Full time trader reccomends

Syprik
 

Registered: Jan 2008
Posts: 248

 

05-15-13 07:08 AM

Had some hesitation posting this, but I guess if it motivates 1 or 2, why not. I truly adore this profession, and want other truly motivated persons to give it a fair shot. A superfluous wave of negative attitude has in some ways taken over this site. Perhaps small anecdotes like this will help off-set it. I wrote this on another finance forum (NP) I frequent, will just copy and paste here with some amendments for privacy/updates...

Perhaps my own trading timeline going from part-time retail to career professional will be slightly insightful (will keep it abbreviated):

I'm 31-35 yrs old. After wrapping up grad school (mech engineering @ top 5 univ, early 2000's), worked in respective field for ~3yrs. Had great interest in trading dating back to late undergrad yrs. Made a difficult decision to devote ~60% of 1st year salary to a capital trading block. Keep in mind I was a single bachelor, 23-25, no dependents, no mortgage, no significant overhead costs, ~$750 rent, car paid off, no school loans (tx to acad scholarship and generous parents). It was approximately $2000/month in living expenses year one. For ~1.5 of the first 2 yrs @ engineering position, almost every Mon-Thurs evening of work week I devoted 2-4hrs to educating myself & developing position trade ideas. Endless time wasted running into dead-ends, as I was beyond naive and lacked experience to know which way to run. I even spent time chasing momentum pump & dump plays at Raging Bull/Investors Hub. It required serious sacrifice to personal life. Around end of year 1, actively started to swing trade an initial ~$30k trading block magnified by 2x margin utilizing volatile US equity small & mid cap issues. Was able to monitor positions 3-5x times per day when @ work. From that initial stage of active trading, over the next 1.5yrs was able to increase the initial block by ~4.5x net. Brunt of return came from three stand-out stocks, including one OTCBB that went from $1.50 to $12. Never had more than 6 stocks in portfolio at one given time. Technical/fundamental mixed approach. With such a result, was able to convince and secure a $100k interest free loan from my father. The agreement entitled him to silently share a joint account with me to monitor my risk/positions, with the right he could pull his $100k at any point. My equity was first to take a drawdown hit. Over the next 10 months, increased the net capital yet another ~30% after a brief 10% draw-down.

Three months before submitting my resignation I finally became comfortable and convinced to go full-time. Another stipulation of the loan was I had to have a full-time "secure" salary, so 3-4 months after my resignation I was obliged to return the initial loan amount. With almost $200k free & clear trading capital, 1.5 years of "bare-bones" living expenses tucked away, and a healthy initial dose of trading experience, I began my journey. ~Eight years later, I'm now a small independent futures trading business that I'm confident would rank in top 10% of independent trader CME exchange members (capital size). Consider myself very fortunate, and could calmly retire tomorrow. Outside a relatively small block I manage for my wife and parents, trade zero opm. Contract out programming development work when needed (ie freelancer, fcm recommended parties, etc) and lease an IMM @ CME from time to time (depends on what type of strategies I plan to run, thus use 3 month lease terms). I have almost exclusively traded futures since mid-2006. RIMM, AAPL, and some dry bulk shippers were the only equities I touched through 2007. ES 90% of volume, 10yr/6E a very distant 2 & 3. I strictly trade the large futures contracts due to significant liquidity, leverage, most favorable tax structure, cost @ higher volume, market access (all in that order of importance).

