Honestly I think Nassim's arguments here don't convince me of his thesis with regard to successful traders. A successful money manager who's attempting to achieve relative returns is not "beating" the market. Discretionary traders who achieve much higher rates of return are, in a sense, "beating" the market. No one can convince me that skill does not play a role in trading and so Nassim's argument is logically similar to (if not equivalent) to saying that the best tennis players in the world are simply lucky and that the ones that never make it out of their hometown are just as good but unlucky. I don't buy it.
Seek freedom and become captive of your desires. Seek discipline and find your liberty. - Frank Herbert
get that from Taleb...from any of his books. Is that his argument or is someone stating it that way for him. I do have a like to numerous excellent academic papers including many by NNT. Ill try to post it here
link in some sense a scholarly repository for all kinds of articles financal and economic. Here is the thing. I've consistently reccomended to guys a basic reading list of mostly non trading books that will help them with their understanding and trading. Almost every time the advice is ignored. I cant tell why and I've stopped trying. But of course if I had code or settings to share those would be greatly appreciated..lol.
Bro, no offense but that is not what I would call a primary source academic resource. There is not even a publishing authority listed. None of that can be considered as anything but anecdotal...although I do think some of it is correct...maybe due to NNT's idea about randomness...lol
Last edited by wldman; November 7th, 2011 at 04:56 PM.
Reason: expand response
I like very much the pages 5 and 7, I beleive many of the discussions on this thread are subjective. Altough Beeing a successful trader is a complex of causes/effects, there are many different ways of beeing succesful based on the traders' personality. Being a succesful trader is a relative term, as we cannot predict our future, succesful and broke are very close concepts.
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agreed 100%. I review every trade every day based on a metric. When I see "issues" develop there is grounds to change the system...but most of the time it is an idiort thing on my part ...not a series and not a pattern of weakness in method or execution.
Page 7... not so much...mostly because I do not know the source or the purpose for the research...but by defenition it is specific and clear what someone is that engages in the same behavior and expects a different result..so if you could accuratly identify all those things as issues that go wrong you would eliminate them all, right. Besides most of those are "idiot things"
Great post, and i believe straight to the point.
I tend to disagree with a strike of luck points and arguments around those things. I would like to add some bits, maybe repeating someone else words but here it goes:
1) Accept that you do need method or system to trade. Comes to the fact that only way in statistical chaos such as markets to achieve positive results is consistency.
2) Develop the method with understanding of adaptivity. Extremely important, as markets do change every day and participants in statistical pool change every day, if your predictions are to be more correct than false, they need to have adaptive component in them. Use forward testing approach for intraday timeframes, very imporatant. The approach i am taking in developing a method/system is this:
See the potential set-up that might be useful and good
Note down all conditions that i can recognize
Develop simple strategy and perform back testing. If back testing results are well below my expectations drop the strategy. My guide on the back testing results for a valid strategy that in last 12 months had better than 40% accuracy and profit factor of 1.2 and more.
Trade the method for 2-3 months and fine tune the criteria, get at least accuracy of 55%, profit factor of 2 at least.
Start trading it for real.
3) Accept that no matter what losses are part of your day job. There is no one, even those masters mentioned in quoted post that always have positive trades. Sooner you learn how to effectively handle the loss you will become better trader. Understand that only way you can handle the loss if that loss is acceptable to you and monies you loose don't mean much in overall schema things. (Have a strong risk management plan and do not step away from it, by the way this is core component of you trading method called position sizing and risk management) Simple thing if you ask your self a question while in the trade which is red, can you be more wrong, answer is always YES YOU CAN.
4) Learn patience to identify the market for your method, trading in the conditions that do not suit your method is suicide. And i know from personal experience that on the begging we have tendencies of trading all the time no matter of the market.
5) Learn that you and market must be as 'one'. Market conditions must align with your method, but YOU must align with the market and be ready to trade. That means forget everything around you, wife, husband, kids, girlfriend, cars everything and focus on trading, make sure that market is at front of your thoughts. Cus if you are tired, sick or stressed you will not be able to execute required decisions at the right time, this WILL cause losses. All basic mistakes come into play afterwords such as chasing, revenge and so on.
6) Accept that only way to make money in the markets is to preserve it. The way one of the trainers from Optionetics explained to me on the first course i ever did was, every trade you enter must be the best trade of your life, if it is not, you will not be able to manage that trade adequately. So if you ask me how you preserve capital when you risking it every time you enter into the trade is exactly this way. Make sure that each trade is trade of your life, all aligns all signals are perfect including the gut one too.
7) DO NOT EVER FOCUS on what you COULD HAVE MADE, after the fact everyone is a wizard, those hills and bottoms look perfect. You will never achieve that. Focus on what you do make and make sure you are happy with the net outcome of that. YOU MUST BE HAPPY TRADING, if your not, you will find that you are constantly exhausted and can not trade properly.
8) Accept that day trading is a JOB. Nothing less nothing more, you must be good at it, you must be disciplined and focused, you are in business of making money, no one will come back and tell you, 'Ohhh sorry i took your money, her you go, i'll give it to you back cus you are such a sweet thing.'. You are SELF-EMPLOYED, you are RUNNING THE BUSINESS, you are in the business of money, behave that way and understand the seriousness of the job. Just cus might look easy to you it aint.
9) There is no silver bullet, any shortcut in developing above skills and methods will only cost you more time and more money. No one can predict the markets all the time. If anyone could do that, markets would seas to exist. There is no magic software or indicator with arrows that will make you money unconditionally and do your job for you.
I just get upset when people ask same question time after time, such as this one, is it possible, it is, understand that this is job, and a hard one, probably the hardest thing any of you will ever do in your life, there is not many jobs out there that require you to process large amount of data very 5 or 15 minutes that directly impact your pocket, and there is no UNDO button either.
It can be done, some people make 100K + in a day, some people make 2k + in a day and they all happy. Create you business, do it simple, listen and learn from experienced guys, and understand that commitment is required and this is not a joke and you will make it too
Markets are logical and
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