What are traders?
 

Im actually reading "Trading in the zone".
But then i was asking myself the question:
What are traders?
In which stocks do they invest?

Are traders people who buy and sell stocks every day?
Or do they keep their stocks longer?
What do u think?
Thx

Re: What are traders?
 

And the answer is:

d) all of the above

Re: What are traders?
 

A trader is generally someone who is looking to take advantage of short term price changes (or lack thereof).

The specific type of trader in the broad trader category can be defined by the specific time frame (scalp, day, swing, etc) they are looking at, and other factors, including what specifically is being traded (stock, option, futures, commodity, etc)

Re: What are traders?
 

Traders trade.

Not all traders make money long term. Most traders become "investors" when a position moves against the trade in a substantial way.

It can be hard to understand the writing of Douglas unless you have substantial experience.

Re: What are traders?
 

[ QUOTE ]
Most traders become "investors" when a position moves against the trade in a substantial way.


[/ QUOTE ]

Mr Now, would you a agree that a "Trader" who falls into that category probably shouldn't be trading in the first place?... or at least has a "leak" they need to work on.

Re: What are traders?
 

[ QUOTE ]
Traders trade.

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'Zackly. They don't invest. Investors want to own a piece of the company. Traders couldn't care less about owning the company.

[ QUOTE ]
Not all traders make money long term. Most traders become "investors" when a position moves against the trade in a substantial way.

[/ QUOTE ]

LOL, a.k.a "bagholders".

[ QUOTE ]
It can be hard to understand the writing of Douglas unless you have substantial experience.

[/ QUOTE ]

Mark Douglas? It doesn't help that he's not much of a writer either. His stuff comes off like a textbook, and more than a little arrogant.

Re: What are traders?
 

[ QUOTE ]
It can be hard to understand the writing of Douglas unless you have substantial experience.


[/ QUOTE ]

Douglas' books talk about psychology... while it may be harder to put yourself into the frames of mind he is talking about without a lot of trading experience (ie you've felt the stuff he talks about)... I think many of the poker players here will identify with some of the things he talks about, w/o any trading experience.

Re: What are traders?
 

Sniper,

Absolutely. We must to fold when we miss. This is essential.

See:
Disposition Effect- caused by a need to be right. This need can be very expensive.
http://disposition-effect.behaviouralfinance.net/


Loss Aversion-- aka "denial of reality."
http://en.wikipedia.org/wiki/Loss_aversion

Re: What are traders?
 

Mark Douglas built a large lifestyle of material consumption from trading profits, then he went bankrupt. Literally. He lost everything.

Then he came all the way back (in trading) after starting over with all-new beliefs about the market and risk.

Then he wrote his books.

Have you actually examined both of his books in detail, from front to back? Have you met the man?

Mark Douglas used to be very arrogant, and that is part of exactly how he went bankrupt. He describes all of this in detail, in his excellent books on trader psychology.

It can be difficult to fully understand the importance of his writing without extensive experience.

Re: What are traders?
 

Mark Douglas website

Re: What are traders?
 

[ QUOTE ]
Mark Douglas built a large lifestyle of material consumption from trading profits, then he went bankrupt. Literally. He lost everything.

Then he came all the way back (in trading) after starting over with all-new beliefs about the market and risk.

Then he wrote his books.

Have you actually examined both of his books in detail, from front to back?

[/ QUOTE ]

Why would I do that? I'm not writing a book report. I was looking for books that would help me out. I read one of them about halfway through, all the time hoping it would get better, but it didn't.

[ QUOTE ]
Have you met the man?

[/ QUOTE ]

No. Why would I care about that? I'm not writing his biography or forming a fan club for him.

Re: What are traders?
 

pig, did you find Elder or VanTharp easier to read?

Re: What are traders?
 

[ QUOTE ]
[ QUOTE ]
Traders trade.

[/ QUOTE ]

'Zackly. They don't invest. Investors want to own a piece of the company. Traders couldn't care less about owning the company.


[/ QUOTE ]

I think that probably qualifies nearly every Mom and Pop with a 401(k) as a "trader", so it's probably not the best definition or characterization.

eastbay

Re: What are traders?
 

Suit yourself.

Re: What are traders?
 

Douglas' books are great and must reads for real traders. A trader is someone who trades for a living in my mind. And by trade I don't mean invest or hold stuff overnight. I trade for a living. I don't really have the time or inclination to be a high quality investor so I stay pretty passive in the ETF arena.

Trading is a different animal from investing. Douglas speaks to trading and is spot on for those of us that bang it out in the pits or make several hundred transactions per day on the screen and go home flat. If you trade in and out all day long his advice is invaluable.

