[RT] Where do trading profits come from?

[ric ingram <ringram@xxxxxxxxxxxxx>]

Hi,
Where do trading profits come from?
There are of course many answers.
A short answer is: 'provision of service' to others.
Another is lack of emotionalism so more opportunities are seen and
exploited.
Another equally valid answer, and perhaps of more immediate value to most
traders, but requires more words, is:
Typical profits on a trading system can be considered to be derived
perhaps from several main factors including:
        -       the
inherent profitability of the system,
        -       the
trading agency chosen by the trader,
        -       the
trading instrument chosen by the trader,
        -       the
time horizon of the trader,
        -       the
error rate of the trader,
        -       the
discipline of the trader, 
        -       the
inner tendencies of the trader,
        -       the
acceptable risk of ruin of the trader and the associated trade
size(s),
        -       other
parameters (trading system variants) used by the trader,
        -       the
use made of cross-system position sizing techniques,
        -       the
degree to which the traders fear gets in the way,
        -       the
degree to which the traders hope gets in the way...
Now the first is independent of the trader, but the remainder seem to be
trader specific to me.
This probably helps explains why, if you give a highly profitable trading
system to another trader, he/she can manage to lose money using it or
make even more money.
Unconditional regards, Ric Ingram
www.traderscalm.com







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