Archive for May, 2008

I am stuck, can you help me ?

I need to do more studies and paper trades with futures options or I am never going get it. The problem is that after reading about such complex stuff I am confused. I recognize that I have harder time than others. It will take time, but I will cut the corner and became a better trader. Going to seminars does not help as much as I would like. No one will ever tell me what to do, after getting paid all those “traders” do, is to give me a vague idea. Maybe if it worked so well they would do it themselves instead of teaching it to the rest of the world, but given the high complexity and lack of info about the subject, even a basic seminar does help to get a little better. Unfortunately, a little better is not enough.

It is up to me how to figure it out, but how ?

I met two hedge fund managers, they know much more than I do and I would love to learn from them, but the only possibility is to pay for yet another seminar. Nothing is free. Why should they teach for free, and how unrealistic is of me to hope or to expect that they would ? Why on earth would someone share with me all his hard work, investing strategies and research just because ? It will never happen.

Getting something for nothing is a popular concept in peoples life and it is often promoted by the MTV culture we live in. It sounds fantastic, but except very few cases it never works and yet, people keep trying hoping that one day it might or that they might be the exception to te rule.

Here is how it works: You give me something I want and I give you something you want. Whatever is that we do, we can insist with our expectations and distorted ideas on how the world should be, or we can embrace reality instead of fighting it. It’s true, there is no free lunch.

Professional traders turn logic into money.

I love the third friday of every month. It is when options expire. In short it is when I get paid, or try to. It is a very volatile day and often it is a day when the market in general goes up. On the Wensday of expiration week I am always long. Maybe now it is a habit, or maybe I saw a full moon last night, or I thought I did. Anyways, I am long and I am going to sell 2 SPY future contracts and buy 5 Nasdaq future contracts. I am looking at beta weighted delta, I am going to do pairs trading. All of the above is a very new concept for me. I am not sure if I will be able to do it on regular basis, but to get better one must build an extensive understanding of different financial products.

Since I am doing this alone and I don’t really have the possibility to exchange ideas with others; I am trying to find ways to challenge myself by trying new strategies.

Opportunities are created all of the times, but trading activity does not necessarely mean progress. Succesful traders understand, execute and combine trading strategies with opportunities and probabilities. It is a very hard task to accomplish, but that is how they turn logic into money.

I am trying to look for things out of wack, to be a contrarian, to separate myself from the herd. We all get excited for the same things and share the same pain and emotions. Everyone looks at the same financial news and charts. For long term success, the best I can do is the opposite of everyone else.

Obviously it is not as simple as it sound, but when a stock is a total piece of junk maybe it is time to buy it and when it is going up like crazy it is time to sell it.

I must stay true to my logic and have no hurry, there will be plenty of times to use trading money to place new trades. Every morning I wake up and I still get excited about making money, does not mater how much. It will be ok as long as I can learn to employ strategy based trading methods. Often I have been completely wrong and yet I was able to brake even. That is a powerful thing ! It is like going to Vegas; not to lose any money, and have fun.

I started giving up the desire of finding the next great stock that flys to the moon to make me a killing; in fact, I am looking more and more at very liquid financial products. I don’t want to deal with events that are completely out of my control. I do not want to take crazy risks and trading an obscure stock that might go up really fast, or down, just because the CEO blows his brain out. , but…

I am more interested in making a little bit of money as consistently as possible

More ways to make money = More risk and less profit.

Some investors like Warren Buffet are incredibily smart and are true geniuses. I am a normal person I can’t do what they do. For a regular trader it should not be about predicting the market, but it should be about managing risk and increasing the┬áprobabilities of making money.

If you put down 1 to make 10, you have 90% chances to lose and 10% to win, however if you risk 10 to make 1 then there are 10% chances to lose and 90% chances to win.

It is all about the strategy not the investment vehicle; whether indexes, stocks or red apples.

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