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What is most profitable for a retail trader?
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What is most profitable for a retail trader?

  #11 (permalink)
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Guys...

the unfortunate truth is that not trading at all is the most profitable approach for the retail trader. This is an opinion poll, and that is fine everyone can and should have an idea about what is best. The facts though, would point to something different. Very few retail traders relative to the number plying the trade ever make any money at all.

Consistent profits? Seriously?

Buy a nice dividend payer and write the high vola calls. You can probably get 10% annual return with that strategy.

I know that many here , maybe 1000 or so from the community do make regular consistent profit enough to call it a primary vocation.

Here is my little issue which I will get over right away. There will be new people here that see the result of this poll and they will cast their lot in that venue and their account will quickly race to zero.

Get a valid, legit and proven mentor.
Watch what they do.
Record and study.
Have them watch what you do.
Listen to and follow their advice.
Repeat until you are the mentor.
Look for a new mentor.

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  #12 (permalink)
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wldman View Post
the unfortunate truth is that not trading at all is the most profitable approach for the retail trader. This is an opinion poll, and that is fine everyone can and should have an idea about what is best. The facts though, would point to something different. Very few retail traders relative to the number plying the trade ever make any money at all.

Consistent profits? Seriously?

Buy a nice dividend payer and write the high vola calls. You can probably get 10% annual return with that strategy.

I know that many here , maybe 1000 or so from the community do make regular consistent profit enough to call it a primary vocation.

Here is my little issue which I will get over right away. There will be new people here that see the result of this poll and they will cast their lot in that venue and their account will quickly race to zero.

Get a valid, legit and proven mentor.
Watch what they do.
Record and study.
Have them watch what you do.
Listen to and follow their advice.
Repeat until you are the mentor.
Look for a new mentor.


I would say get the right mentor. If you get a mentor that trades a style that does not fit your personality, you will probably be wasting your time and money.

While on the subject, I have heard this idea of a trading mentor from many traders. Where does one find a trading mentor anyway? Given that a mentor relationships is generally personal and one on one, and given the number of people who try to become traders, how likely is it that a new trader will find a mentor?

Given that such a one on one relationship is time and resource consuming, how much does a new trader would expect to pay for such a relationship? Given that most new traders are under capitalized, how likely is it that they will be able to pay a valid legit proven mentor, and be able to finance their trading endeavor? Out of everyone reading this thread, how many has/had a mentor? Just asking some questions that brings the subject from idealistic thought down to boots on the pavement.


Last edited by monpere; April 28th, 2012 at 11:20 AM.
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  #13 (permalink)
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Great post and questions.


I can only speak for myself.

I never paid a mentor to be my mentor. Sometimes I got myself into a situation to be in their employ so they where actually paying me to receive their knowledge.

I became a trader by accident. I had about 4 days of training before being on my own with the firms "deck" in my hand. I had to write "bid" on my left and and "ask" on my right hand with a sharpie...along with the associated words guys might use when the phone rang. Lee Bulleri, a nasdaq ledend, sensed my hell and even as a competitor, went out of his way to help me. I'd walk out of my way to be in front of the building he worked in just for the chance to cross his path because I knew he'd ask me how it was going and offer his input. I hung on every word and did exactly what he told me. Because of Lee I was accepted on the street and was soon meeting with and learning from traders from all of the top firms.

I would say stay away from those that want to sell you their mentorship... unless they are charging you more money than they can make trading. An authentic mentor imo wants to pass on knowledge of his craft because he loves the art of his vocation and he wants to see it survive past him and become greater by teaching it to you.

At CBOE I was lucky enough to join a group of guys also legendary in their own right. I clerked unpaid for almost 9 months. I would write down and study everything these three guys did and said. I wanted to learn their methods but I knew to be like them I had to discover and learn their intangibles as well. I learned their ways and to do that I had to surrender my experience and my views as a trader. So I do not agree with "right" mentor as that relates to things like product or method. To be mentored you MUST submit your own ideas and be immersed in those of someone who is making a $h!t load of money.

I do not think it is impossible to find authentic mentorship but it sure is not easy....especially in an "online" setting. I'd say seek collaboration with someone you respect on a specific issue. Once that person proves to be legit I'd try to expand the collaborative relationship. I know that here in Chicago there are a number of prop firms that will train people with no experience to trade their methods with firm capital. Most people though will not submit to that process. They simply lack the dedication and or discipline to see it through. I do believe that trading the financial markets is the most competitive business in the world. Unfortunately many or even most can never treat it like their business and their only vocational priority or option...seems like people treat it like a hobby while expecting the results that are glamorized in books.

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  #14 (permalink)
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Hotch View Post
Depends on the trader. Someone who can't code isn't going to make and money trading an algo.

Assuming the trader has decent ability, algo trading 100%. Anyone doing it seriously would be trading futures,forex and everything else.

