for aspiring traders

[Guest3722A]

Quotes from trader's journal at elite trader:


"2010 Recap.
For the year I grossed $825,141. I traded a total of 27,258,000 shares, 241 futures contracts and 204 options contracts. I don't have my net total to the penny yet, but it is very close to $750k."

"For me the year was dominated by three things.
1. A massive error trade on April 15th that cost me $81,000. I accidentally input incorrect price data for a spreadsheet that I use to send 1000's of automated orders.
2. May 6th flash crash and ensuing volatility explosion. This event and the three weeks after it accounted for 40% of my year.
3. Lack of volume. The second half of the year, many days felt like a ghost town. There was a lot of thin stocks with wide spreads and just not much happening. My screen time dropped dramatically compared to other years as I essentially stopped trading after the first hour of the day most of the time."

Forums - Grinding it out, day after day

 

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[Bearpaw1]

I've been training and trading Forex for the last year. I've read numerous books and postings. Do you have a website with more info I may study? Any suggestions would be greatly appreciated.

Thank you for you insights and help.
Christopher

 

[Sparlin]

Hey Chris, I don't know if you read these threads, but I found them using the search box.


https://www.thefastlaneforum.com/st...rading/28539-daily-forex-trading-9-5er-2.html


https://www.thefastlaneforum.com/st...ading/4419-any-active-forex-traders-here.html

 

[Forza]

I wonder, if you had no emotions and therefore were utterly objective, would that help much? How much better would it be?

 

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[Guest3722A]

I've been training and trading Forex for the last year. I've read numerous books and postings. Do you have a website with more info I may study? Any suggestions would be greatly appreciated.

Thank you for you insights and help.
Christopher

Have you read "Trading in the Zone" yet by Mark Douglas? I like recommending this one because it helps to get a trader's psychology strait.

Also, just from my casual observations, there are several trader based message boards on the internet, with lots of folks sharing and exchanging ideas. However, developing the right *mindset* for developing and growing your net worth exponentially you wont really find in too many places. Actually for me at least, there's only one place where I've found this type of highly overlooked information on the net, and that is here.

Not being a shill. Just being honest. Good luck and please keep us updated on your progress.

 

[Kak]

Thanks man, you show the rest of us its possible.

Could you share with us how you got started? How large of an investment?

 

[Bearpaw1]

I have "Trading in the Zone" sitting on my desk as I type this note. I decided to read Fastlane first. The other books I have read on Forex are as follows.
"Essentials of Foreign Exchange Trading" by James Chen.
"Forex Patterns & Probabilities" by Ed Ponsi.
"Trading from your Gut" by Curtis Faith ( who was one of the original Turtle Traders).
"Beat the odds in Forex Trading" by Igor Toshchakov.
"How to make a living Trading Foreign Exchange" by Courtney Smith
"Beat the Forex Dealer" by Agustin Silvani
I hope this list will help you in you quest. They've all been very helpful to me. Feel free to ask for any suggestions and I will glad help.

 

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[Nicola]

I wonder, if you had no emotions and therefore were utterly objective, would that help much? How much better would it be?

It makes people very difficult to understand!

I have an Autism spectrum disorder - I have emotions, but I have a lot of difficulty in understanding them. I find being utterly objective very easy.

But people don't communicate objectively, or take decisions objectively - they use emotion in both.

When you can't deal with emotions then the people around you appear to be acting idiotically and/or irrationally most of the time.

No emotions would only be useful if no-one had them. But then where would we be? It takes emotion to appreciate art, and the birth rate would drop significantly without love.

But in summary - having no emotions would not help - it would make life much more difficult. Having no emotions would not be better - it would be much worse.

Hope that helps

 

[Guest3722A]

I have "Trading in the Zone" sitting on my desk as I type this note. I decided to read Fastlane first. The other books I have read on Forex are as follows.
"Essentials of Foreign Exchange Trading" by James Chen.
"Forex Patterns & Probabilities" by Ed Ponsi.
"Trading from your Gut" by Curtis Faith ( who was one of the original Turtle Traders).
"Beat the odds in Forex Trading" by Igor Toshchakov.
"How to make a living Trading Foreign Exchange" by Courtney Smith
"Beat the Forex Dealer" by Agustin Silvani
I hope this list will help you in you quest. They've all been very helpful to me. Feel free to ask for any suggestions and I will glad help.

