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Hi Troy,
> I am about to start trading on a system I have worked hard on, but I am
> beginning to wonder whether this is a worthless pursuit.
>
> Reasons: Larry Williams doesn't trade, he sells his stuff. Neiderhoffer
> went bust. Tom DeMark doesn't trade. Schwager doesn't trade. Linda
> Rasche doesn't trade any more. Richard Dennis had a 60 percent drawdown
> last I heard. I am not sure if Gann really ever made any money.
Larry certainly does trade. He just doesn't hold positions for a long
time.
One to two days is enough for him. I know he had a big position in Bonds a
few weeks ago.
Larry likes to be right mote times than he is wrong and so takes profit
quickly. That is a lesson for
you KNOW YOUR TIME FRAME.
Neiderhoffer had very bad money management - he put everything on the line
and that is a lesson
for your system have good money management and a position size that is
safe.
Tom DeMark always was a Technical Analyst. He always said that. That is
good at generating ideas for trading
but his psychology doesn't suit trading. Most good Technical Analysts are
not good traders because they have an egoic
investment in the outcome of trades. That is they like to be right. Good
trading involves being able to admit
you are wrong and cutting losses quickly.
Jack Schwager is a Technical Analyst, he admits that he is not a trader.
The TAs role is to forecast not trade. See DeMark.
I am surprised that Linda Raschke does not trade anymore. Is this true?
It must be something to do with being held up as a great trader. When the
public eye turns to good traders they often suffer problems as they try to
live up to the image created outside of them.
Richard Dennis also suffered the LBR problem when he went off the rails in
1987. That year all his Turtle pupils made money but he lost 50% and shut
down. Is it true that he is down 60% recently? I am not sure this is true
as the last results I saw were for him were reasonable and they were up to
January. I had heard gossip that he tried to short the Bonds in front of
the bull last year - a very un Turtle Concept- but this was not born in out
in subsequent figures. sounds like a 10 year cycle for Rich!! But seriously
he also got some great publicity from Jack Schwager and Wall St Journal in
1987. Again a case of image versus reality. Trading involves losing money
from time to time. The Image thing and publicity can make losing money
that much harder to take.
Trading involves ebb and flow: losing and making money. The markets move
from Trend to non trend and make some methods fall apart for a while and
other methods come on fire. I have seen profitable methods become popular
and then the markets change as the players get to see too many orders the
same way and take them on. The same happens when big traders, like Bank
Negara in the early 90s in the currency markets, try to muscle a market. We
have a very good CTA in Australia that is finding his system not as
profitable in our markets as the floor traders are now happy to sell
everything to him when he is buying because they know his style and know
that once he is finished the market will roll back where it came from 9
times out of 10.
If a method is too popular try something else. Check your system for this.
If you are more suited to developing systems then develop systems and have
a trader trade it for you. Most Systems Developers don't trade because
they are Systems Developers. They have an egoic investment in the outcome
of that system for trading and can't handle it when it doesn't make money
all the time - therefore they can't trade it.
Hope this gives you food for thought.
David Hunt
http://www.adest.com.au/
----------
> From: Troy Kelley <tkelley@xxxxxxx>
> To: realtraders@xxxxxxxxxxxxxx
> Subject: GEN: Worthless Pursuit
> Date: Sunday, 8 March 1998 3:26
>
>
> When I started this, I assumed that if I could predict the direction of
> the market I would make money. But now I realize that prediction is easy
> compared to actually making money from the prediction. I think this is
> also what Larry, Linda, Tom ect..all these other people realize.
> Prediction is easy, making money from the prediction is hard. And
oncejust
> you start making money, making money for extendend periods of time is
> almost impossible.
>
> I think the real problem is not figuring out the randomness of the
> market, but dealing with all the competition of the market players. We
> are all taking money from each other. We are all smart people and we
> don't like loosing money. This makes for an incredibly competitive
> environment. It also means that no one, no one, will stay on top for
> very long.
>
> Just some thoughts. I welcome any replies.
>
> Troy
>
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