Hotch understands the importance of automation and systems approaches. So do I. Assuming the cost of a programmer wasn't the problem, I don't see the hesitation in wanting to automate your strategies. One of the things that amazed me was how simple the automation was (not necessarily the implementation/coding, but the simplicity of the overall strategy). This simplicity is consistent with nature, not necessarily our egos, which tend overcomplicate everything we perceive.


wldman View Post
the unfortunate truth is that not trading at all is the most profitable approach for the retail trader. This is an opinion poll, and that is fine everyone can and should have an idea about what is best. The facts though, would point to something different. Very few retail traders relative to the number plying the trade ever make any money at all.

Consistent profits? Seriously?

Buy a nice dividend payer and write the high vola calls. You can probably get 10% annual return with that strategy.

I know that many here , maybe 1000 or so from the community do make regular consistent profit enough to call it a primary vocation.

Here is my little issue which I will get over right away. There will be new people here that see the result of this poll and they will cast their lot in that venue and their account will quickly race to zero.

Get a valid, legit and proven mentor.
Watch what they do.
Record and study.
Have them watch what you do.
Listen to and follow their advice.
Repeat until you are the mentor.
Look for a new mentor.

I suppose if you perceive yourself as being a caterpillar and the mentor as a butterfly, then asking questions are appropriate. The questions should be concrete, and get you to or closer to your concrete goal (of profit in the markets). But laying down at the feet of some perceived guru or mentor expecting to master the markets. I've learnt that if you can't see it for yourself, whatever you think you learned is just more confusion. This starts with self-mastery. All that third party validation non-sense is tossed out.

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  #15 (permalink)
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The other side...

of the question is that the fact that 95% of retail fails is a wonderful thing. Harvesting the low hanging fruit from inexperienced, the fool hearty and the arrogant makes my job easier.

Actually, in that scenario, view myself as a raptor...eating both caterpillar and butterfly at will. Third party validation nonsense...that is funny. Almost all transfer of knowledge that is non instinctual is passed on through mentorship. If you believe that a new retail trader can show up for the game and join the pack by virtue of his own attributes and experience, you are sadly mistaken.

Students asking questions is not part of the formula. Mentors ask the questions to measure what is retained and what is not.

A mentor once told me that I should get to the pit early and survey the crowd as they arrive looking for who is carrying outside issues into the pit and , he said, be certain to identify who the idiot is. If you can not tell who the idiot is, unplug your machine and leave the pit, because the idiot is you. I bet that during my first months in the crowd that I unplugged and walked out at least three times a week. That got me the nickname "horseshoe boy", referring to the golden horseshoe stuck in a certain part of my anatomy. When the guys would give me the business about having a golden horseshoe up my butt, my response was... you could fit one up there too but you will have to find another place for your head.

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  #16 (permalink)
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wldman View Post
of the question is that the fact that 95% of retail fails is a wonderful thing. Harvesting the low hanging fruit from inexperienced, the fool hearty and the arrogant makes my job easier.

Actually, in that scenario, view myself as a raptor...eating both caterpillar and butterfly at will. Third party validation nonsense...that is funny. Almost all transfer of knowledge that is non instinctual is passed on through mentorship. If you believe that a new retail trader can show up for the game and join the pack by virtue of his own attributes and experience, you are sadly mistaken.

Students asking questions is not part of the formula. Mentors ask the questions to measure what is retained and what is not.

Not having the courage to ask questions or be allowed by the teacher to ask questions sounds like religion or some type of domestication. In an apprenticeship style of learning, the student has direct experience with the subject matter, and is encouraged to mimic a proven system of the master to acheive the same results the teacher through actual practice. So although a student may not be familiar with a specific method, with practice of a proven method (that is based on reality that instincts can identify with) the method can be aquired. Everyone may have their own style of making swords (secondary), but the fundamental process (primary) to swordmaking is the same for everyone.

I never completed my original thought of the previous post, but I will do so now. This insistence that you can gain experience of a butterfly by remaining in caterpillar mode is at the very heart of fear. This idea that something exotic or exclusive truth exists in the market, and that without it failure is eminent, is how the majority of the indicator/robot/guru marketplace lives on. The truth is always simple. You must become the butterfly, to gain the experience of the butterfly. This requires taking action and taking risks, not clinging on to some teacher. Of course a teacher will rarely tell you this (particularly one that does not really have what you want). This 95% of people who "fail" is mainly because they either did not stick with the central problem long enough. They focus on secondary problems, and the ego is very good at the art of seduction and distraction. And it's seeminly easier to procrastinate than take action and risk failure


wldman View Post
A mentor once told me that I should get to the pit early and survey the crowd as they arrive looking for who is carrying outside issues into the pit and , he said, be certain to identify who the idiot is. If you can not tell who the idiot is, unplug your machine and leave the pit, because the idiot is you. I bet that during my first months in the crowd that I unplugged and walked out at least three times a week. That got me the nickname "horseshoe boy", referring to the golden horseshoe stuck in a certain part of my anatomy. When the guys would give me the business about having a golden horseshoe up my butt, my response was... you could fit one up there too but you will have to find another place for your head.