Thank you for the suggestions. I appreciate it. I'm not really an fx guy but I do like learning about all of the markets. Currently I'm reading "The Futures Game, Who Wins Who Loses & Why" by Teweles and Jones

Amazon.com: The Futures Game: Who Wins, Who Loses, & Why (9780070647572): Richard Teweles, Frank, Jones: Books It's a pretty good read.


I'm also reading "Atlas Shrugged" by Ayn Rand and I just got my first magazine from a subscription I ordered of "Active Trader". Awesome magazine!! Highly recommend it. I also just finished Wayne Dyer's, "10 Secrets for Success and Inner Peace".

 

[Guest3722A]

I wonder, if you had no emotions and therefore were utterly objective, would that help much? How much better would it be?

IMHO, you'd probably be a perfect trader so long as you had a viable system with an edge. Emotionless in itself is one reason why so many traders are using black boxes nowadays. Set it and forget it!

 

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[AJGlobal]

IMHO, you'd probably be a perfect trader so long as you had a viable system with an edge. Emotionless in itself is one reason why so many traders are using black boxes nowadays. Set it and forget it!

ya but do the black boxes really work ? If it was that easy everyone would have one, no ?

on a side note, I did read trading in the zone. I found it very redundant but the last few chapters were worth reading the book.

I also just finished how to make money in stocks. Great wealth of info but the last 1/3 of the book basically plugs O'Neil's company IBD. Definitely worth the read though if your interested in charts and picking stocks for long term.

Next up is Technical Analysis explained by Pring. Just got it the other day.

 

[gvv1965]

Anyone interested in option trading here? I've got a decent experience and would be pleased to share my knowledge

 

[Guest3722A]

ya but do the black boxes really work ? If it was that easy everyone would have one, no ?

Yeah I did put a positive spin on that quote of mine above about black boxes. I'm not familiar with them whatsoever. Was just trying to make a point about eliminating emotion, and becoming a machine!

From what I've read around the internet, the black box isn't affective if the trader doesn't have a proven system, AND, isn't able to tweak it as things change. MASSIVE liquidity seems to be necessary too with Bboxes because from my understanding it enables the institutions to manipulate and suck out liquidity, as well as sub penny, which govt regulation doesnt allow for with the common Joe who's not using a machine. What I've learned is the majority of HFT is from prop firms and other institutions. If they're using it, and it has been a growing trend, it's obviously working for their purposes. The little guy on the other hand has quite a maze of a learning curve.

The guy who wrote the thread above is a grey box trader which basically means he actively inputs data that his system executes for him.

On a side note, many of the survivors at prop firms are using black boxes.

O'Neil's company IBD

Yeah I like O'Neil...alot. Much of his theory is incorporated into how I believe fundamental analysis should be conducted.

Technical Analysis explained by Pring

It's dry!

What I liked about the book was that it's required reading for those who who are testing for the Chartered Market Technician designation.

 

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[taichijedi]

Anyone interested in option trading here? I've got a decent experience and would be pleased to share my knowledge

I have been experimenting with options trading. I find it very interesting, particularly for the leverage it offers in the markets. I know the basics (Calls, puts, basic terminology like strike prices and premiums,) but I have alot more to learn.

 

[gvv1965]

I have been experimenting with options trading. I find it very interesting, particularly for the leverage it offers in the markets. I know the basics (Calls, puts, basic terminology like strike prices and premiums,) but I have alot more to learn.

Taichijedi,
As a sort of "veteran" in terms of option expertise, I cannot appreciate anything more than your clear idea about having a lot more to learn.
Options are very complex and also the leverage that attracts traders (and indeed attracted myself 3/4 years ago) is somewhat daunting, if you think that I have experienced cases when GOOG was down 17 dollars in a day and the ATM puts where down 50 cents! Too many variables influence the price of options, so, if we don't have a sound knowledge of the hidden reality, we risk large losses also when our market forecasts are correct.
On the other hand, I have experienced that option strategies are flexible enough to be manipulated and changed according to the market behavior. In other words, we can start a strategy with a bullish bias and dramatically evolve it to a neutral or bearish strategy as the market unfolds.

If you are really passionate about options, once grasped the fundamentals, I would suggest you to get a solid understanding of greeks (no, they are not only market makers' stuff) and then to start focusing on spreads that are really the bread and butter of options.

