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Steve:
In a theoretical sense, if you are looking at day trading the S&Ps, you can
argue that you are certainly able to day trade the S&Ps with a small account
because the margins required for day trading are small and because *you are
assuming* that the day trading abilities you have as a trader will keep your
losses small AND that you won't have an out trade AND you won't have a negative
abhorrent run of trading losses...meaning a string of losses that add up to alot
of cash.
I personally don't mix day trading and longer-term trading in the same bundle,
except that they both require trading skills and a fundamental knowlege of
trading. I think it's a fallacy to think that just because you are watching a
market in real time and can pick up a phone, your risk has decreased. How many
people don't have the discipline to pick up the phone and stick with their plan?
And when you are day trading, and it gets hectic, there are now so many more
things to go wrong: Increased frequency of out trades, much more slippage,
degradation of your thought processes because you are trading as fast as you
can...when you trade in smaller time frames, more can go wrong.
And last, most day traders are already trading for smaller profit targets, so
when you add it all together, it's a slim margin left for error.
I think people that are beginning to trade should consider starting with large
time frames and work their way to lower time frames, once they are competent and
if they wish to try shorter time frames. Longer time frames are less noisy and
it is easier to pick a trend and trade with it, and find congestion and stay out
of it.
Does that answer your question at all?
Tim Morge
Steven Buss wrote:
>
> I can't quote Kase vertabim. But I think a concept from her book could add
> some light to this discussion.
>
> She argues that degree of account risk per trade and for any trading system
> is very much dependent on the price volatility of the specific timeframe
> bars one is trading. Assuming one has and implements money management
> techniques appropriate to the timeframe being traded one risks less trading
> 30 minute bars than daily bars. This makes a great deal of sense to me.
>
> So, when a few folks state below that "there's no sense trading" with
> anything less than x dollars, I presume they have a particular trading
> timeframe in mind for which they believe x dollars is the equity one should
> have to trade the timeframe.
>
> If one were to trade a larger timeframe than they have in mind, the equity
> requirement would be higher. If one were to trade a smaller timeframe than
> they have in mind, the equity requirement would be lower.
>
> Isn't that right? If not, why do you think so?
>
> Steve Buss
> sbuss@xxxxxxxxxxx
>
> -----Original Message-----
> From: Timothy Morge <tmorge@xxxxxxxxxxxxxxx>
> To: xet73@xxxxxxxxxxxxxx <xet73@xxxxxxxxxxxxxx>
> Cc: Neal T. Weintraub <thevindicator@xxxxxxxxxxx>; cpbow@xxxxxxxxxxxxx
> <cpbow@xxxxxxxxxxxxx>; omega-list@xxxxxxxxxx <omega-list@xxxxxxxxxx>
> Date: Monday, August 03, 1998 8:53 AM
> Subject: Re: Trading as a way to financial success (a reply)
>
> >Peter:
> >
> >Well, perhaps they should do some very basic investigation into the
> business of
> >trading. The more informed they are before they begin, the more likely they
> are
> >to go bust. And by informed, not just informed about a system, a quote
> system or
> >how to tune their computer.
> >
> >The markets have been around for thousands of years. many people now think
> that
> >something has 'changed' because computers are here and there is an
> internet.
> >Many of these same people think the stock markets can grow to the sky,
> because
> >the 'fundamentals' of economies have now changed--and we'll never need or
> have
> >recessions again. These people are naive.
> >
> >Trading is trading is trading. Learn a good solid foundation, not today's
> fad.
> >
> >Tim Morge
> >
> >Peter Kiefer wrote:
> >>
> >> o.k. they should invest in your workshops --- right
> >>
> >> ----------
> >> > From: Neal T. Weintraub <thevindicator@xxxxxxxxxxx>
> >> > To: cpbow@xxxxxxxxxxxxx
> >> > Cc: omega-list@xxxxxxxxxx
> >> > Subject: Re: Trading as a way to financial success (a reply)
> >> > Date: 03 August 1998 16:00
> >> >
> >> > Thanks for your response.
> >> > I wish more people were this direct. People tend to think all they need
> >> is
> >> > software and a system and they are on their way to Easy Street with
> Easy
> >> > Language. Hey, maybe that could be a new slogan...Easy Street with Easy
> >> > Language.
> >> > You know when you consider that the Vanguard Funds are up nearly 100%
> in
> >> > three years, it is hard to understand why people even fall prey to
> >> commodex.
> >> > The Merc has a course called before you trade. But I can tell you this.
> >> > Anyone with less than 20,000 in trading cash should not be in Futures.
> >> > Period. End of Story. I am tired of hearing about people saving $7500,
> >> then
> >> > buying software for $3500 and using the balance to trade.