Re: What are traders?
 

At one extreme, a trader is someone who executes orders for someone else (an "order taker"). He knows the different ways to get a trade done and works within his discretion to get the best price. This is the least prestigious and glamorous kind of trading, but it can be a nice steady job. It takes skill.

At the other extreme is the pure speculative trader, which is what the other posters are talking about. She can work for a big firm, or a hedge fund or with her own money.

Many traders are in between. They sit at a desk in a big firm executing routine orders for a spread, but can place some prop positions, or take a lot of discretion with orders. If they make a lot of money, they get bigger limits and do more prop. If they lose money, they quit trading or become order takers.

While it's true that traders usually take shorter-term positions than investors, that's not the defining difference. Some convergence strategies hold positions for months, about as long as some active portfolio investors.

The key is a trader expects to diversify away most of his risk through doing lots of trades. He may do 1,000 trades a day and win 50.1%, or 10 trades a year and win 80%, but it's number of trades that counts. An investor expects to diversify away risk through holding lots of securities over long periods of time. A related difference is traders are concerned with absolute return, winning or losing money. Investors are often content to take what the market gives them, maybe trying to do a bit better, but basically willing to lose money when the market goes down.

In poker people distinguish between playing your cards and playing your hand. If you play your cards, you play good hands and hope they win. If you play your hand, you bet aggressively and hope to win more when people fold to you or call your good hands than you lose when they call your bad hands. Playing your cards is like investing, playing your hand is like trading.

Re: What are traders?
 

Your description of a "trader" is fairly accurate although there are many more forms and types of traders. But the "trader" that Douglas speaks to is basically a day trader or market maker. His advice and writing is tailored to the guy that is in and out of the market all day long and the psycholgical hurdles that this type of trading encounters. If this isn't what you are involved in his writings will be pretty meaningless to you. But if you are doing this kind of trading you will see just how valuable his advice is.

Re: What are traders?
 

Seems like an easy answer, but not a short one, unfortunately... someone who trades something with the intent of making a profit. In this case we are talking about equities, but it could be options, futures, commoditites, horses, forex, etc.

I work for a very successful proprietary daytrading firm and these are my personal observations. Arguments over terminology is often a point of contention and i feel that it is couterproductive to argue over "names" so place the name you want within the quotes. The concept/strategy is what is important.

Trading is very much a personality driven business. If you are too risk averse (hesitate too much or can't buy size) or have no discipline (holding losers and turning them into "investements" as mentioned previously) don't get into trading. You will lose your bankroll. If you have what it takes there are several ways to skin that cat.

"Scalpers" have a niche taking really quick (seconds to minutes or hours) small profits over and over with little risk. They can make a dime and risk a nickle and if they are right 50% of the time make a nice living trading a lot of shares. Make sure you have LOW commissions though and don't forget to figure that in. Requires speed on the keyboard and great execution software, as well as DISCIPLINE.

"Position" traders use technical analysis more than open book, etc. (hybrid is changing things considerably) and may hold positions for hours or days depending on the defined perameters of the trade; is it breaking support/resistance, has it reached the pullback assigned, or whatever the trading plan is regarding risk and pullbacks. If you don't have a plan you will lose over time even if you are lucky at first. Don't have to be as fast on the keyboard, but you do need a working knowledge of technical analysis, earnings, etc.

"Swing Traders" use technical analysis and may hold positions for weeks or months depending on the underlying rules they trade by. Bigger risk/reward. Research daily, put on positions less frequently, hold them much longer, place stops and go play golf.

What each of these styles must have in common to be successful is a well thought out plan and executing that plan unemotionally. Trading is not an easy business, but can be the best job you would ever hope for.

We have found that there is a high correlation between people who play poker well and those who trade well. I think that is because they are able to manage risk, don't mind "folding" a bad position, and are able to push size when they "have the nuts" or as close as you can get to that in a trade.

Too long I know, but I made it as short as I could. Sorry for the rambling.

Re: What are traders?
 

I believe anyone trading in any time frame (longer time frames) can benefit from Douglas. He covers a ton of material related to behavioral issues like loss aversion, the disposition effect, fear effects etc.

He also shows what trading can do to awareness, and how fear actually effects awareness and perception.

I agree completely that, for some, his essential points in his books are difficult to see if you do not have some depth of experience.

The books make perfect sense to pro or semipro traders.

I want to see an "Ask Mr. Baseball About Trading for a Living" thread.

Re: What are traders?
 

