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  #11  
Old 04-15-2007, 02:47 AM
pig4bill pig4bill is offline
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Default 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.

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Have you met the man?

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No. Why would I care about that? I'm not writing his biography or forming a fan club for him.
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  #12  
Old 04-15-2007, 04:06 AM
Sniper Sniper is offline
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Default Re: What are traders?

pig, did you find Elder or VanTharp easier to read?
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  #13  
Old 04-15-2007, 03:22 PM
eastbay eastbay is offline
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Default Re: What are traders?

[ QUOTE ]
[ 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.


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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
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  #14  
Old 04-15-2007, 06:01 PM
Mr. Now Mr. Now is offline
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Default Re: What are traders?

Suit yourself.
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  #15  
Old 04-16-2007, 08:55 AM
mrbaseball mrbaseball is offline
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Default 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.
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  #16  
Old 04-16-2007, 05:29 PM
AaronBrown AaronBrown is offline
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Default 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.
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  #17  
Old 04-17-2007, 08:47 AM
mrbaseball mrbaseball is offline
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Default 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.
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  #18  
Old 04-17-2007, 09:46 AM
nostradumass nostradumass is offline
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Default 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.
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  #19  
Old 04-17-2007, 01:19 PM
Mr. Now Mr. Now is offline
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Default 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.
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  #20  
Old 04-17-2007, 08:22 PM
mrbaseball mrbaseball is offline
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Default 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.
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