Comments on: I, for one, … http://www.movethemarkets.com/blog/2006/12/20/i-for-one/ Futures Trading, Custom Programming, and Commentary Fri, 05 Mar 2010 06:12:03 -0800 http://wordpress.org/?v=2.8.4 hourly 1 By: Zoomie http://www.movethemarkets.com/blog/2006/12/20/i-for-one/comment-page-1/#comment-1357 Zoomie Fri, 22 Dec 2006 14:39:46 +0000 http://www.movethemarkets.com/blog/2006/12/20/i-for-one/#comment-1357 No DooDahs: You have a point. But not for newbies, or experienced newbies. I think the margin should be 0.1:1 for them. Woulda saved me money. Hey, I'm gonna srart a brokerage firm on that premise. Sometimes I really suprise myself on how smart I am ;) No DooDahs: You have a point. But not for newbies, or experienced newbies. I think the margin should be 0.1:1 for them. Woulda saved me money. Hey, I’m gonna srart a brokerage firm on that premise. Sometimes I really suprise myself on how smart I am ;)

]]> By: Bill a.k.a. NO DooDahs! http://www.movethemarkets.com/blog/2006/12/20/i-for-one/comment-page-1/#comment-1339 Bill a.k.a. NO DooDahs! Thu, 21 Dec 2006 21:50:42 +0000 http://www.movethemarkets.com/blog/2006/12/20/i-for-one/#comment-1339 John: have you been letting all that valuable experience slip through your fingers? John: have you been letting all that valuable experience slip through your fingers?

]]> By: john http://www.movethemarkets.com/blog/2006/12/20/i-for-one/comment-page-1/#comment-1337 john Thu, 21 Dec 2006 20:14:15 +0000 http://www.movethemarkets.com/blog/2006/12/20/i-for-one/#comment-1337 bill: i think we all know our "instruments" pretty well...one day i may figure something about my trading vehicle...if i had as much experience trading as i do with my "instrument" i would be rich bill: i think we all know our “instruments” pretty well…one day i may figure something about my trading vehicle…if i had as much experience trading as i do with my “instrument” i would be rich

]]> By: Richard http://www.movethemarkets.com/blog/2006/12/20/i-for-one/comment-page-1/#comment-1334 Richard Thu, 21 Dec 2006 16:05:38 +0000 http://www.movethemarkets.com/blog/2006/12/20/i-for-one/#comment-1334 @Bill: thanks for all the thorough replies! I'm very interested in the result of the "why stocks?" plodding. @Bill: thanks for all the thorough replies! I’m very interested in the result of the “why stocks?” plodding.

]]> By: Richard http://www.movethemarkets.com/blog/2006/12/20/i-for-one/comment-page-1/#comment-1333 Richard Thu, 21 Dec 2006 16:03:08 +0000 http://www.movethemarkets.com/blog/2006/12/20/i-for-one/#comment-1333 @moom: Regardless of what the equity markets do, or whether longs tend to win more often than shorts, the fact remains: every time I make money on a derivatives contract, someone else loses the exact same amount on the other side of the trade. And, vice-versa. It seems pretty clear-cut that this means it's a zero sum game, to me. Make sense? If not, can you explain more in terms of how the gains and losses add up to something other than $0 in some scenario? Every time I add it up, I get $0. @moom: Regardless of what the equity markets do, or whether longs tend to win more often than shorts, the fact remains: every time I make money on a derivatives contract, someone else loses the exact same amount on the other side of the trade. And, vice-versa. It seems pretty clear-cut that this means it’s a zero sum game, to me.

Make sense? If not, can you explain more in terms of how the gains and losses add up to something other than $0 in some scenario? Every time I add it up, I get $0.

]]> By: Bill a.k.a. NO DooDahs! http://www.movethemarkets.com/blog/2006/12/20/i-for-one/comment-page-1/#comment-1331 Bill a.k.a. NO DooDahs! Thu, 21 Dec 2006 15:29:33 +0000 http://www.movethemarkets.com/blog/2006/12/20/i-for-one/#comment-1331 John: Only $1,000? Do you take PayPal? Born: Of course the clearing members are responsible for all cash settlements, but that is not different from the clearing members being responsible for settlements on any other contract. Hedging exists on the cash-settled index markets just as it does on the commodity markets; to a lesser degree, but it exists. I pointed to a copper example as one of the simplest to explain. Zoomie: "Do you really need more than 4:1?" Maybe. Depends on how many opportunities you want to exploit at one time, or how tight your stops can be. exengineer: Maybe the dummy day trades work on everything, maybe, but many strategies that work on one commodity don't work on another, and indices behave differently over periods of days or weeks than stocks do. Brett has pub'd some work on this, even the sector ETFs have different patterns than the overall index ETFs. I say we should know our instruments. Richard: "why are we still trading stocks?" I'm asking myself that, and investigating. It'll take me a while, I'm a plodder. All: The most tax-efficient trading strategies are LTTF in stocks, through buying new highs, or "value" methods that hold/discard around one year's holding time, like the "magic formula." Gains are almost always at 15%, loss credits always at income levels. Tax-efficiency is marginal compared to expectancy, winning percentage (psych reasons), and inventory turnover. Given equal expectancy, acceptable win%, and equal turnover levels, choose the tax-efficient route. I haven't seen too many tax-efficient strategies that can keep up with high-expectancy, high-turnover, inefficient strategies in terms of overall ROE. Just my opinion, the value of margin is in having more, non-correlated positions in play at one time, for a given risk parameter per trade. John: Only $1,000? Do you take PayPal?

