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Once again... that is your opinion, Sir... to which you are entiltled ... as well as the right to express it on a discussion board ... however that does not negate the fact that it is your opinion... IMHO
However, your analogy about flying is flawed. Laws of aerodynamics are substantiated fact.
Regards,
TMFT
I'm just a simple man trading a simple plan.
My daddy always said, "Every day above ground is a good day!"
This won't happens easily if you use market's money in a correct way. Once you run out of profit, you begin to start conservative. You only become aggresive when you got profit.
Oh, oh, which one are you referring to? Did my previous statement state that? I did say market's money is only for master class trader, didn't I? which implies the user has to be profitable in the first place.
That depends who is the shooter. According to Van Tharp, in his book, he states that there is one of his clients whose purpose is to make as much money no matter what the cost is. He also states that the trader starts $100k every year. I guess, It now depends what is the trader's objectives. Sometimes when the trader is already too rich, they no longer for living, but they trade for challenge.
I guess, it's unfair to assume every trader to have same objectives as yourselves, isn't it?
Trading using someone else money and trading using yourown money is very different. Especially when you use market's money, it's becoming very troublesome. As we already know, higher reward is always associated with higher risk (hence drawdown).
When you tell client, you have grown their money from 100k to 1 million, and you later on turn it to 800k, according to you, you just make 700k for them, but the way they view it is they just lost 200k.
For this very reason, "anything" that has large drawdown is unusable. This very requirement practically eliminate all high-risk technique like usage of market's money. So, is it possible to make very high return? No, not for them.
2. Focus too much on high probability system
Any big trader will realise that high probability system sacrifice "a lot" of advantage compared to system like trend follower. High probability system means employing tactic like hit and run which means taking a lot of trades. Cast aside the high probability winning advantage, what's left are these "awesomeness":
* More slippage
* Less scalable
* Less expectancy
As a point of reference, expectancy of trend following system generally about 0.6-0.8. Swing trading system has about 0.3-0.5.
* More prune to price shock (because you have to put tight stop, and when price shock occur it normally amount to several times your stop loss)
* More Unables
Unables is trades that can't be taken because price has moved too much. According to Perry Kaufman in his excellent Smart Trading, He states in big hedge fund, Unables account for 30% of all the trades. And it's easy to see why all unables are winning trades which means they'll lose 30% of their profitable trades.
Trend following system exempts to these things in exchange for abysmal winning rate.
The strategy used by trader works for hedge/manage fund is not something that you can impress with. Dealing with large amount of money is hard enough.
The very best hedge funds usually employs trend following because they got no choice.
3. Dodgy manager (which is non-trader)
Usually, the supervisor of trading in fund is monitored by someone who is not even a trader. I heard they come from other department and has proven themselves in their field. Consequently, they ... sucks... They tend to say "Don't lose, take profit all the time even if it's small".
We all know, it's quite impossible to follow that advice.
When comes to institutional traders, I'm not impress. I rather trust my own fund to myself.
Bedankt,
I agree but i think that the consistency and discipline needs to be almost the same. If you don't believe that you will get this you should not trade manually, but you need to make full-automatic systems they are always consistent.
You're all really focussed on the account value, but take a look at this:
Trader X has the following assets:
$ 300.000,- cash at the local bank
$ 3.000,- in trading account
if he makes 10% per day on his trading account, he is not making that much on his total capital.
the big thing here is: if you have all the money in the trading account then suddenly the risk will drop (and that`s clearly not the case)
if he has 300.000 in his account and makes the same amount of money than he suddenly makes 0,10% and then suddenly it`s all possible right? (and maybe you will be called a too low aiming trader.)
$ 300.000,- cash at the local bank
$ 3.000,- in trading account
If he makes 10% per day on his trading account, it will exceed the cash in the bank in a little under 2 months.
No need to worry about that because the risks involved will prevent it from ever happening.
With 300,000 in his account, he is properly capitalized. With 3,000 he isn't.
Let's say you risk $600 to make that $300 per day. How likely is it that the guy with 300,000 in his account will blow up? Not likely - but the guy with 3,000 in his account will certainly do that.
This is why it doesn't work - you need to risk too much of your capital to make the 10% per day.
My personal experience was that SIM trading was detrimental to my progress.
Consistency only come when I had real money committed to trades (even small amounts). Micro accounts and ETFs allow you to trade big boys markets but with a fraction of the risk. The benefits being that you have money at stake yet you are not going to blow your account learning how to trade. I was fortunate enough to have a mentor that put me on the path with this.
For me SIM trading was not just a waste of time, it was setting me back.
I have yet to meet a single trader that is making a profit from automation. Automation is not really a cure for psychological issues, it is mostly a dead end. In my experience people attempt automation as a substitute for learning how to trade, not to gain consistency.
first of all, $300K in the bank and $3K on the account is not under cap... heck, personally I split my accounts across FCM's and I dont keep all my capital on those accounts... if you look at one account, you might think I am under cap, but the reality is that I am not. The whole point of being properly capitalized is that you wont be out of the game with a streak of bad losses, even if you have to transfer more capital to the trading account, the trader with $300K on the bank is not undercap..
so not following your logic... and more importantly, if the trader is ok with the risk, then what is it to you?
you make some good statements, but you are still not getting the point... as TMFT stated, and I have stated before, you are attempting to impose your opinion that could be right or wrong...
I have a few friends that run hedge funds, and plenty of them that trade for hedgefunds and those that run technologies for hedge funds and the reality is that they would certainly laugh at 10%per day because though they take risk, they have investors to account to and wont risk more than what they should... besides HF deal with way different strategies from those in this forum...so let's not necessarily compare the wanna be trader (ourselves) and the true professional trader that is Series 3 & 7 and has been properly trained and funded to trade with firm capital...
still, in the end that it cant be done is your opinion ... and you seem to hide behind the "it is proven because of risk, your account would be blown" ... which is not crazy, but again, your opinion and nothing more... just like the myth of 99% of traders fail... when in reality it is 99% of undecapitalized, unpreppared, uneducated wanna be traders that fail... but every one out there without the brassballs will say that everyone fails because they failed...
what you seem to miss as well is that one can actually trade all day across multiple markets, focusing on one at a time, and actually average that 10% per day .. when starting with a small $3K account (and to me small is $50K fYI)... there are so many ways to skin the cat if as stated as well one exercises proper money/trade management, that it can lead to averaging 10%... over the very short term.. over the long term, that is another thing... but as I stated before... not impossible..
it is easy to get on a soapbox and claim facts without true scientific measure, and it seems to me that you are more interest on arguing your point than debating your point... so this thread is now getting unproductive...
they dont care about daily, they aim for monthly or quarterly depending on the performance payout structure... lots of people tend to forget why hedge funds came about... yes, there are high frequency HFs.. but the majority use the short time frames to establish positions when in reality they are looking at a bit longer timeframe... which can be days to months ..
