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Primary source of income: how many have made it?
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Primary source of income: how many have made it?

  #581 (permalink)
Jedi Master
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jstnbrg View Post
Playing the game right includes making a big allowance for fat tails events. On Black Monday 1987, options market makers at the CBOE who were short calls got killed when the premium of those calls exploded even though the market was plummeting, because implied volatility was expanding even more. Nassim Taleb in "Fooled by Randomness" claims he has made his living being long option premium in anticipation of fat tails events. The problem with the covered call or naked put strategy is that while you can make money most of the time, the very few times you lose money can still wipe you out. You need to look at the expected value of the strategy as a whole, which may be mathematically impossible (if the nature of the probability distribution of the underlying price moves is unknown/unknowable).

I prefer selling puts over calls because you get put the companies you choose.. That event certainly fits as a black swan which can wipe you out.

Same is true for trading. If you trade your size too big for your account, all it takes is one bad trade to give you a semi wipeout.. I've once lost $100k in a straddle on an FDA situation and at the time, I thought it was bullet proof. I bot OTM calls and hedged with OTM puts prior to the FDA announcement and calculated my max loss to be $20k and potential gain to be around $400-$500k.. What I didn't anticipate was that the announcement got postponed and the options expired worthless..

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  #582 (permalink)
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jstnbrg View Post
Playing the game right includes making a big allowance for fat tails events.......

......Black Monday did not really come out of the blue....

.....In another example, the market was already very soft prior to the flash crash. It seems that the ingredients would be a strong directional move prior to the fat tails event possibly complicated by poorly understood but widely used innovation in the marketplace.

These words have such weight. We tend to become comfortable with the recent past, we start making claims that we are ready for the next "unknown". This is such a fool's errand. I wonder if we really understand whether a black swan can be prepared for.

Even today I see on several new threads here, people making predictions; one new thread is about gold reaching XX dollars by June, another is the constant flow of garbage from Zerohedge everyday and on and on and about people making all sorts of predictions. Some even do it subconsciously (I still do it on some level everyday). I am disappointed that the size of activity on these sort of threads here at futures.io (formerly BMT) is not going down. This sort of mental focus dilutes my attention. I have to make a more conscious effort of staying away from these threads this year.

The only constant that I am reminded of each week in my trading, is that how often I was wrong about what price was going to do. It happens with regularity. Even when I thought I had discounted every possible outcome. Take driving - we can be good drivers for 40years and have no accidents. But each morning you could make a fatal error in judgement that could kill you. That's it. One random event and you are done, after 40years of "good" behaviour. Or worse - someone else could make that fatal error. How lucky do you feel now? All that history and one random act destroyed it all. Why is trading different? If you think about this seriously for a moment. No, really. Stop what you are doing right now - and think about it. How lucky do you feel?

It tells me two things -
One, I am idiot at predicting, and/or reading the market.
Or, I simply not yet in mental place of accepthing what truly random means.

However, my trading results, so far, withstand my daily idiocy. It is this constancy of uncertainty that is my focus of attention.

Sometimes, I can see why the market went into a supposed "moment of insanity". Sometimes not. That is the game.


Last edited by Deucalion; December 30th, 2011 at 09:16 PM. Reason: Added content
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  #583 (permalink)
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"The only constant that I am reminded of each week in my trading, is that how often I was wrong about what price was going to do. It happens with regularity. Even when I thought I had discounted every possible outcome. Take driving - we can be good drivers for 40years and have no accidents. But each morning you could make a fatal error in judgement that could kill you. That's it. One random event and you are done, after 40years of "good" behaviour. Or worse - someone else could make that fatal error. How lucky do you feel now? All that history and one random act destroyed it all. Why is trading different? If you think about this seriously for a moment. No, really. Stop what you are doing right now - and think about it. How lucky do you feel?"

As a trader, we don't predict but we do have to assume (hopefully with an edge that is real).. There are no certainties in the market of course, only probabilities and we have to go with it because its all we have. I love bold predictions because it puts some skin in the game and it won't take long to know who's full of "caca" all the time.. but it won't influence my investment decisions.. Good investors don't make decisions on another's bold prediction.. So yeah, most of it is garbage and some not so much but its hard to distinguish.. Some things are obvious like the world trade center conspiracy by Bush and etc.....

