ITT: I aware brahs on how to supplement their income with TRADING&INVESTING (Srs)

[TheFassbender]

Just checking.
So what indicators & timeframes do you use to tilt the odds in your favor? Are you a divergence trader, overbought seller, oversold bargain shopper? How do you measure & calculate risk vs. reward?

I am for the most part a short term trader, trading first and foremost on the 15 minute chart (using longer term charts to see overall trend/previous points of resistance/interest)
I use many of the techniques you listed, mostly I trade with the trend on average, but use stuff like RSI, channel lines, fibanacci sequences etc. (as you said, overbought/sold bargain hunter) to make some countertrend profits). In terms of risk vs reward, I will first come up with a theory on the markets. I will place a stop loss at at point such that if the price reaches this point, my theory is most likely wrong. I will then decide how much I am willing to risk. I then calculate my position size such that the loss if it hits stop loss = the amount I am willing to risk.

[ZyzzOfPeace]

Wrong, I assigned the value "x" to the probability of a stock going up and down, I did NOT assume half the stocks in the world would go up. If you think I did, you do not understand statistics.

You are though, it's just that I wasn't entirely clear.

Here is your original proof:


"Let x = probability a stock goes up
Let 1-x = probability a stock goes down.

Given that you have a 50% chance of picking up or down (probability = 0.5) , the probability of getting it right is
(x)(0.5) + (1-x)(0.5) = 0.5x + 0.5 -0.5x = 0.5 = 50% (minus small commission)"


Now for a random variable X, E(X) = x1*p1 + x2*p2 + .... + xn*pn

You have set the probabilities - p1 and p2 - as x and 1-x respectively. Fine. The problem comes with your assignment of 'x1' and 'x2'. These represent the values that the random variable, X, can take. 0.5 is not a value that X can take; it is a probability. This is quite obvious; all profit-stocks do not have a 'value' of 0.5, and all loss-stocks do not have a 'value' of 0.5


What you are saying is equivalent to going, 'let x = the probability of picking a winner in a horse race, let 1-x = the probability of picking a loser in a horse race. Given that you have a 50% chance of picking win or lose (probability = 0.5), the probability of getting it right is (x)(0.5) + (1-x)(0.5) = 0.5 = 50% (minus small commission for OP being a dumbass *******)"


If you don't understand this then you don't understand basic statistics. Strawman. Etc. pls go

[TheFassbender]

You are though, it's just that I wasn't entirely clear.

Here is your original proof:


"Let x = probability a stock goes up
Let 1-x = probability a stock goes down.

Given that you have a 50% chance of picking up or down (probability = 0.5) , the probability of getting it right is
(x)(0.5) + (1-x)(0.5) = 0.5x + 0.5 -0.5x = 0.5 = 50% (minus small commission)"


Now for a random variable X, E(X) = x1*p1 + x2*p2 + .... + xn*pn

You have set the probabilities - p1 and p2 - as x and 1-x respectively. Fine. The problem comes with your assignment of 'x1' and 'x2'. These represent the values that the random variable, X, can take. 0.5 is not a value that X can take; it is a probability. This is quite obvious; all profit-stocks do not have a 'value' of 0.5, and all loss-stocks do not have a 'value' of 0.5


What you are saying is equivalent to going, 'let x = the probability of picking a winner in a horse race, let 1-x = the probability of picking a loser in a horse race. Given that you have a 50% chance of picking win or lose (probability = 0.5), the probability of getting it right is (x)(0.5) + (1-x)(0.5) = 0.5 = 50% (minus small commission for OP being a dumbass *******)"


If you don't understand this then you don't understand basic statistics. Strawman. Etc. pls go

What a surprise, another strawman. The 50/50 statement was a very brief point in my OP. I am entirely aware that prices can rise by different amounts, but I am dealing strictly with averages here.

I have covered everything there is to cover on the point of 50/50, I will ignore any future posts related to it unless they actually prove my point wrong.

[ZyzzOfPeace]

I will ignore any future posts related to it unless they actually prove my point wrong.

Newsflash: I just did.

Mathematics degree holder here. Pls go. Troll confirmed.

[mcichocki]

Lol, wrong.

It is that you win a larger amount than you lose, not that you win more often than you lose. You can still easily make money trading and lose the majority of the trades that you make.