You must not be afraid of leverage. Everyone talks about over-levering (yes, beyond critical), but not many discuss the silent killer after you have some experience under your belt: under-leverage. I'm a clean cut, relatively nerdy & passive persona, but one thing you really need in this business is brass balls & stamina to get through the daily grind. You hear it said in passing, it is not an exaggeration. If you don't have it inherently, be patient as it takes some time to build up. I'm not going to give an exact example, but say I had $500k in capital in 2007. In that era I would have taken $100k of that block, and swore it off as gone. Heavily levered it up (ex, $4k-5k capital/ES contract or ~2-2.25% fixed fraction). The remaining $400k used for far less risk position sizing. That early, calculated aggressiveness while I was trading well really helped moved the arrow forward. Now I use a very conservative fixed-fraction position sizing of around 0.2% per strategy as I'm esp keen on protection. Since late 2006, I'm strictly intra-day for 95+% of my volume. I deploy 5-6 active strategies for ES, roughly half momentum, half mean-revert. Each relatively small/conservative on their own, but when summed out end of month, very strong. I strongly discourage relying on 1-2 "bread n butter" methods. Fell into this trap plenty of times through-out my journey. Current winning ES trades average in the 8-10 tick range in present volatility. 2008/2009 was an incredibly large gift as the volatility catapulted my accounts to a different realm. So, ultimately there is no denying it: I had some good blind luck at the onset, fortunate circumstances not available to everyone, and timing. Another tremendous mental backstop is my wife is a clinical research engineer (manager) at a large medical device company. If I were to have a bad year, she could support us without blinking an eye.

Moral of this story: give yourself a fair shot by going in with a decent size capital block, hold reasonable expectations, and work your ass off. Going at it full-time with only $25k is reckless imo. Swinging that size block while you work full-time is the smart decision. I would wager too many think they can get this off the ground in a few years. Give yourself 3-5yrs to build the full-time block. If you are good, once you get to that 150-250k range via your after-work efforts, that first 1MM can come very quickly once full-time. Trust me, compounding/exponential growth is a sight to see, no rush to get there.

Best of luck.

Plant based diet

NoDoji
 

Registered: May 2008
Posts: 8107

 

03-18-13 08:28 PM

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Quote from lvivihor:

Hello NoDoji! It's pleasure to read your informative posts about plant based diet. I'm also on plant based diet for year now. We have 2-years old kid, who also do not eat meat, but i faced a lot of criticism from my parents, friends, local doctors and so on. The main arguments they have is that it is very dangerous not to eat meat and fish for so little kid, because his body is forming and he needs to eat meat, as meat is the best source of iron, B12 and other amino acids. I doubt if i have right balanced diet for my kid right now, cause if i'm wrong that can be irreversible process for kid healths. I even though to gave my son meat once a week. So i need your qualified advise about this. Can you point me out for good scientific source, or book about right plant based diet for little kids?
Thank you and waiting for your answers.

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Plant-based diets provide very high quality nutrients. B12 can be got from many fortified sources or a supplement.

Meat is not necessarily the best source of iron. Meat contains heme iron, the absorption of which the body doesn't regulate. So its possible to get more iron than is needed and this is not healthful. Non-heme iron from plant sources is absorbed as needed. If you're low on iron, you'll absorb more, if you have enough or too much iron, you'll absorb less.

Here are my favorite resources for plant-based nutrition:

http://www.drmcdougall.com/free.html

http://nutritionfacts.org/

And here's my favorite book for kids:

http://www.amazon.com/Disease-Proof...t/dp/0312338082

Steps to become profitable

Of all the things I did on my quest for consistent profitability, there were several that were harmful (such as trading live without a well-researched and tested trading plan).

Here are the steps that contributed to consistent profitability, listed in the order they should've been taken:

1. Research trading ideas by compiling statistical data over time through varying market environments (trending, ranging, chopping, calm, and volatile).

2. Develop entry and trade management rules for the ideas that indicate the highest odds of success.

3. In a simulated real-time environment, test these mini-plans.

4. Continue to study and tweak based strictly on statistical data, not on bias or feelings.

5. Discard any ideas that are not consistently profitable after commissions and slippage.

6. Practice trading the remaining ideas in sim for a period of time sufficient to have offered all the common market environments listed above. If you have difficulty following your trading plan, code the ideas into an automated trading system.

7. Trade live with smallest size, and size up accordingly as your account grows. If size affects your ability to follow your plan, trade small again, and consider automating to avoid "Thinking While Trading".

While practicing in sim, I highly recommend reading Mark Douglas' Trading in the Zone several times with a month of trading experience between readings.

