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Ten-thousand in Education and still not profitable!
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Ten-thousand in Education and still not profitable!

  #161 (permalink)
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rtrade View Post
Wow, 1 lot to 500 lots....that gives me hope...the secret I believe is, Do You Believe?

Belief (really, proof, in the form of successful traders we worked with daily) is what motivated most of us to keep at it when the going was tough. As Tigertrader has pointed out, pit trading is a business with high fixed costs even if you're a small trader. Without the absolute knowledge that it was possible to make serious money in the pit, there's no way I could have stuck with it through the three years it took me to learn the business.

But pit trading is different. Pit traders had advantages not available to screen based traders, such as the ability to evaluate the net position of the crowd based on how it responds to order flow (for example, if a big offer comes into the pit and traders are extremely vocal and aggressive bidding for it one tick lower, it's a pretty good sign they're short), the ability to evaluate who is buying and selling and how much based on who is filling the order (Goldman's Five Year Note broker's eyes get real big as he screams "What's bid?" and I think to myself, "Less than before you went into panic mode"), and the most important advantage, the ability to sell the offer and buy the bid even if you joined an existing bid and/or offer (the real meaning of the phrase "getting the edge"). Personal relationships were very important in the pits. Also, cheating was not unknown. I used to think it was rare in Chicago, especially at the CBOT (common in New York), but now I'm not so sure.

What I'm saying is that while there were definitely many pit traders able to make substantial fortunes, that ability does not necessarily translate to the screen. Most pit traders I know have given up even trying, and I'm talking about guys who made millions in the pits, guys who have the risk tolerance, the capital, the experience, everything but today's "edge". I'm afraid that edge may be reserved for corporate sized money with the resources to employ teams of mathematicians and programmers and 7 to 8 figure budgets for IT infrastructure.

Sorry to be such a downer, but we have to accept the possibility that all the advantages reside with the pros just as they always have, and it may in fact have gotten worse. At the same time, the penalty for trying has also gotten less; retail commissions are much lower, quality historical data can be had for free, quality trading platforms and analysis software are cheap or free, you can hone your skills in sim, and even the smallest futures trader has equal access to market data and a place in the queue. I'm not yet sure there is a "secret" available to the retail trader.

"You don't need a weatherman to know which way the wind blows..."
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  #162 (permalink)
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jstnbrg View Post
Sorry to be such a downer, but we have to accept the possibility that all the advantages reside with the pros just as they always have, and it may in fact have gotten worse. At the same time, the penalty for trying has also gotten less; retail commissions are much lower, quality historical data can be had for free, quality trading platforms and analysis software are cheap or free, you can hone your skills in sim, and even the smallest futures trader has equal access to market data and a place in the queue. I'm not yet sure there is a "secret" available to the retail trader.

Your not a downer, you're real as a breath of fresh air...thanks

I guess I'll just have to trade in the direction of the PRO's and just get a small piece of the move.

"Faith is the substance of things hoped for, the evidence of things not seen." --- "Therefore, I Believe it and I will see it. And every day and in every way, I am healthier, wealthier, and wiser."
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  #163 (permalink)
Live Your Bliss
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jstnbrg View Post
Belief (really, proof, in the form of successful traders we worked with daily) is what motivated most of us to keep at it when the going was tough. As Tigertrader has pointed out, pit trading is a business with high fixed costs even if you're a small trader. Without the absolute knowledge that it was possible to make serious money in the pit, there's no way I could have stuck with it through the three years it took me to learn the business.

But pit trading is different. Pit traders had advantages not available to screen based traders, such as the ability to evaluate the net position of the crowd based on how it responds to order flow (for example, if a big offer comes into the pit and traders are extremely vocal and aggressive bidding for it one tick lower, it's a pretty good sign they're short), the ability to evaluate who is buying and selling and how much based on who is filling the order (Goldman's Five Year Note broker's eyes get real big as he screams "What's bid?" and I think to myself, "Less than before you went into panic mode"), and the most important advantage, the ability to sell the offer and buy the bid even if you joined an existing bid and/or offer (the real meaning of the phrase "getting the edge"). Personal relationships were very important in the pits. Also, cheating was not unknown. I used to think it was rare in Chicago, especially at the CBOT (common in New York), but now I'm not so sure.

What I'm saying is that while there were definitely many pit traders able to make substantial fortunes, that ability does not necessarily translate to the screen. Most pit traders I know have given up even trying, and I'm talking about guys who made millions in the pits, guys who have the risk tolerance, the capital, the experience, everything but today's "edge". I'm afraid that edge may be reserved for corporate sized money with the resources to employ teams of mathematicians and programmers and 7 to 8 figure budgets for IT infrastructure.