Born: Of course the clearing members are responsible for all cash settlements, but that is not different from the clearing members being responsible for settlements on any other contract. Hedging exists on the cash-settled index markets just as it does on the commodity markets; to a lesser degree, but it exists. I pointed to a copper example as one of the simplest to explain.

Zoomie: “Do you really need more than 4:1?” Maybe. Depends on how many opportunities you want to exploit at one time, or how tight your stops can be.

exengineer: Maybe the dummy day trades work on everything, maybe, but many strategies that work on one commodity don’t work on another, and indices behave differently over periods of days or weeks than stocks do. Brett has pub’d some work on this, even the sector ETFs have different patterns than the overall index ETFs. I say we should know our instruments.

Richard: “why are we still trading stocks?” I’m asking myself that, and investigating. It’ll take me a while, I’m a plodder.

All:

The most tax-efficient trading strategies are LTTF in stocks, through buying new highs, or “value” methods that hold/discard around one year’s holding time, like the “magic formula.” Gains are almost always at 15%, loss credits always at income levels.

Tax-efficiency is marginal compared to expectancy, winning percentage (psych reasons), and inventory turnover. Given equal expectancy, acceptable win%, and equal turnover levels, choose the tax-efficient route. I haven’t seen too many tax-efficient strategies that can keep up with high-expectancy, high-turnover, inefficient strategies in terms of overall ROE.

Just my opinion, the value of margin is in having more, non-correlated positions in play at one time, for a given risk parameter per trade.

]]> By: Richard http://www.movethemarkets.com/blog/2006/12/20/i-for-one/comment-page-1/#comment-1330 Richard Thu, 21 Dec 2006 15:17:00 +0000 http://www.movethemarkets.com/blog/2006/12/20/i-for-one/#comment-1330 ah, the last piece of the puzzle. I suspected it was a shell site for some sort of scam... I just couldn't figure out <em>what</em>, exactly. ah, the last piece of the puzzle. I suspected it was a shell site for some sort of scam… I just couldn’t figure out what, exactly.

]]> By: john http://www.movethemarkets.com/blog/2006/12/20/i-for-one/comment-page-1/#comment-1329 john Thu, 21 Dec 2006 15:07:17 +0000 http://www.movethemarkets.com/blog/2006/12/20/i-for-one/#comment-1329 richard: leverage is not free...btw, TOTT is just a shell site to scam newbies into my 100% sure fire system that i will let my readers have for $1000 richard: leverage is not free…btw, TOTT is just a shell site to scam newbies into my 100% sure fire system that i will let my readers have for $1000

]]> By: moom http://www.movethemarkets.com/blog/2006/12/20/i-for-one/comment-page-1/#comment-1322 moom Thu, 21 Dec 2006 14:18:21 +0000 http://www.movethemarkets.com/blog/2006/12/20/i-for-one/#comment-1322 In the long-run the stock futures market isn't zero-sum as long as the stock market is rising. On net shorts will lose and longs win. If the market goes nowhere it is zero sum (ignoring commissions etc.). The actual trading per se though is zero-sum. In the actual stock market there are fewer shorts than longs and so it is more positive sum as long as the market is going up in the long-term. In the long-run the stock futures market isn’t zero-sum as long as the stock market is rising. On net shorts will lose and longs win. If the market goes nowhere it is zero sum (ignoring commissions etc.). The actual trading per se though is zero-sum. In the actual stock market there are fewer shorts than longs and so it is more positive sum as long as the market is going up in the long-term.

]]> By: exengineer http://www.movethemarkets.com/blog/2006/12/20/i-for-one/comment-page-1/#comment-1319 exengineer Thu, 21 Dec 2006 05:25:30 +0000 http://www.movethemarkets.com/blog/2006/12/20/i-for-one/#comment-1319 People often say "If you can tradeone thing (stocks), then you can trade anything (futures, forex, etc.)", but I don't think that's true. Patterns and dynamics that exist in one market will be different in another. All these markets are just different animals, and anyone who rushes in thinking they've got it down will only take their account down. BUT--with proper study and application of universal pinciples like position sizing and risk management, I think a good trader can make a successful transition. You've got to go through several phases: 1) Observation and study of your market 2) Distill observations into an edge 3) Practice and testing of edge 4) Trade live, trade small Then you can get to "swinging your full line", as Jesse Livermore liked to say. There is a foundation of trading wisdom that is universal, but I truly believe that you have to go through these stages with every new market to be successful long term. People often say “If you can tradeone thing (stocks), then you can trade anything (futures, forex, etc.)”, but I don’t think that’s true. Patterns and dynamics that exist in one market will be different in another. All these markets are just different animals, and anyone who rushes in thinking they’ve got it down will only take their account down. BUT–with proper study and application of universal pinciples like position sizing and risk management, I think a good trader can make a successful transition. You’ve got to go through several phases:

1) Observation and study of your market
2) Distill observations into an edge
3) Practice and testing of edge
4) Trade live, trade small

Then you can get to “swinging your full line”, as Jesse Livermore liked to say. There is a foundation of trading wisdom that is universal, but I truly believe that you have to go through these stages with every new market to be successful long term.

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