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Troy Kelley wrote:
> nwinski wrote:
> >
> > Troy Kelley wrote:
> >
> > > 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.
> >
> > NW: Yes, Gann made money. Perhaps not as much as the legend would imply, but
> > nonetheless he was
> > very successful.
> >
> > > These
> > > are the biggest players in this world, and they don't make a living from
> > > purely trading.
> >
> > NW: You didn't mention Warren Buffett, George Soros, or Marc Rich. All
> > three of these made billions of dollars from trading.
>
> Warren isn't really a trader is he? More of a buy and hold kind of guy.
NW: That depends on your definition of buy and hold. For some floor scalpers,
holding a position formore than 10 minutes is buy and hold.
> >
> > > I am wondering if all these people just had a lucky
> > > streak and now all they can do is sell their "knowledge".
> > >
> > > 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.
> >
> > NW: No one can successful "predict" the markets" However, a few can do a
> > credible job of forecasting the markets, strategizing a trading plan, and
> > managing the resulting risk.
> >
> > > 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 once
> > > 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,
> >
> > NW: The markets are not random.
>
> The markets are random, but predictable within certain limits. I am big
> on chaos theory.
NW: Random is one of those absolute words, like pregnant. It either is or isn't.
Now, I will grant you that some entities exhibit some random looking qualities,
but in fact are not random. This is where chaos theory is useful.
> The markets are like the weather, which is random
> within degrees. You can predict that it will rain, but predicting that
> it will rain 4.3 inches between 12 and 5 o'clock is another matter.
> Similarly, I know that S&Ps will go up. But go up 600 points and stop at
> 11:23 is another matter. The complexity of the system makes perfect
> predicition nearly impossible. If the markets were not somewhat random
> you would have systems with 100 percent accuracy.
NW: You are confusing a lack of accuracy with randomness. As for the weather, this
is why they
are called weather forecasters and not weather predictors. To predict implies that
100% accuracy is achievable. Forecasting impiles that it is ok to be less than
perfect in ones projections.
> >
> > > 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.
> >
> > NW: You don't have to be #1 to make a nice living. To be successful in
> > trading, you need only to be in
> > the top five percent. This is far better than most professions such as
> > sports or the arts where you must
> > be in the top 1/10th of 1% just to make a living.
>
> Never thought of it that way.
>
> Thanks for your thoughts Norman. I appreciate it.
>
> Troy
NW: Your welcome Troy.
Regards,
Norman
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