Sorry to be such a downer, but we have to accept the possibility that all the advantages reside with the pros just as they always have, and it may in fact have gotten worse. At the same time, the penalty for trying has also gotten less; retail commissions are much lower, quality historical data can be had for free, quality trading platforms and analysis software are cheap or free, you can hone your skills in sim, and even the smallest futures trader has equal access to market data and a place in the queue. I'm not yet sure there is a "secret" available to the retail trader.

That's why squawk box might be a good idea if you trade S&P. You can't see their eyes... but you do hear the excitement at different points.

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  #164 (permalink)
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Anagami View Post
That's why squawk box might be a good idea if you trade S&P. You can't see their eyes... but you do hear the excitement at different points.

True. All different sorts of information can be helpful. Remember, however, that the real game is no longer being played in the pits.

I can't think of a reason why anyone places orders in the S&P pit these days, it was always a cesspool anyway. My wife worked for a discount futures broker 20 years ago. She said that when a customer got a good fill in the S&Ps, it was a sure sign the trade was really bad.

"You don't need a weatherman to know which way the wind blows..."
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  #165 (permalink)
Live Your Bliss
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jstnbrg View Post
True. All different sorts of information can be helpful. Remember, however, that the real game is no longer being played in the pits.

I can't think of a reason why anyone places orders in the S&P pit these days, it was always a cesspool anyway. My wife worked for a discount futures broker 20 years ago. She said that when a customer got a good fill in the S&Ps, it was a sure sign the trade was really bad.

Thanks for sharing that. Good fill bad trade applies to most instruments.

I cannot imagine why anyone would trade S&P period, pit or electronic (ok, it has huge volume). Back in the days when I would program and test a variety of systems, they would always always have the worst performance on ES out of all the instruments. In any case, I suppose that the way ES acts might appeal to some personalities (I was gonna say anal retentive types, but then I thought it would be too inflamatory )... but certainly not to me.

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  #166 (permalink)
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bobbyacim View Post
Dear Folks,,
I have finally thrown in the towel, -I quit this fools game of thinking I can anticipate the behavior of thousands of traders in the span of a few minutes, and do it consistantly day in and day out. Hey if George Soros admited that his trade of the century was a one-in-a-life-time occurance; then who am to think I can do that day-in and day-out.

I am going back to working on constructing a convential business or opening a franschise where according to the department of commerce, I will have at least a 30-40% chance of success for at least the first 5 years!!!

It's so funny that over 6,000 have viewed this post and no one has been able to sqash this topic by offering any kind of proof of long term sustained profitability.

Thank you for all the input and I wish everyone eventual success.

nobody is gonna post you his account balance or wins. My win ratio is 56%, but my wins are twice as large as my loosers.

Yeah, forget Soros. He made only 10%, even I make more

I must disagree with slipknot. I think, it is because people forget that forex is about money. They start playing with all the beautiful indicators and forget what it really is about. Money management threads have most of the time 4-5 pages while some crappy heiken ashi system have millions of views. This is the problem with all the forums, especially the larger ones (ffactory).

This is a business and treat it as such! It is about money and everything you do while learning forex has to be about money, not indicators.

The only thing I can do is give you couple of signals and tell you how I trade, but there are always losses and some month go by with no profit.

There is too much bullshit in forums: For example, you will find opinions about Risk to Reward and people saying that having larger SL than TP is bad. Those who say it they had D minus in math.
While you risk 20 pips, you are not gaining 40. There is no such thing as 1:2 RR. There is Risk vs. Expectations. You risk 20 pips and you expect to gain 40. Now. You will certainly lose 20 pips if it goes against you. But will you gain 40 if goes the other way? What if it goes 39 pips and reverses? Your SL is something certain, your TP is not. At least not in the way forum people think.
The true Risk to Reward is calculated like this:

You have 50% chance to win and 50% to lose if your SL and TP are of the same value and there is no spread. I have done many simulations. Just believe me on that one. Now add speard. You do the math, and it will eat your account. Spread and spread only is what we should be fighting at first. Spread is what eats away profits. It is the edge of your broker. The house always wins.
True RR is mathematical, not user defined. It is calculated by (Pips-Spread)/Pips.