I personally found the best trading ideas come from studying price action. A thorough study of price action reveals edges that do not degrade over time. The reason is that basic human nature is unlikely to change in your lifetime; it certainly hasn't changed much at all throughout recorded history.

Pa setups

I'm curious what, specifically, would constitute proof to you that a trader, trading a single futures contract (to ensure there's no average-down opportunity), can in fact be consistently profitable applying one or more of the following standard technical price action concepts:

1. Entering a with-trend position on a pullback

2. Entering a with-trend position on a break of a previous high/low

3. Fading the extremes of a tradeable range

4. Entering a counter-trend position based on the old 1-2-3 reversal setup

Automated Price Action

Registered: Mar 2004 Posts: 140

01-17-13 05:03 PM Donna, Direct chart trading is okay (imo) for the CL for scalping if you going to set it up and not have to move the stop/target lines around afterward too close to the last transaction. Clicking a line and dragging it around is super slow in comparison to single clicking a DOM column cell with no confirmation. We're talking 2-4 secs vs a 1/4 sec mouse click which can cost you some on a 1 min chart. But you have the resources to go beyond that. Your husband can program. It's not hard at all to build your own price ladder (PL) and customize it for your trading style. Your broker is IB, right? It's cake to use their ActiveX component with C# and Windows Forms. All the hard stuff has been done for you already as far at the lower level trade and price messaging goes. What I'm currently doing is have my charting package send over entry signals to my PL and it can also send add-on signals for more positions. NO WAY I could enter these kinds of trades manually on non-time based charts like tick and volume and range charts. I can setup custom brackets and reversals off of the stop or target by overloading either with more contracts than the entry size and also immediately protect the reversed quantity with new stop / target brackets. On the entry brackets, I can simply click the pre-target or pre-stop on the PL and then adjust their respective stop/target values in case I expect more or less from a break-up or break-down. I can get out of a trade based on a dollar value or move my stop up based on one. When I add to a trade on a scalp chart, sometimes price moves so quickly that I have to protect a max dollar loss or live gain made because I'm working with higher leverage which can turn on me. I pretty much know now what point targets of 20, 30, etc can yield with add-ons (even when I don't know the specific entry order prices in real-time) and also know I can get very brief moments of live max gains (where I'm satisfied vs the initial risk) and the computer is going to know and react to getting out far more quickly than human decision. It's all open to your imagination and specific needs. YOU are in control of what it can do. So many things I haven't mentioned and you would have a blast telling your husband what you need as the capabilities improve and you think of new ways to enhance your style of trading. My next step is to build my own charting to go along with it and then I can make direct chart trading far more flexible than this commercial krahp you see. They cater to the generic. There's always some roadblock they'll throw in your way once you see what you did with your PL and then want to innovate direct chart trading beyond what vendors provide. No, you're not going to lose $1000's from programming mistakes. Handling the messaging and keeping track of your position is just not that hard. You can get a basic PL up showing live bid/ask/last in less than a week (1 day if you're familiar with the IB interface). You can get basic order management up in another two. Planning for multiple symbols on multiple PL's running at the same time AND in multiple IB accounts takes more time. Don't worry about that. Do the basic, knowing you're going to rebuild it with more experience gained. The rebuilds are fast because you can reuse so much of the old code, just better organized to handle the more advanced requirements. In the meantime, sure, try a direct chart interface from whatever place. But build YOUR dream PL in parallel. You can integrate your husband's auto-trading code as a part of that and then the wheels of your imagination will REALY start to turn! [You won't even have that DOM number junk on it]

noDoji how to handle losers

Notes I took from a Mark Douglas interview: “There’s no way to know the sequence of wins and losses. If we want to be able to trade our methodology in an effective fashion, to be able to utilize this methodology in a way where we can extract the maximum amount of profit that it makes available to us based on the pattern that it identifies, we have to do it in certain ways. Our mind has to be free to be able to execute these trades without making trading errors and the trading errors come from believing that because the pattern is present, that it’s going to give me a winning trade on THIS one; THIS trade is going to be a winner. You can’t think that way. That’s the way the typical trader thinks. The typical trader thinks ‘I’m not gonna put on this trade on unless I think it’s gonna be a winner or why would I do it?’”

