Option FanaticOptions, stock, futures, and system trading, backtesting, money management, and much more!

Do You Know if Successful Traders Exist?

At first glance, successful traders are found and documented most everywhere you turn.  Examples include folks who run mentoring programs or serve as trading instructors, profitable traders documented in literature (e.g. Master Traders, Market Wizards, Reminiscences of a Stock Market Operator), friends or third-hand acquaintances who have made great sums of money in the markets, ex-floor traders, etc.

An imbalance does exist, however, with regard to what it takes to garner a following in the stock markets and other disciplines.  As a pharmacist, I usually had at least 10 people seeking my wisdom every single day about medications and supplements.  To earn that coveted opinion, I worked my butt off for four long years of pharmacy school in exchange for a doctorate.  Contrast this with the world of investing where trading gurus need only make claims of success, be convincing in their delivery, and perhaps show a profitable trade or two before others seek their direction to wealth nirvana.  In many cases, people will purchase wares written by these trading gurus or pay good money to attend seminars.

Indeed, the credibility imbalance is real because it doesn’t take much to discount every category of “expert” mentioned in the first paragraph.  How do you know said trading “mentors” or “teachers” ever made consistent profits on their own in the financial markets?  The same applies to friends or third-hand acquaintances.  Have you ever looked at their tax returns?  Have you ever seen brokerage statements or trade confirmations?  The same may be said of “great traders” written about in books.  Jesse Livermore, in fact, went bankrupt in 1934 and was suspended by the CBOT.  I know of a couple ex-floor traders who blew up accounts and chose to go into teaching.

What motives have these people to lie, you may ask.  Two of them are money, fame, fame, and money.  Who exactly can you trust when trying to measure up against these?

If testimony to financial market success in on trial then reasonable doubt certainly abounds with regard to its veracity.

Stow Your Ego Before Trading

Here’s a worthwhile quote from acclaimed systems developer Thomas Stridsman: 

“It is only a question of how long you stick around. If we all stick around long enough the probabilities have it that we all will be wiped out sooner or later. It is just a matter of time.”

Once upon a time, I lost 50% of my total net worth in a span of less than two weeks.

Been there done that and hope to never live through such an experience again.

Global Disclaimer

From options trading to futures trading to stocks and hypothetical results of proposed trading systems, I intend to show many things on this blog.

Everything presented on this web site is intended for educational purposes only.  I am neither licensed nor registered as a financial adviser; nothing here should be construed as personalized financial advice.  I have also added a Page accessible from the sidebar to reinforce this.

Options, futures, commodities, equity, and foreign exchange trading involves substantial risk that all traders should fully understand before committing real capital to the markets through live trading.

With regard to any backtesting results I will present in this blog, please understand that no representation is being made that any account will or is likely to achieve profits or losses similar to those presented here.  For numerous reasons, actual trading results can differ substantially from those seen in backtesting.  Please understand that hypothetical backtesting performance results are generally prepared with the benefit of hindsight and without financial risk.  No backtesting record can completely account for the impact of financial risk on actual trading activity.  As an example, emotional pain due to intratrade drawdown often forces traders to deviate from their planned trading strategy.

Trading’s Best Kept Secret

I’m a full-time options trader looking to diversify more of my portfolio to futures and equities.  System development and backtesting fits in here.

Last night, I posted the following on the Yahoo! AmiBroker (AB) User’s List:

“I’ve had AB for several months now but have struggled immensely with learning to code. I’m not a programmer. I found Bandy’s Introduction to AB to be hardly introductory. I believe the AB web site and documentation to be complete but hard for me to understand.

Is there anyone else like me out there?  What I’d like to do is form a small group of AB beginners looking to learn AB Formula Language (AFL) and improve their usage of the software. Our communication could take the form of a mailing list or on-line meetings. We could tackle some simple explorations or AFL code, share ideas, and generally help each other learn while demanding some accountability to be in the group.

If you’re interested then feel free to respond with your e-mail address or e-mail me directly.”

AB is like an indie version of more commercial software like Telechart 2000, eSignal, or Metastock.  For a one-time fee of $199, the consensus is that AB offers more functionality than any other product.  It is not widely promoted like the other products and it seems to have a small but loyal user base.  Few third parties have jumped in to provide education or support, which means you either enter the jungle and hack through the learning curve on your own or you pay a recurring monthly fee for something else.

If you are an AB user and can identify with my sentiment above then please contact me.  The intent here is not necessarily to form a group like that described in http://www.optionfanatic.com/2012/02/25/seeking-the-mastermind/ .  The goal here is strictly to better learn the software and to get more extensive use out of it.