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COMMON SENSE
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COMMON SENSE

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Elite Member
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COMMON SENSE

I will post articles, thoughts, notes, charts, pictures from other traders, coaches whom i respect and have myself
tested whatever idea, trading set up etc. i learned from these wonderful members of trading community.

I will encourage other members of futures.io (formerly BMT) community to post they feel like worth sharing.
To kick off- here is one from Brett Steenbarger " A Visit with World Class Trader".


I follow Brett Steenbarger. He has coached or observed 100's of traders at very high quality prop. firms.

Follwoing write up from him shows many things. One thing which stands out that
in a professional enviornment - making 20% a year return is EXCELLENT.

Traders trying to make a living while trading full time on 30K, 50Ketc, paying retail
comission , having restrictions like overall day wininng of 55% or more, profit target
of $9000 ( on 150k funded account) , max draw down of $4500, 10 day duration etc.
have no chance. As usual there are ALWAYS EXCEPTIONS.

This does not mean TST program does not have merits for traders to check what's
it's like before juming into trading full time. Traders doining combine 5 times, 7 times
and on and on- have no clue. It will make more sense if they do what Marc
Greenspoon does everyday. With technology available now, it's much easier and
cheaper to record ones trading day Vs keep throwing money at TST. I have to
admitt TST guys are good traders- they have set up a system where they have all
the upside and ZERO downside. Now that's an EXCELLENT trade.


" Marc Greenspoon: A Visit With A World-Class Trader" Brett posted this in his blog in 2007.

In past posts, I have tried to describe the qualities that I have observed among very successful traders. I've also attempted to outline specific steps that traders can take to make themselves more successful. In this post, let's make the discussion more concrete by taking you inside one of my visits with a trader I consider to be among the best in the world.

The name Marc Greenspoon won't be familiar to you unless you've read my book Enhancing Trader Performance. He doesn't speak at conference events or advertise himself as a guru. What he does do is trade every day of the week, average between 50 and 100 trades per day in the equity indexes, and make millions of dollars a year. Not just one year or two years, but year after year. He doesn't trade with a mechanical system, and he doesn't trade with quantitative research. Nor does he manage a portfolio. He trades with his mouse and his computer, accounting for several percent of the day's total volume all by himself.

I'm grateful to Marc for giving me permission to write this about him, because it illustrates the sheer level of skill needed to be a great trader. Imagine the commissions of trading so frequently, even given the lower commissions available to a trader at a firm that is an exchange member. Imagine how the slippage adds up over the course of, say, 80 trades in a day. Now realize that Marc's profits are after the costs of paying for his overhead at Kingstree Trading, his trading firm, after all the slippage, and after all the commissions. He would be a fine trader simply by trading that often and breaking even at the end of a year! To make millions of dollars a year, year after year, trading that frequently makes it transparently clear that markets are not random.

Marc called me on Friday and asked, "What are you doing today?" He wanted to set up a meeting. Friday didn't work, but Margie and I had plans to be in Chicago on Saturday, I told him; we could meet then while markets were closed. Sure enough, Marc was up early Saturday morning to greet us.

What did he want to meet about? He wanted to review his first quarter performance and set goals and take specific steps to improve during the second quarter. Not that his first quarter was bad. He made a significant amount of money, certainly in keeping with his past earnings.

But he knows he can do better.

That's one of Marc's defining features. He's not just an expert trader; he's a continually improving trader.

Marc studies himself as diligently as he studies markets. His daily journals, religiously kept, go back years in notebooks that are always at his side. Sometimes he illustrates a point for me by going back to an entry in last year's notebook. He knows the entries--and the markets--that well that he can jump back months and find exactly what he's looking for.

Similarly, Marc keeps a large TV monitor and recording device in his office. He records his trading day by capturing everything on his trading screen, and then he archives each day for reference. The screen shows how the market was trading at the time, where he placed his orders, and where he entered and exited trades. At times Marc will get excited and go back to one of the recordings to show me a specific moment in a specific day's trading. He knows the market so well--and his own trading--that he selects the right day and fast forwards to the right spot in the tape.