Many small wins can be net profitable if your win % allows you to cover the few large draw-downs.
Few large wins can be net profitable if you win enough $ to cover the frequent small draw-downs.

My biggest gripe ITT is the OP's lack of discussion on draw-downs, bankroll management and the law of diminishing returns.
My 2nd biggest gripe ITT has been the 50/50 crap, failing to account for fees and taxes.

Other than that the thread is solid and sound. LOL

[payupho21]

In.

[ZyzzOfPeace]

My 2nd biggest gripe ITT has been the 50/50 crap, failing to account for fees and taxes.

Even if you ignore the fees and taxes, it's still inherently wrong.

[TheFassbender]

Newsflash: I just did.

Mathematics degree holder here. Pls go. Troll confirmed.

No, you didn't.

[arem20]

Many small wins can be net profitable if your win % allows you to cover the few large draw-downs.
Few large wins can be net profitable if you win enough $ to cover the frequent small draw-downs.

My biggest gripe ITT is the OP's lack of discussion on draw-downs, bankroll management and the law of diminishing returns.
My 2nd biggest gripe ITT has been the 50/50 crap, failing to account for fees and taxes.

Other than that the thread is solid and sound. LOL

Yes, by "win a larger amount than you lose", I meant in the net, total, at the end of the day, so to speak. I didn't meant on the individual trade. Just clarifying.

And OP, please address this:

But that's wrong, the fundamentals of making money trading (not investing, that's different) is that you win more trades than you lose, meaning on average you win money.

Lol, wrong.

It is that you win a larger amount than you lose in total, not that you win more often than you lose. You can still easily make money trading and lose the majority of the trades that you make.

There are plenty of traders that only win a small fraction of their trades but remain profitable as a result of closing out losing positions quickly and "letting winners run" as they say.

[TheFassbender]

Yes, by "win a larger amount than you lose", I meant in the net, total, at the end of the day, so to speak. I didn't meant on the individual trade. Just clarifying.

And OP, please address this:


Lol, wrong.

It is that you win a larger amount than you lose in total, not that you win more often than you lose. You can still easily make money trading and lose the majority of the trades that you make.

There are plenty of traders that only win a small fraction of their trades but remain profitable as a result of closing out losing positions quickly and "letting winners run" as they say.

That's also true. Change my statement to "That you win more than you lose" if you want to be pedantic

[ZyzzOfPeace]

No, you didn't.

Lol, k brah. Nice rebuttal to my counter-argument above (trying my best not to imply that this is a debate, as you are objectively incorrect).

Your first post:
"Given that you have a 50% chance of picking up or down (probability = 0.5)"

Your first rebuttal to me:
"I did NOT assume half the stocks in the world would go up."


but who was contradiction?

Without googling OP, define the term 'discrete random variable' and how you think it applies to this case.

Seriously, how has 33k worth of reps been imparted onto this *******? Disappoint misc.

[arem20]

That's also true. Change my statement to "That you win more than you lose" if you want to be pedantic

If you are describing something as being "fundamental", I don't think an obvious critique of it is being "pendantic". You clearly state your belief is that you win more often, a percentage issue, whereas it is clearly a return, a total issue.

[TheFassbender]

Lol, k brah.

Your first post:
"Given that you have a 50% chance of picking up or down (probability = 0.5)"

Your first rebuttal to me:
"I did NOT assume half the stocks in the world would go up."


but who was contradiction?

Without googling OP, define the term 'discrete random variable' and how you think it applies to this case.

Seriously, how has 33k worth of reps been imparted onto this *******? Disappoint misc.

You have a 50% chance of PICKING UP or DOWN (i.e LONG or SHORT)
This is the choice that the TRADER makes, whether he chooses to LONG or SHORT a stock.
With this in mind, the probability of a stock rising is completely IRRELEVANT and independent of the probability of a TRADER picking LONG or SHORT.

Once we have that out of the way, we use the simple formula
(x)(0.5) + (1-x)(0.5) = 0.5, no matter what x is. Do you understand now?

[bluemarlinO4]

And I am not the one who needs to prove anything, you are the one coming on here under suspicious terms and will not answer any direct questions. Please, where did you get your education, what firms have you worked for, why are you unwilling to answer any of these questions, what are you doing on this board, what are your previous returns, why do you not know the role of IB in the financial sector.