So, if your SL is 10 pips and TP 10 and spread 1, your true RR is 0.9. This is something sure, it is mathematically correct. The 10% of your win is what your broker gets paid. The brains must ring now: don't take trades that have SL of 10! Which means, move to higher TF! Here I gave you a mathematical reason to use times frames H1 and above! Take signals from these time frames only! It is still daytrading.
Your SL is 30, TP 29, your true RR is 0.96666. Your broker still gets some, but not as much! (percentage wise). Your goal is to keep that number as close as possible to 1.

It is very important to understand:
R:R does not really matter, because, if you target 100 pips with 10pip SL, you gonna get stopped out 10 times in a row before you make a profit. It is still about 1:1 RR in the definition that you know.


There is a lot of cowsh*t in forums. It is like a filter of good information, like someone is holding your from knowing the truth.
Forget the moving averages, the Elliot theory, news... you don't need them. They only cloud your way of thinking. Good news for USD!!! EU WILL GO SOUTH AND BAM, it flies north. Your have been just fooled by the big boys who needed your money (liquidity). Just look at price and see what it does. Don't think what it will do, see what it does. Don't imagine things, don't think at all. Just know, that when there is news, there will be chance to fool little investors and steal their money. This is how you must think. Greedy. But not greedy out of being desperate that you need to recover losses. Not greedy of hoping your trade will make even more pips. That's newbiness. Be greedy by taking every pip out of others. Remove fear completely, turn on your ego and fight for those pips. Be greedy by squeezing every pip out of market. Buy at valleys, sell on spikes. You see a larget spike after a trend has been going long for a while, this is where you close your position. This is big boys buying so that they can sell higher. This is them averaging up before taking profits. Do the freaking same!

Words worth tons of gold and they don't come from me:
The road to success is to use what others don't. Something that gives you the edge.

Find something that works. Like pin bars. Look at today, USDCHF and EURUSD (both H1) had nice pin bars today. They work, but very few people really trade them. Forget the moving averages and mechanical systems, they are meant to strip you of your money. Find that one thing and specialize in it. Learn everything about it and that's freaking it.

I spent maybe 1000 hours just to find what works. I went puking after spending 20+ hours at computer a day and next day it is the same. You need time and patience looking for what will give you your edge. It is not something special...no. It is something small that is easily overlooked and it is there, on the chart and everyone is looking at it.

ok, text getting long, i am starting to lose the overview. Sorry I was fast typing it...


Last edited by ReaM; March 14th, 2011 at 06:10 PM.
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  #167 (permalink)
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Anagami View Post
Thanks for sharing that. Good fill bad trade applies to most instruments.

I cannot imagine why anyone would trade S&P period, pit or electronic (ok, it has huge volume). Back in the days when I would program and test a variety of systems, they would always always have the worst performance on ES out of all the instruments. In any case, I suppose that the way ES acts might appeal to some personalities (I was gonna say anal retentive types, but then I thought it would be too inflamatory )... but certainly not to me.

Not my favorite instrument, but there are times I trade it, or YM (I get lower fees because I'm a CBOT member).

There is more information available to the stock index trader, namely market internals. E.g., the index is making a new high but fewer issues are making new highs than the previous swing high. This is real information, much as volume is real information, as opposed to the number massaging of indicators such as MACD, etc. I personally have not made much of an effort yet to incorporate this type of data into my trading, so I can't tell you from personal experience how useful it is.

"You don't need a weatherman to know which way the wind blows..."
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  #168 (permalink)
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I skipped reading a lot of the posts but if you want to see some real records just join velocity futures and look at their leader board. It refreshes every 3 minutes and there's a guy named "m a x" usually making $100,000+ net a day on a couple thousands trades a day. It doesn't look like he's trading today but I see him at the top all the time. He by far makes the most but u can see a lot of other traders that opt in to the program to publish their results to the leaderboard.

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  #169 (permalink)
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Lots of good stuff in your post, but also a few things that just don't add up and don't make sense.


ReaM View Post
While you risk 20 pips, you are not gaining 40. There is no such thing as 1:2 RR. There is Risk vs. Expectations. You risk 20 pips and you expect to gain 40. Now. You will certainly lose 20 pips if it goes against you. But will you gain 40 if goes the other way? What if it goes 39 pips and reverses? Your SL is something certain, your TP is not. At least not in the way forum people think.

This doesn't make sense. Neither your stop nor target is certain. All that is certain is that one of them will get hit. To reverse your logic, if your stop is 20 and target is 40 and the trade goes 19 against you, does this mean you actually risk less than 20? If it goes 20 against you, you lose 20. If it gains 40, you make 40. What it does in between, i.e. gaining 39 and reverse to stop you, or going against you 19 and reverse to hit your target is irrelevant to your risk:reward. That doesn't change.