> >> > And anyone with more than $10,000 in credit card debt can never trader
> >> > themselves out of debt.
> >> > Take the $7500.00 and buy a vending route.
> >> > -----Original Message-----
> >> > From: Conrad Bowers <cpbow@xxxxxxxxxxxxx>
> >> > To: Neal T. Weintraub <thevindicator@xxxxxxxxxxx>
> >> > Cc: Omega List <omega-list@xxxxxxxxxx>
> >> > Date: Sunday, August 02, 1998 3:23 PM
> >> > Subject: Trading as a way to financial success (a reply)
> >> >
> >> >
> >> > >Neal T. Weintraub wrote:
> >> > >>
> >> > >>
> >> > >> wHAT DO YOU THINK OF TRADING AS A WAY TO FINANCIAL SUCCESS.
> >> > >> PLEASE POST YOUR RESPONSE TO THE LIST.
> >> > >>
> >> > >
> >> > > For a minute I thought this was a joke (in light of my very recent
> >> > >post) but I believe it's not so here goes:
> >> > >
> >> > > I think you have to have a method that actually makes money and the
> >> > >capital to withstand the drawdowns that will occur before you succeed.
> >> > >That makes it not a very good way to go for someone of limited means
> or
> >> > >anyone who is emotionally attached to money. The brochures that say,
> >> > >we have a great system, and then show it on 20 commodities, often go
> on
> >> > >to say, "you can trade this on a more limited portfolio with $5000".
> >> > >Even tho they may have been honest in their testing, I believe the
> >> > >chances of the smaller portfolio having acceptable results is much
> >> > >lower. Primarily because the drawdown numbers for a smaller portfolio
> >> > >will be more prone to being inaccurate or the portfolio "cherry
> picked".
> >> > >
> >> > > It's not the easy street it's made out to be either. Unless it's a
> >> > >small portion of your net worth and NOT your way of making a living,
> >> > >it's hard to see how it could not be anything but stressful to some
> >> > >degree.
> >> > >
> >> > > For many of us who have other careers, it can become a second job in
> >> > >itself, maybe even supplanting our original one. In effect my
> original
> >> > >goal to pay off some debts has become a goal to succeed in trading.
> And
> >> > >that goal has distracted me quite a bit from my first career. I can
> >> > >tell you why I don't like my current job, but was the transition to
> >> > >spending a lot of time on trading well thot out? Nope, it evolved.
> For
> >> > >those of us who seek to make a transition (or by default are making
> the
> >> > >transition) from our current career to trading as a means of making a
> >> > >living or being sucessful, maybe we should step back partway along the
> >> > >way and ask, was this the right thing to do?
> >> > >Even if it was a means to $ sucess for an individual with another
> >> > >career, it might not be right for them. I guess everyone has to ask
> >> > >themselves what success is.
> >> > >
> >> > > Also I think your emotions have to favor you being in it. If you
> have
> >> > >conflicting feelings about it, it's less likely you will succeed.
> >> > >Recently, I built up my small account from about 3K to 6K, patiently
> >> > >grinding out small losses and a few larger wins in options and
> >> > >mini-contracts. But a number of emotionally charged issues have come
> >> > >up, at times introducing frustration, discouragement, and even guilt
> >> > >into my thoughts. After being rigorous (perhaps too much so) about
> >> > >kicking back options that werent' making money, I suddenly stopped
> >> > >looking at options i had altogether, same with most potential new
> >> > >positions. What was going on? The only thing I can think of, is that
> >> > >my ambivilence about some of my decisions, including getting into
> >> > >trding, was being manifest by actions that might take me out of it.
> I
> >> > >used to scoff at some of the stuff in M. Douglas book about how you
> may
> >> > >defeat yourself - seemed crazy, why would anyone do that? But now, I
> >> > >think I've seen it in my own trading.
> >> > >
> >> > > In short then I think it is a way to financial success for a few
> people
> >> > >- The ones who either find a method and/or have the talent to succeed
> >> > >in this field. It's a low-probability route for someone who does not
> >> > >have a fair amount of capital already. I think its a way to financial
> >> > >success for someone who:
> >> > >
> >> > >1. has a positive expectation system or talent, and has confidence in
> >> > >it.
> >> > >
> >> > >2. has the capital to back that up.
> >> > >
> >> > >3. has a risk mgmt plan consisntent with 1+2.
> >> > >
> >> > >4. Doesn't have conflicting emotions about the money at risk; doesn't
> >> > >have conflicting emotions about other issues or people that are in any
> >> > >way impacted by the decision to trade.
> >> > >
> >> > >
> >> > >What % of people in this crazy arena do you think have all 4? For
> those
> >> > >it's a good way to financial success. For the rest, nope.
> >
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