To be fair, you haven't posted anything about your credibility either (unless I missed it). If someone is stupid enough to blow real money on OP's advice then they deserve what's coming to them.

[mcichocki]

I am for the most part a short term trader, trading first and foremost on the 15 minute chart (using longer term charts to see overall trend/previous points of resistance/interest)
I use many of the techniques you listed, mostly I trade with the trend on average, but use stuff like RSI, channel lines, fibanacci sequences etc. (as you said, overbought/sold bargain hunter) to make some countertrend profits). In terms of risk vs reward, I will first come up with a theory on the markets. I will place a stop loss at at point such that if the price reaches this point, my theory is most likely wrong. I will then decide how much I am willing to risk. I then calculate my position size such that the loss if it hits stop loss = the amount I am willing to risk.

Could you post an example of your charting and what you look for in terms of S&R? I don't doubt you trade, I just didn't like your vague opening post and the 50/50 crap. Stop going after this 50/50 garbage, defending it makes you come off silly. Let's instead talk about up/down-side aka risk vs. reward. If you use support & resistance you can keep your stops fairly small and you can properly assess risk vs. reward.

Do you use ATR, IV or any measure of volatility to adjust position sizing? For example, in periods of high volatility people would be wise to cut their position sizing in half and double their stops so volatility doesn't whipsaw them out of an eventual winning position.

I'd much rather talk in realistic terms over 50/50 theory. Deal?

[ZyzzOfPeace]

You have a 50% chance of PICKING UP or DOWN (i.e LONG or SHORT)
This is the choice that the TRADER makes, whether he chooses to LONG or SHORT a stock.
With this in mind, the probability of a stock rising is completely IRRELEVANT and independent of the probability of a TRADER picking LONG or SHORT.

Once we have that out of the way, we use the simple formula
(x)(0.5) + (1-x)(0.5) = 0.5, no matter what x is. Do you understand now?

Sigh, I'm not going to waste my time repeating myself. Your placement of 0.5's in the LHS as x1 and x2 is, once again, incorrect.

I hope you get negged to oblivion for being the fraudulent individual that you are.

QED.

[arem20]

To be fair, you haven't posted anything about your credibility either (unless I missed it). If someone is stupid enough to blow real money on OP's advice then they deserve what's coming to them.

Summa Cum Laude, Top 10 economics program, employed as an economist and fiscal analyst, primarily doing cost-benefit analysis. Also, clearly, I have been successful investing, majority of my investments have been made over the course of the past decade and are not in the account posted, but clearly I have been successful investing as demonstrated by the photo (also it's not like I just got lucky on one trade/stock pick, that is a portfolio with 6 different positions in it, I am an investor, not a trader). I also did not make a thread claiming that I was going to be giving investing advice.

I don't need credibility to suggest that people be wary of OP and the fact that he will provide any evidence that he has ever earned money trading, has an educational background that would support "expertise", is trustworthy, or has ever held a reputable position at a firm.

[mcichocki]

Even if you ignore the fees and taxes, it's still inherently wrong.

Agreed but I don't think OP intended to use the 50/50 thing as his key bullet point on why trading can be profitable. He probably (hopefully) regrets posting that because he's been beat up over and over on it. I just hope we can all shift to a more productive discussion here.

[newtmiscer]

lol@the 2013 making this thread.

[TheFassbender]

Could you post an example of your charting and what you look for in terms of S&R? I don't doubt you trade, I just didn't like your vague opening post and the 50/50 crap. Stop going after this 50/50 garbage, defending it makes you come off silly. Let's instead talk about up/down-side aka risk vs. reward. If you use support & resistance you can keep your stops fairly small and you can properly assess risk vs. reward.

Do you use ATR, IV or any measure of volatility to adjust position sizing? For example, in periods of high volatility people would be wise to cut their position sizing in half and double their stops so volatility doesn't whipsaw them out of an eventual winning position.

I'd much rather talk in realistic terms over 50/50 theory. Deal?

Sure, I'm glad to stop posting about this 50/50 crap which was one small part of my post.

I had some pretty good trading during the week trading EUR/USD and GBP/JPY. Give me a few minuted and I'll fetch some charts.

