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bh2007  
#21 Posted : 12 years ago
bh2007

Rank: Member

Groups: Registered, Registered Users
Joined: 2/15/2013(UTC)
Posts: 13
Location: Hong Kong

After watching One Million Trader - BBC.

I consider my current trading profile would be more worst than the first out trader - (the retired IT Engineer: Simon). At least the retired IT Engineer: Simon is one of the contestants from many people…..

From my analysis, I believe Simon's over confident leading to his failure. His over confidence probability due to his mind-set: “30 years plus experience for resolving engineering problem mean that he could also resolve trading / market problem using similar approach”. I also think in same way before watching the video. Now, I must tune my attitude too.

God bless BBC giving me such good video for avoiding similar mistake in early stage.

In the post-interview, Simon remarked that MARKET behaves completely different from his previous working environment…… His early thinking – trading problem was just like IT debugging, if a bug identified in his trading strategy, he will debug his strategy step-by-step, then he believe the plan will finally works. In fact he admitted that even after 3 or 4 time debugging process, his trade strategy still not working (the highest capital lose in the team).

(i.e. trading is dynamic problem, which change from time-to-time, not as a static environment / closed system like most engineering problem).

To be one of the 3% population of the trading community. (97% are lossers - not vertify yet).

It is easier said than done! Trading is much difficult to manage than Roulette Table.

Two points I heard before, but now have deeper appreciation of their importance.

(1) John Nash’s games theory in trading environment.

(2) Steven Achelis – we are not dealing with pure logical entity in trading world.

Technical Analysis from A to Z - Achelis....

Mechanical trading systems can help us remove our emotions from our decisions. Computer testing is also useful to determine what has happened historically under various conditions and to help us optimize our trading techniques. Yet since we are analyzing a less than logical subject (human emotions and expectations), we must be careful that our mechanical systems don't mislead us into thinking that we are analyzing a logical entity.

Mechanical trading systems can help us remove our emotions from our decisions. Computer testing is also useful to determine what has happened historically under various conditions and to help us optimize our trading techniques. Yet since we are analyzing a less than logical subject (human emotions and expectations), we must be careful that our mechanical systems don't mislead us into thinking that we are analyzing a logical entity.

BH2007

2013-02-25

eddie.m  
#22 Posted : 12 years ago
eddie.m

Rank: Advanced Member

Groups: Registered, Registered Users
Joined: 1/20/2012(UTC)
Posts: 152

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bh2007 wrote:

After watching the BBC Million Dollar Traders, the life of a trader is
not as fascinating as I originally though.
It makes me realised why my broker friend mentally collapsed on one
day after the market closing!!
It is a stressful job, but the reward is good ONLY when your are smart
enough to handle it.

Million Dollar Traders 1-3
http://www.youtube.com/watch?v=v6ciY8u04Kk

Million Dollar Traders 2-3
http://www.youtube.com/watch?v=ML4ObTeYLhg

Million Dollar Traders 3-3
http://www.youtube.com/watch?v=pWkzAvE5aQQ

Hello BH2007, [:)]

1). You do all the bad things baby traders do. [:@] DO NOT BOTHER ABOUT MILLION $ TRADERS. [6]
I had a friend pit trader in NYSE who was working for somebody getting $300K/year + perks. His boss ended his contract when many firms sent their pit traders home, so he lost his job. He had to take a job as restaurant host for $20K/year.
I asked him why he does not switch to trading with the PC from home. His answer was that he cannot trade with the PC. He was very good in the pit MOSTLY BECAUSE HE WAS IMITATING WHAT OTHER PIT TRADERS DO, but staying at home and trade by the charts was forbidden art for him BECAUSE HE COULD NOT THINK FOR HIMSELF. I laughed because several years earlier I told him to learn the charts and that he was setting himself up for trouble but he laughed it off.
Now he is not pit trader anymore because he cannot find somebody to give him a deal like his former boss, and he is not a private trader. He is nobody in New York, Mr. Zero.

2). Your road is different. As a beginner, you should not allow anybody to influence you, especially negatively. You bought MS, now you have to learn it (6 months). Put the User Manual on the left of your computer keyboard and apply everything from every page in MS. Do not ru[censored] Do not think you know and that you may skip pages. Stop thinking you are this big contractor in Hong-Kong anymore.
Why?
Many people worked to make MS to be a useful software, and now you must show respect to MS founder, to MS, to MS staff and to User Manual.

I hate to use "why" and "should", but in emergency situations like yours I am asking you a question again: why do you want MS staff to add more features to MS in the future when you did not make any serious money with the already existing features?

