57 replies to this topic

[selecto]

If you go over to elitetrader.com and click around, you will find a number of threads about capital, trading for living, etc., etc.

[Gary Smith]

JB and Geo, Sorry, sometimes I react before I think (comes in handy though as a trader) I agree with Geo about not listening to the naysayers (myself included) Everyone should pursue their trading dreams, for better or worse. Heavens knows, if i made it, there's hope for just about anyone. And I agree with JB that there are successful small time traders out there, just not quite as many as one might suspect. In fact, I would love to profile such traders in an article for a trading publication. One of my problems is I've heard too many tales of woes from so many traders over the years. It's made me a bit cynical about trading claims be it vendor or private trader. There's one well known futures vendor out there who has written books, given seminars, managed money, had a fax service, etc. where it was uncovered in an expose by Bruce Babcock that his "I trade for a living" spiel was a complete fabrication in order to pander his products. I ought to dust off one of my post from years ago about Crooks, Con Men, and Charlatans, scary stuff.

[hereclitus]

Thanks Selecto for the site info.

[*JB*]

Gary, etc. --

Don't stop warning people. Daytrading -- any trading -- for a living require a LOT of work and a special set of personal characteristics that must come together in the right way. That's one of the reason paper trading success means little (or nothing) when making the move to real money trading. A great book that new traders should read is "West of Wall Street"

As for Larry Williams (and others like George Angel) their books have SOME very good value...as an introduction to concepts to STUDY until they are your own (or you discard them)...period. When he turned $10,000 into $1,000,000 in a year -- what is not known widely (this was confirmed by him to me, personally) was that he was up to well over $2,000,000 and lost a million plus in a couple weeks (or less). He lived on the edge, in order to make a big name for himself and pulled it off.

Why would he not continue to just trade if it he could continue on forever? I'll let other's answer that...but some clues are in the book "West of Wall Street".

The $20-$50 books is one thing, but the high priced seminars/cources as a short cut to being a successful trader is NOT going to work!

geosing --

What success I have found daytrading came when I shifted to one who did it as a business, looking to make 1-10 points consistently and repetively....NEVER holding overnight. This approach is where I have met (nearly) all of people who are successful daytrading. My partner did this for about 11 years (he just retired).

Before daytrading the S&P, he was a CTA, managing his and other people money for a long time -- as high as $35-$40 million under management (beside his own)-- position trading the Eurodollar and the big bonds. When he got to the point where he went to trading the S&P, looking for 1-10 point trades, he closed down his business -- giving up the a lot of "incentive money" (CTA's usually take a % of profits, not managment fees) and went to trading just his own account and never looked back. The point is he was a very successful trader who did all the work BEFORE he started daytrading the S&P...and he found (with his skill set) that daytrading the S&P was far more profitable.

Those who live to just hit home runs by swinging for the fence are the ones who lose out. 2 steps forward and 3 bigger steps back. Some think the approach I take is like trying to make quarters daytrading individual stocks. It is nothing like it and many who do not really know futures do not get that point.

Do the math -- (net after slippage and commision) JUST 1 (big) S&P point a day ($250), times 5 days, times 50 weeks, times enter a number contracts.

[*JB*]

Do the math -- (net after slippage and commision) JUST 1 (big) S&P point a day ($250), times 5 days, times 50 weeks, times enter a number contracts.

I should clarify.

Make that averaging one S&P point a day...net.

[IndexTrader]

I once heard Jack Schwager wanted to write a book about your Average Joe trader who had been successfully trading for a living over a period of several years.  The book never came to fruition because of a lack of *verifiable* applicants.

The CFTC enforcement files are full of traders who claimed they succesfully traded for a living while in fact they were net losers.

I couldn't disagree more with Index Trader, and especially on the small account.  At one time years ago I offered a $500 bounty for anyone who could show they had been successful at daytrading stock index futures over a three year period - no takers.  When I used to market a manual on daytrading the stock index futures, I spoke with literally thousands of daytraders.  It's more myth and folklore that there's a bunch of traders out there succesfully daytrading the futures.  Actually I did have one taker on my bounty.  But of course, he could never come up with any documentation.  Lot of big talkers out there who when push comes to shove never can produce any real money trading statements.  He eventually drifted into selling an expensive daytrading course and advertised about how he successfully traded for a living.  When the CFTC went to investigate, they discovered that in his real money trading account he had been a net loser for six straight years.