Quite simply, he's reviewed so many more of his performances than other traders that he's learned more than others. He is a one-man study in implicit learning. And it's all driven by his desire to improve.

Also by his side are small dictation devices. Marc records his thoughts about his trading and then plays the tapes for review. Many of the tapes focus on what he needs to do to make himself better. He never trades better than when he is thoroughly disgusted with his own performance. Listening to his first tape, my first thought goes to Coach Bob Knight--another professional who hates losing and is driven to win.

Indeed, there is similarity between Marc and Coach Knight. Both are aggressive competitors who wear their emotions on their sleeves. Both are generous to a fault and inspire both admiration and loyalty. And, yes, both can push the envelope too far in frustration and sheer determination. If non-emotionality were a necessary ingredient of trading success, Marc would have gone belly up long ago.

But Marc succeeds for two other reasons:

1) He knows that winning is guaranteed to no one. Look at it this way: let's conservatively say Marc trades 60 times per day with an average of 400 contracts per trade. That's 24,000 contracts per day. It's also about 6,000,000 contracts per year. Do the math: if he makes several million dollars in a year, his edge is far less than a single tick of profit per contract per trade. That razor thin edge, replicated many times, is what makes him a success. It is like the razor thin edge of a NASCAR champion, battling with his pit crew for every fraction of a second. All it takes is a small flip to turn that small positive expectancy into a small negative one and put a trader like Marc into severe drawdown. Marc knows that. That's why he calls me. That's why he keeps recordings and journals. He works as hard on himself as on his trading. Indeed, for Marc, those are one and the same.

2) He has the support of a superior organization. To use one of Marc's phrases, he has "balls" when he trades. But that is, in part, because he has a boss who has the brass ones. Chuck McElveen, also featured in my book, makes it a point to develop large, successful traders. If you don't have a goal of making a very solid six or seven figures a year, Kingstree isn't interested in you. (Of course, if you don't have a track record of success with smaller size, Kingstree isn't going to enable you to trade thousand lots in the ES contract. Indeed, you wouldn't even get hired.) But once a trader is successful at one level, Chuck encourages a raising of size. A trader like Marc can take risks because Chuck can take risks. As a firm owner, he understands that you only learn to take risks by taking risks. You only learn to trade large by growing your size.

Marc is living proof that you don't need a huge edge to be successful, but certain factors are necessary for success. You do need to have an edge; you need the consistency to replicate that edge; you need the drive to continually adapt to changing market conditions; and you need enough capital. I have never met a successful trader who makes money by doubling his or her money every year. The successful traders start with meaningful capital and earn a respectable, but reasonable return upon it. Their success is measured in their consistency, not in their ability to make occasional big scores. The small trader who tries to make millions is forced to take undue risk by trading imprudent size. When the inevitable strings of losing trades occur--as they do for the greats--the account cannot weather such drawdowns.

If you have the drive of a Marc Greenspoon to trade tick by tick every day, review markets in video, keep journals and audio recordings, and sustain a learning curve, just focus on sustaining profitability. Don't try to develop a mad edge. Instead, sustain the edge you have and then seek out those organizations that will bankroll your success. Marc is a constant reminder for me of what can be accomplished with determination and skill. For that I am both grateful and proud.


Last edited by mfbreakout; July 14th, 2014 at 09:04 AM.
 
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  #3 (permalink)
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If you are writing your posts in Word or something and then cutting and pasting, please don't.

The formatting of your posts is impossible to read. You are inserting line breaks instead of allowing word wrapping to work naturally. It makes your post appear with extremely odd formatting and nearly impossible to read.

If you aren't using Word, then my guess is you are pressing enter when your cursor gets close to the right side of your screen. This may look good on your screen, but it looks terrible on everyone elses.