 

[IceCreamKid]

gvv1965,
Can you please expand on how one can enter a strategy with a bullish bias and evolve it into a neutral or bearish strategy later on? I'm assuming you'd be making adjustments regularly, but I'd be interested in more clarification.

Also, what type of spreads would you suggest I read up on? While trading spreads, is it always your goal to have a neutral delta?

I don't consider myself a veteran with options trading in any way, but I must say that I feel there is much more of a science with options than with the traditional art of buying a stock.

 

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[Bearpaw1]

Thanks for the Futures game tip I'll check into it....

 

[gvv1965]

gvv1965,
Can you please expand on how one can enter a strategy with a bullish bias and evolve it into a neutral or bearish strategy later on? I'm assuming you'd be making adjustments regularly, but I'd be interested in more clarification.

Also, what type of spreads would you suggest I read up on? While trading spreads, is it always your goal to have a neutral delta?

I don't consider myself a veteran with options trading in any way, but I must say that I feel there is much more of a science with options than with the traditional art of buying a stock.

Ryan
I am not a veteran either, just an avid student, since 2006.
Let's start with delta neutral. My answer is no, I do not normally try to be delta neutral. The reasons behind this are quite long and will probably deserve a post on their own. For the time being, suffice to say that I consider delta (and other greeks) while analysing overall a position, but i do not look to be delta neutral by definition.

About spreads: Sorry, was not clear, but I was referring to verticals, i.e. call or put verticals that are actually the foundation of more complex strategies.

About adjustments, I think that the beauty of options is not (or not only) the leverage that attracts so many people, but the flexibility and the possibility to morph a position into something different, according to different opinions about the market.
Though if I try to apply those concepts to wingspreads, I'll try to make an example as simple and as straightforward as possible.

Let's assume you are bullish on GOOG (now around 616ish) and you buy 10 615 feb call @10.1, with the P&L profile as per the following image.

View attachment 2310
Suppose that, by Feb 12, a week before exp, GOOG raises to 630, where you think the stock will face a strong resistance and will start a consiolidation phase. At this point, according to a theoretical model, your options could be worth 18.7ish.

If your market opinion at this point in time has changed from bullish to sidewayish (meaning you think that chances are that GOOG will stay around 630 until the expiration), your position must change accordingly. Of course, you can sell your options and cash-in the nice gain you got until now (18.7-10.1=8.6), but you can also consider to morph your long call position into a 630 call bfly by, for instance, selling 20 630 calls (est.d @ approx 9$) and buying 10 645 calls (@ est.d 3.7$) for a total credit of 18-3.7= 14ish.
Considering the initial outlay of 10.1 when you bought the original 615 calls, it is like you are taking 4$ out of the table, risking the remaining 4 of your paper profixt versus a potential max gain of ADDITIONAL 15 (the width of the butterfly) for a total profit of 19ish. See next picture.

View attachment 2311
A word of caution. While evaluating what to do next, you don't have to consider the butterfly using 10.1 (the original outlay) as the price of the 615 call. Indeed I would suggest you to consider the butterfly as a fresh, new position, using the current market price of the 615 calls (around 18 and change according to the model). This because you should ask yourself: Would I risk 3.8/4 $ (the current cost of the bfly) for a potential profit of 15? if your answer is yes, go ahead, if your answer is no, yous should just liquidate your 10 615 calls, make the cash register ring and find a new trading opportunity.
Hope this somewhat clarifies.

 

[linny75]

Hello , i can answer this question, i have been trading on and off for the past 5 years and have completely failed to make a consistent profit due only to one thing, lack of control over emotions. The reason behind it was that i was relying on my success in trading to produce income to keep my family and even though i didn't need the income at that point it removed the dispassionate overview and turned me into an emotional overtrader.

I have since removed myself from the forex trading arena for the past few months while i set up a new online business and have over the past week or so been papertrading to see if now that the pressure is off whether i will improve as a trader.

I have found that because i am looking at the charts a lot less i now seem to have a lot more emotional control and will be switching back to a small account over the next few weeks to test it out.

In trading self discipline, emotional control and money management are what mark out the proffessionals from the get rich quick merchants who get eaten up and spat out again by the market makers, brokers and the like.
you can't be completley unemotional because you are human but you can do things to reduce the emotional pressure, such as not relying on trading to feed your family!

 

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