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  #584 (permalink)
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Jedi View Post

As a trader, we don't predict but we do have to assume (hopefully with an edge that is real).. There are no certainties in the market of course, only probabilities and we have to go with it because its all we have. I love bold predictions because it puts some skin in the game and it won't take long to know who's full of "caca" all the time.. but it won't influence my investment decisions.. Good investors don't make decisions on another's bold prediction.. So yeah, most of it is garbage and some not so much but its hard to distinguish.

Spoken like a true trader!



Jedi View Post

. . . Some things are obvious like the world trade center conspiracy by Bush and etc.....

Are you for real??

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  #585 (permalink)
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Jedi View Post
I prefer selling puts over calls because you get put the companies you choose.. That event certainly fits as a black swan which can wipe you out.

I was referring to covered calls, which are synthetic puts.

"You don't need a weatherman to know which way the wind blows..."
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  #586 (permalink)
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mmtrader4 View Post
Spoken like a true trader!




Are you for real??

I agree that was a bad analogy..

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  #587 (permalink)
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jstnbrg View Post
I was referring to covered calls, which are synthetic puts.

I don't really like covered calls as much as naked puts.. The R/R is less compelling.. When the market goes down, you're still exposed pretty good.. when the market goes up, your income reward is capped. With nakes puts, you get put the stocks of your choice (good companies) at good prices..

For example, if you sell AAPL 350 puts, when the market crash, your worst cased scenario is to buy AAPL@350. while collecting some premium. On this last sell off, AAPL held up pretty good and bounced nicely when the market bounced.. IF you sold AAPL 1-2 weeks b4 expiration after a sell off, your edge is pretty decent..

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  #588 (permalink)
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Agreed (Capatilist Rock)


vegasfoster View Post
First, there is a difference between making money from something and earning a living from something. I have rental properties that I make money from, but I earn a living from trading. Second, I would consider operating a trading website to be directly correlated to trading for a living. Third, regardless, things change. Fourth, I don't understand why people get pissed off or call Big Mike a sell out for possibly making money off this site. This is America, that's what we do here. Because the site is intended to help people he can never allow advertising? He can never charge a monthly fee? He had the ingenuity to create this site, he can do with it what he wants to. If he chooses not to, then he chooses not to, but people shouldn't be giving him crap for it either way.

What happened to us, now we get pissed off at people because they make money!

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  #589 (permalink)
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Gpotter View Post
What happened to us, now we get pissed off at people because they make money!


vegasfoster
Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).

First, there is a difference between making money from something and earning a living from something. I have rental properties that I make money from, but I earn a living from trading.

Second, I would consider operating a trading website to be directly correlated to trading for a living.

Third, regardless, things change. Fourth, I don't understand why people get pissed off or call Big Mike a sell out for possibly making money off this site. This is America, that's what we do here. Because the site is intended to help people he can never allow advertising? He can never charge a monthly fee? He had the ingenuity to create this site, he can do with it what he wants to. If he chooses not to, then he chooses not to, but people shouldn't be giving him crap for it either way.
-------------------

Second, I would consider operating a trading website to be directly correlated to trading for a living.

i do not think many traders here or anywhere else could agree with what you stated above.

operating a website is in no way similar to or directly correlated to trading for a living. my friend, the two are miles and miles apart.

most trading websites so abundant nowadays on the net are at best but parasites feeding on the little known persons who are anxious to learn how to trade quickly and profitably. inasmuch as, i was told once, that this is not the proper thread to discuss the atrocity of numerous trading schools and websites, i shall not elaborate further. if anyone wishes to know more about numerous warnings about most trading schools and their inviting websites and so on, can look further into vendors thread, where discussion of this sort entails more specificities and details, K?

NO, trading for a living differs significantly from trading school operators. just for example, i am attaching some pix of what one operator of a trading school tried to entice me into joining, sent me his verified statement of performance by one of his newly minted head of the class traders. an experienced trader would never accept such as prove of trading performance, but many newbies would not question such devious attempt to entice.

well, look at each attachment in sequence and decide for oneself, what is or is not acceptable, K?

happy and profitable trading everyone.
----------------------
EMAIL 01:

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EMAIL 02:

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Last edited by nakachalet; February 16th, 2012 at 10:59 PM.
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  #590 (permalink)
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re: email 01,02 and pic

There's no execution information, nor even mention of what type of instrument traded. Win ratio is perfect, but # of trades is few compared to the sample time. imo, not quite acceptable for a seasoned trading student nor a good enough statistical sample.


Last edited by Cloudy; February 17th, 2012 at 02:54 AM.
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