DO NOT TRADE during learning process. Close your positions and keep your money in the Bank until you finish your tuition. There are more chances you will be losing money right when you learn and hope everything will be OK than you making profits! ... That's not the way to build up your dream.

Train your mind for fixed hours sessions, every day 30 minutes, just like you would be training for marathon running.

3). Trading is the world's best profession, but YOU must make it work for you.

You could have bought MS 27 years ago when it first came into the market. Now you have to recuperate lost time. Make it fun A.S.A.P. [:D]

eddie.m  
#23 Posted : 12 years ago
eddie.m

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Groups: Registered, Registered Users
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bh2007 wrote:

Dear Eddie,

Thank you for your value advice. I recalled a old book bought in Altantic City 21 year ago (while I was a student spending a wonderful working hoilday in US during summer 1992)

"So You Wanna Be a Gambler - Advanced Routette" by John Patrick, in which the book discussesd how to overcome the house advantage (2.7%) in a routlette table.

1. Bankroll control.

2. Knowledge of the game.

3. Money management.

4. Discipline.

In summary, there is only 3% constant winner against 97% constant loser in any Casino. In a routette table you have to beat the odd of single zero (French version) and double zero (US version). It is about 2.70% and 2.63% of house advantage of a casino respectively.

In the trading market the house advantage is not fixed (dynamic enviroment). It seems more difficult than managing a routette game (static enviroment).

For trading game, I am only at the verrrrrrrrrrrrrrry begining of stage 2 - knowledge of the game as mentioned in John Partick's book. The only advantage I possess - patient. i.e. never rush to place a bet.

I consider trading should be joyful just like any game in a casino (provided that you take control) when people treat trading as a hobby it creates fun by itself. (i.e. spend affordable money on it, built-up knowledge on your own hobby, identify your mistake with reasons, the reward is not just about profit - it is about lesiure, amusement and proofing yourself as a competent person in a particular hobby)

How to proof yourself as a competent person in trading - at least you don't loss money, but not about profit! I managed in routette game through a very tough experience :(

I also run a private lottery pool with a group of friends, so far the performance is better than theory results (still need money input for draws). My broker freind said the result is likely as "a margin of error" at the positive side - luck. The sampling side is too small. Yes, I apprecate his comment. But as a Lottery Manager, it makes fun too! It suggests the draw pattern is not at random walk, there are some skills to overcome the adverse situation for big prizes (i.e. charting lottery tickets given better chance than pure randon tickets). Remember the house advantage in loterry pool is about 35% min. in my country (tax, commission and charity purposes)!

My mindality in trading should similar to what I learned from John Patrick's way in routette table. The sad thing is that I cannot enjoy the game anymore when I return to Hong Kong (casino is not legal here!).

Few months ago, one of my devil friends aroused me that there is always a similar game in NATURE in Hong Kong........

My devil friend gave me a SERIES on managing LONG Buy and LONG Sell position (I doult it works, but could not falsfy it neither), but such SERIES including NO stock screening. So I continue digging deep into it. Then I draft a specification to my own requirment and exchange with my devil friend. He comments that such software specification considered to be instiutional level and must be bloody expensive.

I kept searching the software and talked to another old friend (also a broker) who end-up borrowing me his Metastock version 9. Now I purchased the version 11 after few weeks trial. (it fits my specification, but most improtantly at a reasonable price).

During the trial, I discovered the difference between LONG only and both LONG & SHORT position. That's why I obsessed in SHORTING at present. Once I re-sovle my curisity and limitation of the software, I will continue my jounery.

In the past 7 days in the forum, I learned lots of new stuff from you dear Fellows. That's why I love western culture too. In local forum (HK), no people will give such responsive and constructive comments in a single query.

This is my story for end-up with Metastock!

It is worth to mentioned that I admired Mr. Wabbit's life style. I am a freelance engineer practising in HK too, that why's I have a little-more spare time than average Hong Kong people working on his own hobby.

Working enviroment in HK is crazy as a full time Contractor - 0800 to 1800 Mon to Sat - 7 to 14 days annual holidays a year, not to mentioned overtime til 2000 every day when considering as a responsible person in your position. It is a dog's life for general working class in Hong Kong :(

I recall the film Margin Call - the sacked manager (Risk Management) and the smart analyst used to be a bridge engineer (I also built roads, bridges and tunnels for benefit the mankind too) and rocket engineer respectively. This inspired me that I am also one of the people dealing with numbers! I also learn a good phase from the film too "today my loss is your gain"....Ha Ha Ha

To be serious, I am learning and searching for "on the good life" at present. Certainly, it is not about money (but also essential stuff). It is about how to live with goodness and virtue in my life. In short it is about learning "HOW TO DIE" in philosophical term according to Plato's version.

