charged the New York Commodity Exchange's Board of Governors with "manipulative actions" that had crippled them. Stoically, both Congress and public managed to suppress any tiny quiver of compassion.
The Hunts' accusations were nevertheless quite pertinent and accurate. The chummy board members of the Comex -- as the New York exchange is called -- make up a club that had a powerful, personal, and collective interest in sending the price of silver into a tumble. They are still trying hard to mask their role as double agents-as governors and traders; rulers and ruled-in the seething Comex arena. All through silver's upward flight, they had stubbornly clung to their own short positions, binding them to being sellers at fixed future prices; and the carrying charges had come close to ruining them. But they found their remedy-by putting on their governors' robes in the exchange boardroom, switching regulations on their own trading, and neatly turning a misbegotten gamble into an assured success.


http://www.usatoday.com/story/money/business/2014/04/14/high-frequency-trading-cme-lawsuit/7708019/

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