In regards to your mentor showing you to identify who the idiot is, this sounds like a similar approach they use at poker tables. If you sit down at a table and you dont know who the sucker is, you are the sucker. The idea behind that is you 'play the player's more so than playing the cards. This strategy holds merit when there are multiple opponents and there is a human element of fear, greed, lack of experience, etc which can be manipulated and give you an edge to bluffing. However when you have a bunch of good poker players, it becomes much more difficult to extract money from them because they are likely to fold much more often when you have a good hand, and read you when you don't.

In financial markets as speculators, we don't have that problem (better said: we can choose NOT to have that problem ) When we place a trade, it is against the collective sentiment of the market, which is reflected in price action. We are "heads up" against the market and there is a 50/50 chance per trade that the market will go in the anticipated direction. And you don't have to bet it all in to profit. You can trade whatever lot size you want and the market will 'call' you. There are occassions where the call is < 100%, such as partial fills or slippage, which are mostly irrelevant when we are using position sizing and most markets are liquid enough anyway.


Last edited by 4EverMaAT; May 3rd, 2012 at 12:10 AM. Reason: complete a sentence.
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  #17 (permalink)
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a master trader's selection of trade only offers a 50/50 chance?


4EverMaAT View Post
Not having the courage to ask questions or be allowed by the teacher to ask questions sounds like religion or some type of domestication. In an apprenticeship style of learning, the student has direct experience with the subject matter, and is encouraged to mimic a proven system of the master to acheive the same results the teacher through actual practice. So although a student may not be familiar with a specific method, with practice of a proven method (that is based on reality that instincts can identify with) the method can be aquired. Everyone may have their own style of making swords (secondary), but the fundamental process (primary) to swordmaking is the same for everyone.

I never completed my original thought of the previous post, but I will do so now. This insistence that you can gain experience of a butterfly by remaining in caterpillar mode is at the very heart of fear. This idea that something exotic or exclusive truth exists in the market, and that without it failure is eminent, is how the majority of the indicator/robot/guru marketplace lives on. The truth is always simple. You must become the butterfly, to gain the experience of the butterfly. This requires taking action and taking risks, not clinging on to some teacher. Of course a teacher will rarely tell you this (particularly one that does not really have what you want). This 95% of people who "fail" is mainly because they either did not stick with the central problem long enough. They focus on secondary problems, and the ego is very good at the art of seduction and distraction. And it's seeminly easier to procrastinate than take action and risk failure



In regards to your mentor showing you to identify who the idiot is, this sounds like a similar approach they use at poker tables. If you sit down at a table and you dont know who the sucker is, you are the sucker. The idea behind that is you 'play the player's more so than playing the cards. This strategy holds merit when there are multiple opponents and there is a human element of fear, greed, lack of experience, etc which can be manipulated and give you an edge to bluffing. However when you have a bunch of good poker players, it becomes much more difficult to extract money from them because they are likely to fold much more often when you have a good hand, and read you when you don't.

In financial markets as speculators, we don't have that problem (better said: we can choose NOT to have that problem ) When we place a trade, it is against the collective sentiment of the market, which is reflected in price action. We are "heads up" against the market and there is a 50/50 chance per trade that the market will go in the anticipated direction. And you don't have to bet it all in to profit. You can trade whatever lot size you want and the market will 'call' you. There are occassions where the call is < 100%, such as partial fills or slippage, which are mostly irrelevant when we are using position sizing and most markets are liquid enough anyway.

....We are "heads up" against the market and there is a 50/50 chance per trade that the market will go in the anticipated direction....

this sort of statement mostly are offered by traders with lesser experiences, as far as my limited trading experiences are concerned.

at the master level, the selection of trade whether going long or short, imho, should offer much greater than a 50/50 probability of success, otherwise it would be only like tossing a coin to go long or short which also offers a 50/50 chance of success; signifying no significant difference between a beginning trader and a master trader like yourself, in terms of ability to select a profitable trade setup.

perhaps, you meant something else much deeper and entirely different than your quick exposition in your text, pls.

just a little perplex without any malice at all, K?

cheers. enjoyed reading your post otherwise.


Last edited by nakachalet; May 3rd, 2012 at 10:45 AM.
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  #18 (permalink)
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Sometimes...

where there is no productive or beneficial outcome it is wise to simply move on. I'll do that now and leave the last word to the guys that need it.

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  #19 (permalink)
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  #20 (permalink)
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So the majority vote for Futures :-) but I've never understood really why.
The leverage alone makes it dangerous for the retail investor that in general doesn't have proper money management skills...

I am in the camp that Pros day trade Futures on a regular basis, but not really convinced for retail investors.

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