Talking too much at week end.

BH2007

2013-02-23

Hi BH2007, [:D]

1). Bankroll? Although I never heard of anybody doing it, do you know you can learn to trade and pay $0 for lessons?
Although I heard of such very rare persons, but I never met one, do you know that you need $0 to trade?
All these require special human qualities inexistent in most people.

2). Knowledge of the game?
I met many millionaires who have been to school only 3, 6, or 8 years and quit while still teenagers. They had no knowledge of anything, but their nose was good at smelling where big dollars hide ...
Aapart from being honest, working hard and getting up early in the morning, more is required to hit gold.

3). The best money & wealth management is not to spend it outside the markets. All your profits should go back into the markets, not to women, wives, children, luxuries, etc.
Most private traders can NEVER grow rich because of their familial environment, which is strange because they help a family which does not help them grow professionally ...

4). Discipline.
It is very difficult for a newcomer to trading to be disciplined because discipline in his previous profession did not pay off. You can do everything nice and well in your contracting job, but there is always someone to put you down in construction business. How can you become disciplined if you are bitter about it?

5). Game theory?
Yes, it will help you ONLY WHEN you have US$5M trading capital with the broker and US$5M savings in the Bank.
What game are you in at this moment to justify applying game theory? [:P]
Please do not tell me because I do not want to hear. [:@]

6). You have to train your mind to success. How? With the little step of learning MS User Manual fast and well. After three months you will feel good about finishing studying it in time. Then a few other things will follow BASED on your success with the User Manual.

7). Trader groups, seminars, etc. in Hong Kong.
This is a must, but to go there you must speak some technical analysis language first.
You do not know how much I wish I could visit HK especially in summer. [ap] I've never been there. [:S]
Maybe I'll come there at a money show one day ... [:O][A]

8). Yes, we do not analyze a logical entity. All we need to analyze if whether what we see has profits coming for us. You must never be sad when you lose $$$ or happy when you gain $$$. This is hard to do.

I'll come back here this weekend for you to discover the most important quality in the stock markets. [:O]

eddie.m  
#24 Posted : 12 years ago
eddie.m

Rank: Advanced Member

Groups: Registered, Registered Users
Joined: 1/20/2012(UTC)
Posts: 152

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Hello BH2007, [:)]

See my post dedicated to you at http://forum.equis.com/forums/thread/41140.aspx. [:D]

eddie.m  
#25 Posted : 12 years ago
eddie.m

Rank: Advanced Member

Groups: Registered, Registered Users
Joined: 1/20/2012(UTC)
Posts: 152

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Hi BH2007, [:)]

How are you keeping?

You can work around deducting the cost of borrowing for bearish trades as follows:

In Enhanced System Tester, start New Simulation, Select Systems, next, Select Securities, next, in System Testing Options click on More …, click on Trade Execution, under Slippage select Percentage, Sell Short 4%, Buy to Cover 4%.

You may add a bit more for treasurer bill rate, margin interest and yes, slippage too.

You will get an approximation to think about if you still want to play the bearish side. [:O]

Keep in mind that the money & risk management features in Metastock are just an introduction to specialized portfolio management software which you can buy on the Net or have it done specifically for you if you are going to manage serious capital.

Re your BRK-B shares: you should have bought on Nov. 16, 2012 and held all the way up until today. There was no real major technical analysis reason for you to have sold your entire stake until now, and you could have bought more shares several times since then, but you could sell your entire stake this coming Monday, and switch to something more serious for beginner traders.

If you invested US$8,500, do not use the profit from BRK-B for reinvesting. Find other securities to buy with only $5,000 of your trading capital. Save the balance of $3,500 plus your ~$2,000 profit from BRK-B for when you lose your entire capital and you need to start again. [:D]
eddie.m  
#26 Posted : 12 years ago
eddie.m

Rank: Advanced Member

Groups: Registered, Registered Users
Joined: 1/20/2012(UTC)
Posts: 152

Was thanked: 1 time(s) in 1 post(s)
eddie.m wrote:

Hi BH2007, [:)]

In Enhanced System Tester, start New Simulation, Select Systems, next, Select Securities, next, in System Testing Options click on More …, click on Trade Execution, under Slippage select Percentage, Sell Short 4%, Buy to Cover 4%.

Sorry, BH, I was wrong to split the presumed costs in half. [:(]

All interests + slippage should be assigned to the Short Sell side because they are to be calculated at the start time on the start amount, not at exit time on profits. So, the Short Sell box should have 10%.

At Buy To Cover, you apply only slippage, 0.1%. [:)]

You want to estimate the figures as accurately as possible, which you do, but you can find them out exactly only after you placed a few trades. [:D]

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