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Steve,
Get a life. If I'm so full of it, waste your time somewhere else.
Doc
Steve Karnish wrote:
>
> In the end, what has been shared? Buy low, sell high? Use tight stops?
> Sell an "evening star" pattern? Buy a hammer? Invest 50% of your capital
> in one issue?
> Brilliant stuff from a "newbie" that has traded for less than a year. Many
> of us use exactly the same tools (unmechanically). Few of us think we are
> "God's gift to trading". As they say in the north Idaho panhandle: "What
> a pile of bear scat".
>
> Steve Karnish
> CCT
>
> ----------
> > From: Docteur <docteur@xxxxxxxxxx>
> > To: metastock@xxxxxxxxxxxxx
> > Subject: Re: S&P 500 (was AOL, CSCO, & WMT)
> > Date: Thursday, February 25, 1999 10:46 AM
> >
> > Rick and ALL on this thread,
> >
> > Thanks, thanks for all the input. Wow. It was huge.
> >
> > Hopefully this letter will put all this bantering to rest. By some of
> > the e-mails I have received I pissed a lot of people off. It wasn't my
> > intent. My intent was to share my style of trading, which works very
> > well for me. I understand now that we all have much different styles.
> > Some of us have "systems" that work. I'm not one of those.
> >
> > First off I never said this is easy money. It's the most intense and
> > difficult thing I have ever done.
> >
> > Secondly, I know nothing of market dynamics and don't care to. I don't
> > really know what makes my computer work either but I sure can make it
> > serve my purposes.
> >
> > So you won't waste your time speculating any more here's what I did in
> > November (my 2600% return month): I made 37 trades (round trip and those
> > I added to as a stock climbed/fell were all bunched under one trade).
> > None of them were more than two days in duration, the majority of them
> > were less than three hours in duration. 33 were winners and 4 were
> > losers or break even, including commissions and slippage.
> >
> > My account balance is the same at the beginning of each month. I take my
> > profits out at the end of each month and start over fresh. Why?
> > Because with the kind of returns I am making I am living very, very well
> > and I see no point in rolling profits back into my account. I don't
> > need more than I am earning. I want to spend the money now and enjoy my
> > life. And besides, I have a very large nest egg from my other
> > businesses that is my slow grow capital (20% - 35% per year).
> >
> > I may be reading this thread wrong but I assumed the goal of trading for
> > most people on this site is to make a living at it. If not, well then
> > my style is not for the people reading this post. I take and spend
> > profits every month. I have no debt and enjoy life immensely.
> >
> > As soon as I start trading again (remember I am reviewing the last
> > several months and just focusing on learning more right now) I will use
> > the same strategy and guidelines that I did in the last six months,
> > those being: Never risk more than 50% of my capital on any one position
> > and never risk more than 4% of that on any one LOSS.
> >
> > More often than not, my stops put me at a break even or a commission
> > loss. I keep very tight stops and only enter a trade when it screams at
> > me to enter. I never trade more than TWO STOCKS at any given time. I
> > typically buy between 10 and 100 contracts per trade, depending on how
> > deep in/at/out of the money I am on that trade. Very intense but it
> > works for me. So, I try to never risk more than 2% of my capital on any
> > given trade LOSS.
> >
> > So, if I make 30 trades in a month and the average trade is 100% return
> > on 50% capital at risk (which with options is very possible
> > consistently) I am cruising along at 1500% per month on my capital
> > account at the beginning of each month. I won't tell you how much my
> > base capital was during the last six months but when I start trading
> > again (as opposed to taking a break to continue learning) my base
> > account will be in six figures.
> >
> > I keep very tight mental stops and never enter a trade unless I see an
> > intraday period top or bottom. I trade off real time charts and use a
> > 15 minute time frame for candlesticks and chart patterns and a dynamic
> > daily chart to give me the bigger picture of support and resistance
> > levels.
> >
> > Market up or market down makes no difference to me. If it's falling, I
> > simply buy puts. So your discussion of what the market did over that
> > screaming three months holds a little weight, but not much. Remember, I
> > earned 1200% in January and themarket basically closed where it opened
> > for the month. I actually have done better with puts than with calls,
> > even with an up market because of the volatility.