You don't want to get me going on the S&P daytrade course vendors.

Gary:

Frankly, I think you should take your blinders off.

Probably the best known SP trader I can think of right off hand was Marty Schwartz. He entered into any number of trading contests at one time where the results were documented. I guess you forgot him.

Then there was Frankie Joe, one of his competitors in the contests, who generally entered with an account along the size of $50K if I recollect.

Over the 4 month period of the contest Frankie Joe would typically make 100-200%+ if my memory serves....and he was being soundly beaten by Schwartz who at times was doing 400%+ on a $500K account.

Since you mention Schwager, Schwager mentions Schwartz entered 10-4 month contests, in which his AVERAGE return was 210% for 4 months (not annual) on an account of $400K (I thought it was $500K). In a one year contest Schwartz had an annualized return of 781%.

You might re-read Schwager's interview of Mark Weinstein, who at that time claimed to never have had a losing week since 1980. That particular book was written in 1989. Most of Weinsteins trades last hours or minutes according to the interview.

None of the above traders offer advice for sale. Schwartz has written a book.

Schwager also interviews Linda Radske (sp?), who does sell advice, seminars, etc. He seems to be comfortable with her record.

Maybe the problem Gary is that you have been looking in the wrong places. Some of these examples above are highly publicized. Hard to say why you are so dubious that anyone can make any dough trading futures.....unless it's because they are unwilling to show you their statements. Personally, I can't imagine why anyone would be interested in doing that at all.....but that's just me.

IndexTrader

[Sentient Being]

I find it helpful, personally, to keep in mind that most people who trade, do it badly and lose. I've read the same books and they are somewhat inspirational. But I try to never associate myself with those who "have made it". It has been helpful for me not to trust me. And to learn how to treat myself and my emotions as the enemy. To question what I do, why i do it, so forth. I know that for me, an inflated trading ego will most likely lead to disaster not wealth. As an amateur who does not trade for a living and most likely cannot yet trade for a living...I've little else to contribute here. One thought. How many in those books, since they have been written have 'blown up' as traders? Now I'd love to know that.

[IndexTrader]

One thought. How many in those books, since they have been written have 'blown up' as traders?

Now I'd love to know that.

Couldn't tell you. Obviously, if a trader has been successful for 10-20 years, he could still theoretically "blow up". Witness Neiderhoffer. Of the people I mentioned, Schwartz is still trading as far as I know, Frankie Joe died a number of years ago, Linda R. is still active and sells services. Don't know about Mark Weinstein.

The fact that they "could" blow up does not diminish their success in my eyes.

IndexTrader

[Sentient Being]

I asked the question for a reason. I've been working my way through "Fooled by Randomness". One thing you read in that book is that some traders with good long records must indeed not be good traders at all. But rather, purely based on probablity there MUST be traders out there who will develpe good records but eventually blow up. So it occured to me that in the two Wizards on Wall Street books there might be a trader or two in there who "blew up" because their good trading was due more to randomness than to skill. The fact that someone has a good long run making money trading DOES NOT PROVE SKILL. Which is why I think it behoves all of us to always take care. NOt to freeze on the trigger like a deer caught in the head light but to take care. Such as, using stops, risk management, diversification, whatever.

[Gary Smith]

Index Trader, we are talking about Average Joe traders here, not market wizards such as Schwartz who at one time or another held a seat on the exchange. As usual you know not of what you are talking about. Frankie Joe had a real simple technique, he sold rallies and bought dips. Then along came the greatest bull of all time and there were no dips to cover on the rallies he sold. According to his friend Larry Williams, he became so frustrated with losses he apparently committed suicide. It's all in one of Larry's books. As for the trading contests, had you ever spoken with Norm Zadeh the sponsor, he would inform you that in the futures division, 99% were net losers overall. In any one year, it was something like 90% as reported by the WSJ. And these weren't average Joes, but newsletter writers, brokers, and other assorted gurus.