“Trading a technical methodology or a technical pattern does not have anything to do with being right or wrong. It’s just an odds game. You’ve got to be able to take every single trade because you don’t know the sequence of wins and losses. You’ve got to be able to identify what your risk is and that’s simply ‘How much am I willing to spend to find out if other traders are going to come into this market and bid it higher than my price or offer lower than my price if I sold?’”

The solution is to change your mind, to change the way you think. “[You’ve] got to eliminate the potential to think that the market’s going to disappoint you. And the way [you] eliminate the potential is by understanding that trading is not about being right or wrong. It’s a probability game.”

There are stages of development such as learning how to think in probabilities so the market doesn’t have the potential to cause us to feel emotional pain.

“When you put on a trade and it doesn’t work, all it really means is that some of the traders didn’t come into the market that had the same belief that you had, or the same conviction about this market doing whatever it is you thought it was going to do. You have to learn to walk away.”

We can’t predict collective human behavior. “The methodologies that we have access to, these mathematical formulas, do that for us. But you have to understand that there’s no possible way that these mathematical formulas can predict the outcome of these patterns on a trade by trade basis, only on a series of trades. So when I get a signal from my methodology, at the most fundamental level what this is telling me is that the odds are in my favor that somebody is going to come into the market (this is what the pattern means) and bid it higher than here if I bought or offer it lower than here if I sold. That’s all that it’s saying. Now they’re either gonna come or they’re not, and so as a result I don’t look at this as being a ‘right’ or a ‘wrong’; I look at this as How much distance am I going to give the market to move away from my entry point to tell me that they’re either going to come or they’re not, and any further is not worth the cost of finding out.”

I can't speak for Lescor, but my guess is that he learned to attain this mindset before he became a master trader.

Post about Automated trading

A long time member here, although I don't post much. To this topic I can contribute so here it goes for whatever it's worth:

Is it possible to build an automated, profitable trading strategy? This is an oversimplified question (it doesn't actually ask the right kind), but in short, yes, without a shred of doubt. There are a number of algo shops that make a killing at this every day. There are a number of individual traders who make a great living at it as well.

Now, what is the barrier to entry?

There are at least four that I know of:

1. Money. Not as high as some might think because many algo strats are not very latency sensitive. However, one must be capitalized with at least 12 months of expenses in addition to trading capital. In my experience, 12 months wasn't nearly enough, but I am different, just like everyone else.

2. Experience. This is a very, very big one. In my view one has to be at least a promising discretionary trader (someone who knows how to take money out of the market, but not necessarily keep it) before any automation can be even thought of. One must understand the markets very well, through spending thousands of hours trading them instead of reading books and mining data. That latter point is key: a purely academic/scientific initial approach is fundamentally flawed as it takes out the organic nature of the markets out of the equation and thus prevents one from gaining a complete understanding. However, this approach must by all means be applied, but only after said understanding has been gained.

3. Time. It takes 18-24 months to code a dependable platform. Being able to code this platform implies proficiency in programming and systems overall, in addition to having obtained the above experience. Or, it implies that there is a free access to someone else's proficiency. In my experience, this is an exceedingly rare combination of skills, especially given the low survival rate. By the way, existing tools can be used and there is evidence that they can be used profitably. There are notable disadvantages and it may take an almost equivalent amount of time to get them set up/trained right.

4. Drive and commitment. Hardest and most important of all of the above. Have no illusion, making this work is very, very hard. And once you think you realized just how hard it is, it gets harder still. So, you must really want this. You have to want it so bad that you dream about your system/strategy/whatever at night. You think about it on your commute home and you think about it as soon as you wake up in the morning. And you work all the time. Evenings, mornings, weekends. holidays. Nights. And when all of this doesn't produce the results you expected, you take a hard look at yourself and do it all over again. And to make it yet harder you must balance it all with your life. The actually important things like your family, your parents, your friends.

So, is it possible? Sure thing.

"It's long way to the top if you wanna rock'n'roll."

/Wulfrede