> >
> > I generate the kind of returns I do because I work on a monthly basis.
> > Average return on capital for the year will be close to what I earn
> > monthly because the base stays constant. My goal is ten times my
> > account balance at the beginning of each month. For the last six
> > months, I have averaged that or better. Again, I pay myself at the end
> > of each month over and above my static capital base. That affords me
> > less risk and higher returns and I don't continue to roll my profits.
> > Why take more risk for less return? I pay myself at the end of each
> > month and start over again because I know that I can match my previous
> > months return. And I have been making a phenomenal living just doing
> > what's in front of me.
> >
> > Like I said earlier, I know nothing of market dynamics. Don't need to
> > and don't care. I know market makers control this thing. I just want
> > to go in the direction they are moving it. Doesn't matter to me what
> > they are doing or thinking. I couldn't care less. Won't waste my time
> > trying to figure out what everyone is doing to manipulate the market. I
> > just trade what's in front of me.
> >
> > I keep my strategy simple and read the market as it unfolds. Market
> > dynamics? Nah, waste of my time. Know nothing about them. You nor
> > anyone else understands them either because if you did, YOU'D be on the
> > cover of Forbes. Even Greenspan admits there's a lot he doesn't know...
> >
> > Truth is you have a system that works pretty well. Great. Keep doing
> > what you're doing. More power to you. More power to all of you.
> >
> > My style of trading (definitely not a system because the market is fluid
> > and a systematic approach just doesn't serve my purposes) affords me
> > great monthly returns on my capital with very little risk. Defnitely
> > not for everyone. But my goal is to make a really good living/cash flow
> > at this with the least amount of risk. I'm succeeding. That's all that
> > matters to me.
> >
> > Again, if I was continuing to build my capital base of course my returns
> > would progressively shrink every month. But why continue to risk larger
> > sums of capital for smaller returns? Never understood that one.
> >
> > I live off what I earn and live very, very well. My risk is minimal, my
> > returns quite satisfactory. What more could I ask?
> >
> > BTW, great analysis. It just doesn't apply to me.
> >
> > I wish you and everyone onthis thread continued success. If nyone wants
> > to contact me please feel free to do so direct.
> >
> > Doc
> >
> >
> >
> > Rick Mortellra wrote:
> > >
> > > Lionel,
> > >
> > > After reading his "proof" exposing this guy is easy and I don't even
> have to
> > > check his *hypothetical* trade prices, nevermind his real ones. The guy
> is
> > > all over the place, having us in a trade for 3 hours one time and 30
> days
> > > the next. He also expects us to ignore the fact that these gains
> weren't
> > > made over a series of many trades but just 2 huge totally disimilar
> trades
> > > made months apart. Practically one-offs in other words. Especially
> since the
> > > stocks he mentions are extraordinary to say the least as well as the
> time
> > > periods in which he trades their options. These stocks have exhibited
> > > unprecedented prices moves during a never-before-seen 3 month market
> period
> > > that saw the Dow gain more than 30% and a NASDAQ gain of almost 85%. To
> > > imagine this "easy money" is the normal state of the market from now on
> and
> > > trades like this can be made daily is total naivete.
> > >
> > > Now here's how the math catches up with his charade:
> > >
> > > Of course buying CALL options can keep his losses small EXCEPT he bets
> his
> > > whole wad on each trade because he infallibly calls the highs and the
> lows.
> > > But if he looses, which he implies he sometimes does, he looses
> EVERYTHING.
> > > End of fairytale.
> > >
> > > Obviously he has lived to trade again so he must not be betting
> everything
> > > and perhaps he's practicing a little bit more money management than he
> lets
> > > on. In which case, his 2400% return on his *account* is not what it he
> makes
> > > it out to be.
> > >
> > > Let's keep it simple. Say he still bets a very imprudent 10% or $1000
> of a
> > > $10K account on the AOL trade. He wins $24k. Suddenly his total
> hypothetical
> > > account's return is just 240%, still not too shabby. However, maybe
> he's not
> > > so wild and crazy and only bets 2%. Now his total hypothetical returns
> are
> > > back down to a more believable 48%.
