Where can i discuss trading ideas without all the TA crap

[mrbaseball]

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I don't consider arbitrage trading, it's just a another form of investing, albeit one with a clear edge. Pure trading I would categorize as predicting price movements.


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I do a lot of very short term arbitrage and it is I think the definition of trading. Execution is critical and missing a leg is a real possibility. I do some longer term arbs too and those are relatively safe and you can hold them until they come in without much worry. There are all kinds of arbitrage, some very risky and some where the only risk is execution. The eurodollar (most liquid commodity contract) for example is an arbitrage trade. At least for the guys trading it as market makers. They get their edge and lay it off asap in a different month. Same with options market makers. If a customer comes in selling calls and they buy them they lay it off immediately with the underlying or a different option they are leaning on when they make the trade. The market maker isn't predicting anything. He is just perceiving a temporary price imbalance and trying to take advantage of it.

I consider predicting price movements to be pure speculation.

[shylock43]

Please dont get stuck on semantics on what classifies as trading and what doesn't. Lets just say I am interested in alternatives to the valueplays that makes up most of my portfolio.

mrbaseball: You are obviously very knowledgeble on the subject. May I ask you for a pointer where I can learn more about trading strategys like the ones you wrote about.

[hapaboii]

TA and stat arb aren't so different. I suspect intellectual snobbery is one of the main reasons why people sh*t on TA.

Yes, many amateurs have easy access to applying TA(note: that doesn't mean they are making good use of it).

Anyway, try wilmott.com. I could share another but would hate to see the signal to noise ratio ruined. Wilmott is decent enough, you should be able to find a few threads on ARCH, GARCH, neural nets, NLPs, blah blah blah. As for the merger arb and spec sits, don't know of any sites.

[shylock43]

hapaboii: Wilmott is nice however very little discussion of actual trades. You are right about stat arb, didnt know about the field but looking it is very much like you say. I know ARCH, GARCH and neural nets from statistics classes and dont have very much faith in them for financial applications. Mostly they are all about predicting future price from historical prices.

May I ask you if the other forum you wouldnt mention was "nuclear"?

[pig4bill]

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I have been looking all around the internets to find the twoplustwo of the trading world. However most sites like elitetrader.com is mostly about amateurs talking TA indicators. Where does the pros hang out.

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Where does they hang out? Well, a lot of pros does use TA.

[hapaboii]

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May I ask you if the other forum you wouldnt mention was "nuclear"?

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Ph*ck.

[kimchi]

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Does anyone actually make long term profits trading?

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This is similar to people asking if poker players make long-term profits.

I think the success rate is about the same (maybe 90% eventually fail, and over half bust out within a year).

There are however huge hurdles to overcome common to both disciplines: psychology and costs of business (spread/commissions/rake).

As for myself, my trading has mirrored my poker - I did really well in the first year and seem to have been gradually on the road to busting out ever since.

[fun160]

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mrbaseball: You are obviously very knowledgeble on the subject. May I ask you for a pointer where I can learn more about trading strategys like the ones you wrote about.

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MrBaseball is a pro. The type of very short-term trading he does requires an data feed, expensive trading software, and professional rates. You learn about these markets, for the most part, by working for a professional trading firm.

[fun160]

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Arbitrage is definitely trading, not investing. The edges tend to be very small, so you usually have to leverage the crap out of them. The goal is for your holding period to be as short as possible. (In contrast, Warren Buffett's favorite holding period is "forever.")

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Yet Buffett has made billions in arbitrage in a variety of categories from merger arbitrage (leveraged) to arbing the relative prices of coffee beans against a specialized equity tender offer.

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You've mistaken the word "favorite" for "only."

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Arbitrage is a subset of investing that involves finding identical or very similar investments (with similar values) that have significantly different prices and profiting from the situation. Most arbs are short term in nature, but they are still investments, i.e. they have quantifiable values and quantifiable risks.

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LOL! I hate to burst your bubble about how markets work, but there are very few "pure" arbs with perfectly quanitfiable values. Such arbs are quickly banged back into line. Truth be told, most pros prefer a bit of "dirt" in their arbitrage.

As for quantifable risks, all the Nobel Prize winners and assorted geniuses at LTCM thought the same thing.

[ QUOTE ]
I don't consider arbitrage trading, it's just a another form of investing, albeit one with a clear edge. Pure trading I would categorize as predicting price movements.

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Most traders on Wall Street and in Chicago disagree with you. By your ultra-narrow definition market makers are not traders, because we make few predictions about price movement. Quite the contrary--we let others make their predictions about price movement and insist on getting the edge in return for fading their trade.

Moreover, many, many professional traders hedge their positions (a form of arbitrage) rather than make pure directional plays. Most professional options trades involve some sort of hedge. The biggest U.S. futures market, Eurodollars, is a calendar spreader's dream. Professional traders would laugh at the notion that they are "investors."