ReaM View Post
The true Risk to Reward is calculated like this:

You have 50% chance to win and 50% to lose if your SL and TP are of the same value and there is no spread. I have done many simulations. Just believe me on that one.

Simply not true. Running simulations is not proof. And no offense, but I won't you believe you just because you say you did simulations. I have a system with the same stop and target and average around 60% profitable which contradict what you are saying.


ReaM View Post
So, if your SL is 10 pips and TP 10 and spread 1, your true RR is 0.9. This is something sure, it is mathematically correct. The 10% of your win is what your broker gets paid. The brains must ring now: don't take trades that have SL of 10! Which means, move to higher TF! Here I gave you a mathematical reason to use times frames H1 and above! Take signals from these time frames only! It is still daytrading.
Your SL is 30, TP 29, your true RR is 0.96666. Your broker still gets some, but not as much! (percentage wise). Your goal is to keep that number as close as possible to 1.

Again, this is not proof that you need to move to an higher TF. This is true that percentage wise your commission will be lower percentage on larger targets, but this is not proof that you will be successfull only on 1 hour bars and above. This is your opinion. Not fact nor proof.

You also need to look at opportunity. Many trades on a small timeframe can result in more overall profits over a monthly basis than just a handful of trades a month on a larger timeframe.


ReaM View Post
It is very important to understand:
R:R does not really matter, because, if you target 100 pips with 10pip SL, you gonna get stopped out 10 times in a row before you make a profit. It is still about 1:1 RR in the definition that you know.

What do you base this calculation on? How do you know that you will get stopped 10 times in a row before making a profit? Are you saying then that you cannot get a better than 1:1 Risk:Reward because no matter what you do, over a series of trades it will still equate to 1:1?

As I said, many good points in your post, but a few things I don't agree with.

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  #170 (permalink)
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thatguy View Post
Lots of good stuff in your post, but also a few things that just don't add up and don't make sense.

I'm not exceptional at math, but I think most of his points were examples, not hard and fast rules.




Quoting 
This doesn't make sense. Neither your stop nor target is certain. All that is certain is that one of them will get hit. To reverse your logic, if your stop is 20 and target is 40 and the trade goes 19 against you, does this mean you actually risk less than 20? If it goes 20 against you, you lose 20. If it gains 40, you make 40. What it does in between, i.e. gaining 39 and reverse to stop you, or going against you 19 and reverse to hit your target is irrelevant to your risk:reward. That doesn't change.

Actually, it is not certain that either will be hit. I've often had trades where the market just died at some point after I put the trade on, and I either got out at the end of the day or just got out because the reason for putting on the trade had disappeared.



Quoting 
Simply not true. Running simulations is not proof. And no offense, but I won't you believe you just because you say you did simulations. I have a system with the same stop and target and average around 60% profitable which contradict what you are saying.

Again, I don't think he's saying that R/R is always 50%, he's just using that as an example.


Quoting 
Again, this is not proof that you need to move to an higher TF. This is true that percentage wise your commission will be lower percentage on larger targets, but this is not proof that you will be successfull only on 1 hour bars and above. This is your opinion. Not fact nor proof.

I think I agree with @thatguy. I was confused by this part of the post.


Quoting 
You also need to look at opportunity. Many trades on a small timeframe can result in more overall profits over a monthly basis than just a handful of trades a month on a larger timeframe.

And in fact, if the expected value of your trade is positive, you have much more stable returns the more trades you can make. Personally I would much rather hire a trader with a 60% win/loss ratio who trades 10 times a day than one who trades 10 times a month. There is a reason why the casinos' most profitable game is the slot machine.



Quoting 
As I said, many good points in your post, but a few things I don't agree with.

I particularly liked the parts about trading being a business, and not getting too wrapped up in indicators. (An aside: I have come to disagree to some extent with those on this forum who disdain all indicators. In a discussion with @Fat Tails about how I may have been the only pit trader who totally ignored Floor Pivots, he replied that this was my loss, because they are important. He's a very bright guy and much more mathematically sophisticated than I am, so I took a look at them, and he appears to be correct. PP, S2, and R2 very often are both support/resistance, and what I call "attractors", prices that, when approached, get traded at least once, which makes them good targets. The same is true for the opening range, the first five minutes of RTH: it is important S/R later in the trading session.

"You don't need a weatherman to know which way the wind blows..."
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