> > >
> > > But, he completely ignores slippage and commissions. Not that
> commissions
> > > would be adversely huge (maybe for a 1000 contracts though) but they
> sure
> > > won't be $20 roundtrip either! Slippage, on the other hand, could be
> very
> > > adverse to his options' return and it is a stretch for us to believe
> that
> > > he, as a retail customer, could buy 100, much less a 1000, contracts of
> AOL
> > > for a 1/16. Frankly I can't even imagine an expiring option with strike
> of
> > > $160 for a wild stock like AOL trading barely out of the money that
> low, but
> > > perhaps it did among option makers/institutional accounts at the low of
> the
> > > cash market. Nevertheless his trade would probably make up a
> substantial
> > > part of an expiring options' total open interest that day and as soon
> as his
> > > order hit the sheets the options' bid/ask would fly. He's talking
> trading
> > > 10,000 to a 100k shares of the underlying here too and the options
> maker is
> > > also gonna lay that risk off in the cash market. Needless to say, he
> seems
> > > to lack a complete understanding of the market dynamics. Cutting him
> some
> > > slack and allowing slippage to bump a market order price up to just a
> > > measily 1/4 point lowers his trade return to 60%. And using 2% of his
> total
> > > account to enter lowers the return to a *really* more normal 12%.
> > >
> > > Now here's the big surprise! Once he starts making his big profits the
> IRS
> > > is gonna want a piece of it. In advance! Because as anybody who has
> made big
> > > profits in stocks learns, you gotta pay your estimated taxes quarterly
> > > whether you finish the year at an overall profit or not. Otherwise the
> IRS
> > > paddles your behind with penalties. This directly impacts the amount of
> his
> > > trading capital available throughout the year, hence the overall profit
> he
> > > can generate, thus lowering his return even more.
> > >
> > > So as you can see, unless you belive 1-2 lucky trades vouche for a
> persons
> > > trading skill, just overcoming the frictional costs of trading is a big
> > > hurdle for any trader regardless of his system or lack thereof. Even a
> huge
> > > win can be cut down to size.
> > >
> > > Of course the simple solution is to make more than 1 huge trade a month
> but
> > > I doubt if he could conjure up enough historical data. Certainly not
> enough
> > > to satify my risk profile.
> > >
> > > At least I give him credit for buying slightly out-of-the money CALLS
> on
> > > highly volatile stocks on expiration, as it is a tried and true
> strategy.
> > > Especially, in these net stocks like AOL when they are splitting the
> > > following Monday. It's a great punt WHEN it pays off. But make no
> mistake,
> > > that's exactly what it is, a punt, as any option maker will tell you.
> Just
> > > like a lotto ticket, 99.99% of these plays expire worthless, except in
> this
> > > case the ticket would cost you a minimum of $625. But when they payoff,
> the
> > > rewards can be spectacular. I congratulate him on his paper win, but
> now the
> > > challenge for him is turn his Monopoly money into cold cash.
> > >
> > > cheers,
> > > Rick
> > >
> > > -----Original Message-----
> > > From: Lionel and Gail Issen <lissen@xxxxxxxxxxxxxxxx>
> > > To: metastock@xxxxxxxxxxxxx <metastock@xxxxxxxxxxxxx>
> > > Date: Thursday, February 25, 1999 1:13 PM
> > > Subject: Re: S&P 500 (was AOL, CSCO, & WMT)
> > >
> > > >Docteur:
> > > >
> > > >Your "proof" is after the fact. What have you traded?
> > > >
> > > >
> > > >Lionel Issen
> > > >-----Original Message-----
> > > >From: Docteur <docteur@xxxxxxxxxx>
> > > >To: metastock@xxxxxxxxxxxxx <metastock@xxxxxxxxxxxxx>
> > > >Date: Wednesday, February 24, 1999 7:52 PM
> > > >Subject: Re: S&P 500 (was AOL, CSCO, & WMT)
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