Your posts are also double spaced, making it really hard to read.

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

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  #4 (permalink)
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post


Big Mike View Post
If you are writing your posts in Word or something and then cutting and pasting, please don't.

The formatting of your posts is impossible to read. You are inserting line breaks instead of allowing word wrapping to work naturally. It makes your post appear with extremely odd formatting and nearly impossible to read.

If you aren't using Word, then my guess is you are pressing enter when your cursor gets close to the right side of your screen. This may look good on your screen, but it looks terrible on everyone elses.

Your posts are also double spaced, making it really hard to read.

Mike


Thanks for bringing it up. I am not sure how to fix it? Basically, i have copied articles via CTRL- C and CTRL- V

feature in my files. I am using the same CTRL C and CTRL- V feature from my files to post.

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  #5 (permalink)
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mfbreakout View Post
Thanks for bringing it up. I am not sure how to fix it? Basically, i have copied articles via CTRL- C and CTRL- V

feature in my files. I am using the same CTRL C and CTRL- V feature from my files to post.

Clearly you didn't copy and paste this post, but it still has a line break between sentences like all of your other post do.

Without line break below:


mfbreakout View Post
Thanks for bringing it up. I am not sure how to fix it? Basically, i have copied articles via CTRL- C and CTRL- V feature in my files. I am using the same CTRL C and CTRL- V feature from my files to post.


The following 2 users say Thank You to tturner86 for this post:
 
  #6 (permalink)
Site Administrator
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Platform: My own custom solution
Favorite Futures: E-mini ES S&P 500
 
Big Mike's Avatar
 
Posts: 46,238 since Jun 2009
Thanks: 29,350 given, 83,214 received

To be clear, here is what it looks like for everyone else.

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


You are either pressing enter at the end of lines instead of just continuing to type, or you are using some word editor to write your posts and then paste that into the site, which is screwing up all the formatting.

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

The following 3 users say Thank You to Big Mike for this post:
 
  #7 (permalink)
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post


tturner86 View Post
Clearly you didn't copy and paste this post, but it still has a line break between sentences like all of your other post do.

Without line break below:


I did copy and paste but placed space between lines thinking it will be easier to read. I corrected it, hoping it

worked this time.

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  #8 (permalink)
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VIX

Keeping an eye on Vix.


Historically, July is the best performing month in the usually rather weak 3Q. None the less, if you go back to 1990, you’ll find that the VIX actually has the highest average return in the month of July! In fact, it comes in at an 8.65% average and is up 14 out of 24 years - or up 58.3% of the time.
Now, I’ve long been a proponent that you should focus more on the VIX based on absolute moves, not percentage changes. Remember, it is much easier to have a big percentage move higher when the VIX is low. In other words, a 20% move from 10 to 12 sounds like a lot, but it isn’t nearly the same in terms of the volatility is produces as an absolute move from 30 to 35 (16.6%).

Could July just be a function of a low VIX coming into it? Maybe. Still, this is one of those stats I’d still rather know than ignore.


Source: Kimble charts.

Attached Thumbnails
COMMON SENSE-2014-07-13_1306_vix.png  
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shorts and shorts

Gold short till buyers show up. Failed A up short.

Attached Thumbnails
COMMON SENSE-2014-07-15_1157_short.png  

Last edited by mfbreakout; July 15th, 2014 at 01:34 PM.
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market internals


I do not see longs any where. Failed A up short. Covered prematurely as market internals were mixed with nice earnings from GS, JPM. Thought TF will bounce off ORL but there were no takers and thus reshort and then it was matter of holding.

It's OK to cover short but taking longs aginst trend at whatever so called support one is looking at with a customary cute stop loss had no chance except for a scalp.

Attached Thumbnails
COMMON SENSE-2014-07-15_1202_nyse.png   COMMON SENSE-2014-07-15_1016_short.png  

Last edited by mfbreakout; July 15th, 2014 at 01:30 PM.
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