[ QUOTE ]
I believe anyone trading in any time frame (longer time frames) can benefit from Douglas. He covers a ton of material related to behavioral issues like loss aversion, the disposition effect, fear effects etc.


[/ QUOTE ]

You're probably correct that his stuff does translate well to longer timeframes although I believe it is tailored for the shorter term interday stuff. The short term interday trader will experience the fears he speaks of several times a day while the longer timeframe traders will have far less opportunity to make the plethora of pyschological mistakes that a daytrader has available.

As far as "ask me" threads go I have always found those sort of pretentious [img]/images/graemlins/smile.gif[/img] I'm more than willing to talk trading and answer questions though to a degree and happy to join in on trading threads even though there haven't been very many in my areas of experience or expertise.

Re: What are traders?
 

It is probably not pretentious to assume that a very large number of guys here that play online every day are keenly interested in your trading knowledge.

By focusing the questions under a single thread, the resulting content stays focused and in one place. That makes it a valuable resource that adds value to this forum.

Please seriously reconsider starting a thread where others can ask you questions about your for-a-living, high-frequency trading.

If you are supporting yourself successfully for over a year from trading, for sure you have alot of valuable knowledge to share.

To those who lurk here: Chime in if you want to "Ask mrbaseball about Trading for a Living".

Re: What are traders?
 

I have a question:

As many know the Blackberry system was down in North America overnight and into this morning.

The parent company RIM lost about 9% on the London exchange during the outage.

I see that it is gaining steeply on the NASDAQ this morning (RIMM).

It would seem to my limited mind that this would have been a perfect way to either pick up a long term position at a discount, or make a quick play on the obvious restoration in price that would presumably come quickly.

Is this something a 'trader' would jump on?

Was the hammering of the stock in London a fear-based trader-driven price drop?

Any insight traders would care to give on NIM's price moves over the past 12 hours would be appreciated, thanks.

Re: What are traders?
 

[ QUOTE ]
Is this something a 'trader' would jump on?

[/ QUOTE ]

Yes, overreaction to news, is like free money...

Re: What are traders?
 

[ QUOTE ]
Is this something a 'trader' would jump on?

Was the hammering of the stock in London a fear-based trader-driven price drop?

Any insight traders would care to give on NIM's price moves over the past 12 hours would be appreciated, thanks.

[/ QUOTE ]

RIMM didn't move much in the U.S. I was surprised that it didn't. A lot of the upmove was probably due to following the overall market.

Re: What are traders?
 

[ QUOTE ]
RIMM didn't move much in the U.S.

[/ QUOTE ]

Open 129, close 134+, is not much of a move?

Re: What are traders?
 

You can teach principles such as indicators and chart patterns in books but you can't teach discipline and this is why 90 percent of traders and poker players lose. If you have the ability to get out of a losing trade everytime at a predetermined price than you have a chance in trading. Money management and the discipline to get out of bad trades is the most important aspect in trading hands down. If you can focus on those two aspects when you are starting out and slowing thereafter work on chart patterns and trade setups you have a good chance of making money each year trading. It took me 5 years to figure this out so learn from my mistake.

Re: What are traders?
 

[ QUOTE ]
but you can't teach discipline

[/ QUOTE ]

Why do you believe this?

Re: What are traders?
 

What i mean is lets say for example i was going to coach a new trader and i teach him the basics such as how to place buy and sell orders on an online brokerage account,teach him the basics of a chart and how to trade just one setup by showing him where to enter and where to put the stop loss order in and where to take profits. I go over everything 20 times so he has it memorized so there wont be any second guessing the correct methods. Lets say he gets into a stock long and before he enters the trade he writes down the price objective and stop loss so he knows exactly where he's getting out but all of a sudden the stock tanks causing him to lose money all the while getting to wrapped up in his emotions he moves the stop loss down further from the original placement of it just because he doesent want to lose the money and accept a loss. The point is that you can teach someone how to do something but you cant make them do it unless they have the heart to follow through. It kinda explains the fact that there are probably thousands of books on trading and poker out with authors telling people sound methods to make money on both subjects but only around 10% of people make money each year playing poker and trading stocks.

Re: What are traders?
 

[ QUOTE ]
It kinda explains the fact that there are probably thousands of books on trading and poker out with authors telling people sound methods to make money on both subjects but only around 10% of people make money each year playing poker and trading stocks.

[/ QUOTE ]

Control over your mind is probably the most important factor in becomming a successful trader, and maybe also in poker.

Another important consideration is that trading, like poker, is not a zero sum game (like many brokerages trumpet) because of transactions costs/rake. This explains more why a tiny minority of traders/poker players make money consistently over the long haul.