[ILIKECEAREAL]

lettuce be real tea here

the OP should be negged to red and this thread closed before anyone follows his advice

[TheFassbender]

Sure, I'm glad to stop posting about this 50/50 crap which was one small part of my post.

I had some pretty good trading during the week trading EUR/USD and GBP/JPY. Give me a few minuted and I'll fetch some charts.

At this stage I feel it is worth noting that I am a university student and thus my trading times are limited to a few hours of short term trades a day.

Here is one of my trading sessions - during which I primarily traded GBP/JPY


I placed my short trade at 19.45 for a few reasons.
-In terms of the trend line (which had been verified by several previous points), the price had hit the top range and had slowed down in price
-The RSI, while just above 50, was in my opinion overbought for such a downward trending market. Going closer up, to a 5 minute chart, the RSI was almost 70.

This was enough justification for me to sell. I shorted at 140.60
I closed the trade about an hour later at 140.43, making me a healthy profit (plug in your own capital/leverage ratios). The basis for closing it: While it hadn't reached the bottom trend line, it had reached the midway point which is often of some relevance. In addition the price stalled and wasn't moving towards the bottom channel line as I expected.

I realise that this wasn't a spectacular trade (like for example buying at the bottom of the trend when the price was at the bottom channel line and the market was way oversold according to RSI), but it was profitable which is fine by me given my limited trading hours.

[Fit1NYC]

If from a good uni, yeah.

http://ce.columbia.edu/statistics

I can do this one for free, not sure if I'd get accepted though. I don't know anythin about math

[mcichocki]

At this stage I feel it is worth noting that I am a university student and thus my trading times are limited to a few hours of short term trades a day.

Here is one of my trading sessions - during which I primarily traded GBP/JPY

I placed my short trade at 19.45 for a few reasons.
-In terms of the trend line (which had been verified by several previous points), the price had hit the top range and had slowed down in price
-The RSI, while just above 50, was in my opinion oversold for such a downward trending market. Going closer up, to a 5 minute chart, the RSI was almost 70.

This was enough justification for me to sell. I shorted at 140.60
I closed the trade about an hour later at 140.43, making me a healthy profit (plug in your own capital/leverage ratios). The basis for closing it: While it hadn't reached the bottom trend line, it had reached the midway point which is often of some relevance. In addition the price stalled and wasn't moving towards the bottom channel line as I expected.

I realise that this wasn't a spectacular trade (like for example buying at the bottom of the trend when the price was at the bottom channel line and the market was way oversold according to RSI), but it was profitable which is fine by me given my limited trading hours.

How did you trail your stop, if at all? Did you scale out of your position to lock in profit along the way or was it all in all out?

[HMFIC_BROWSIN]

These threads are always lulz worthy.

[TheFassbender]

http://ce.columbia.edu/statistics

I can do this one for free, not sure if I'd get accepted though. I don't know anythin about math

Tbh brah I'm not sure about online courses. For investment banks they're mostly looking for a traditional, good undergraduate university, maybe a masters. You'd be better off with a full time degree. I guess a lot depends on your undergraduate.

How did you trail your stop, if at all? Did you scale out of your position to lock in profit along the way or was it all in all out?

Because I was monitoring the stock personally, I didn't have a stop loss. I would have closed if it went significantly above the trend line (say 15% of the width of the channel) and re-entered bitterly if it went back down below the trend.

In terms of profit, on this occasion I took my profit all at once, I did however expand my position as it started falling rapidly on the down side.

[TheFassbender]

How did you trail your stop, if at all? Did you scale out of your position to lock in profit along the way or was it all in all out?

Also, it should be overbought not oversold when referring to RSI

[Das_Auto]

At this stage I feel it is worth noting that I am a university student and thus my trading times are limited to a few hours of short term trades a day.

So you are in school and probably never traded a full day ever in your life, but we should listen to your advice... okay.jpg

once you are trading everyday all day and have real seat time come back and try to give advice.



Pic of my desk when I was doing PM, I ran a covered call strategy

[TheFassbender]

So you are in school and probably never traded a full day ever in your life, but we should listen to your advice... okay.jpg

once you are trading everyday all day and have real seat time come back and try to give advice.

I don't feel qualified to give advice to experienced traders, I do feel qualified to give advice to newbies however.

[snizzle77]

do we have an options trading thread in the misc?