I've tested many mechanical trading systems, some make lots of money, but after factoring transaction costs, slippage, financing etc., the reduced profits are not really worth all the effort.

When trading live, the awful emotional swings most traders experience further dramatically reduces their profitablility.

Re: What are traders?
 

mrbaseball thread mrbaseball thread mrbaseball thread mrbaseball thread mrbaseball thread mrbaseball thread mrbaseball thread mrbaseball thread


Mr.Now, in your loss aversion topic, for the example of the virus expecting to kill 600 people, which position do you hold?

I have always been passive, and would chose to save 200, rather than risk all 600. In essence, would this make a better or worse gambler?

Re: What are traders?
 

[ QUOTE ]
You can teach principles such as indicators and chart patterns in books but you can't teach discipline

[/ QUOTE ]

I would argue the exact opposite. You can learn discipline and money management but you will never learn the markets. As Douglas argues even a mediocre trading strategy with the proper mindset will outperform the market wizard with bad technique. You can learn a plan. You can learn how to stick with said plan and let the proverbial profits run while cutting the losers short. Most people don't or won't. Most people sucumb to their fears and greed. Most people, if even for just a split second will think they are smarter than the market and this is their undoing. But the proper attitude and mindset can be learned. Much easier than market indicators.

All of those indicators and principles and chart patterns work. Sometimes [img]/images/graemlins/smile.gif[/img] But the proper mental attitude works at all times. In the book "Mastering the Trade" John Carter describes the stages of a trader. For many the last stage is "the search for the holy grail". That one pattern or indicator or situation which you can't lose. But it doesn't exist. What does exist is a solid plan enforced by strict discipline. That plan and discipline can be learned by anyone if they are willing and commited to do it. But the searchers of the holy grail will never find it.

Re: What are traders?
 

This post embodies the essential message and theme of the writings of Mark Douglas:

Take total responsibility for all your results.

Nice post mrbaseball, please keep posting here.

Re: What are traders?
 

Bumb cause I learned more from this thread than in 2 days of searching the net about trading. Is mrbaseball still around and willing to do an "ask me" thread?

Re: What are traders?
 

[ QUOTE ]
[ QUOTE ]
I believe anyone trading in any time frame (longer time frames) can benefit from Douglas. He covers a ton of material related to behavioral issues like loss aversion, the disposition effect, fear effects etc.


[/ QUOTE ]

You're probably correct that his stuff does translate well to longer timeframes although I believe it is tailored for the shorter term interday stuff. The short term interday trader will experience the fears he speaks of several times a day while the longer timeframe traders will have far less opportunity to make the plethora of pyschological mistakes that a daytrader has available.

As far as "ask me" threads go I have always found those sort of pretentious [img]/images/graemlins/smile.gif[/img] I'm more than willing to talk trading and answer questions though to a degree and happy to join in on trading threads even though there haven't been very many in my areas of experience or expertise.

[/ QUOTE ]

yea i think you doing an ask me thread would be a good idea. i did one and learned a lot as was the intent. you don't need to be an expert to do one.

in fact, i'm far from an expert and say so explicitly.

so get on it!

Barron

Re: What are traders?
 

wow a ask me thread would be the nuts seriously.
Youre good at something interesting, you make the thread if you feel like it and everyone say yay! Imo anyway.

I have a question. I have an account and I pay 9.95 for every transactions. Are day traders getting a better deal because they trade a lot ? I mean if you make hundreds of trades a day, how can you turn a profit, even if you pay 2$/trade ? Seems impossible, am I just clueless ?

Re: What are traders?
 

Traders of size (2000 shares or more) like the fixed 10 buck or 7 buck commissions because a 1 cent move is 20 bucks. Smaller traders like brokerages like Interactive Brokers that charge around a penny per share commission.

9.95 isn't even that much of an impediment if you're doing 200 shares or more. That's only a 10 cent move to cover your round-trip cost.

Re: What are traders?
 

One more lurker requesting an ask me from Mr. baseball.

Re: What are traders?
 

No need to be a dick.
I dont request anything, Im just saying that I dont think anyone would think hes pretentious if he makes one and will greatly appreciate it.

I just found that forum and Im curious thats all. Anyway Im a lot more of an 'investor' than a trader. Mostly because I dont know what Im doing eh.

edit* Thanks for the precision 4Bill [img]/images/graemlins/smile.gif[/img]

Re: What are traders?
 

[ QUOTE ]
One more lurker requesting an ask me from Mr. baseball.

[/ QUOTE ]

Re: What are traders?
 

I would love to see an 'ask me' thread from anyone who has been successfully trading on their own for a year or more.