So I heard You Want to Start Trading?

Let me start off by clarifying. By trading I'm not referring to investing or trading part-time while you do other things (such as hold down a full-time job). I'm talking about those people who want to take a shot at trading for a living, as their primary or only source of income. I'm not only talking about day trading. I've never actually been a day trader. But if you intend on making twenty or so trades a month, you're right where I was six long (and yet so short) years ago.

Let me also say: if this is you, good luck.

Anyway, back to the topic on hand. "So I heard you want to start trading?" This was a question I heard dozens of times from family and friends when I decided to start trading on my own. I even got it long after I started trading, and after I had been successful for quite some time. People don't tend to understand that it's a job, like everything else, and it requires a serious, dedicated effort. It was difficult enough just to convince my family and friends who didn't understand what or why I was doing what I was doing that I wasn't insane. But that doesn't mean the heart of their obnoxious, probing, and doubt-filled inquisitions were without merit.

This post is for those of you who are considering trading and are on the fence. I'm here to tell you it's great, it's horrible, it's easy, and it's impossible. But mostly that it's horrible and impossible, and that's coming from someone who has been successful and full-time for six years. So let's get right into it and delve into what is really behind that dreaded question you will probably hear from someone down the road.

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h4>1) What're you worth?

This has to be one of the first questions you ask yourself. Frankly, if you're broke, this isn't for you. I didn't follow this advice, and my life was infinitely harder because of it. I started trading with just under $20,000 to my name (my student loans), and with basically no background whatsoever, poker aside. Would I recommend this? Not a shot in hell. Less than $10,000 and you're just gambling, but even at 20k you have to realize that you're never going to be able to diversify properly, and you're riding that edge where a bad run can basically knock you out. And if you are the type to ride that line, I hope you've got some living money. Because even if you have a great streak and show a 50% to 100% return six months down the line, you've hardly made enough to live on. Not to mention - I hope you weren't planning on withdrawing those initial earnings. If you were, just back away slowly. You don't belong here.

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h4>2) Are You Prepared to Fail?

This is a very serious question. Trading is emotionally challenging. You don't go to work and come home with a paycheck. It's a meritocracy, pure and simple. Sometimes it can even feel like there's more luck involved than skill (though if it feels like that more than once in a blue moon you're doing it wrong). I've had days where I "went to work" and at the end of the day I was tens of thousands of dollars poorer. It doesn't matter how much you've got in your account. That hurts. I know, I know, I can hear it already - but the flip side! Here's the honest truth - even enormous gains in a day or two, or even a week or a month, can end up screwing with your head just as much as your losses. It's not just ups and downs. It's all over the place. It's wild. And if you aren't prepared for an emotional roller coaster that you have to fight to keep in check all the time, to find a way to live a life where it doesn't ruin your relationships, or your relationships don't ruin your ability to trade properly, or to face the unknown every waking moment, it's not for you. I mean it. You'll regret it. Because even when you succeed you can often still feel like you're failing.

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h4>3) What Makes You So Special?

I know everyone is a unique snowflake because their mommies told them so. That's not what I mean. What I mean is, traders don't have the best record of being successful. In fact, a fairly small amount of them are truly successful, and the more trades and the more frequently they trade, typically the less successful they are. So if you're going to be trading for a living, there has to be a reason you think you're in the top 10% of people who even attempt it. Most people tend to think they are smarter than they are. They also think the average person is an idiot. Well, the bad news is, according to the Dunning-Kruger effect, if this is you, you're probably the idiot. The facts remain that the world works on a bell curve. The average is most people. If you are super confident you're not the average, that's likely more evidence that you are. So really think about it. Take stock of yourself as an enemy would, don't look at yourself the way your grandma does when you have dinner at her house on Thanksgiving. If you can't definitively say you're cut out to be a trading God, it's probably because you aren't.

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h4>4) How Driven Are You?

Most people could be more driven than they are. Trading frequently takes a lot of focus, an ability to take in and process a ridiculous amount of information, and a lot of boring research and preparation. It's not as fun as it looks on TV. You don't get to sit in front of twelve monitors and make crazy gambles on things and blow everyone's mind with your latest guess. When I first started, between learning as much as I could, observing markets and trends, tracking graphs and data points, researching companies and data history, following my positions, reading a non-stop feed of financial news, following my potential future positions, and deciding on price points for execution, I literally worked sixteen or so hours a day. It was grueling. Eventually I got it down. I created a system. I had spreadsheets that pulled in data and did a lot of the grunt work for me. I came up with parameters for what things to pay attention to and what things to ignore. But getting there was brutal, and it took nearly a year. Even now, I find myself on busy days spending a solid fourteen hours without getting up. It's insanity. It's beautiful. But it requires dedication.

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h4>5) Can You Take the Heat?

This is just an honest question. It's not about the stresses of trading, but rather of being a trader. People will have questions. They will ask who you trade for. They will think you are full of it. I even get called out here on WSO for having no background to justify my comments. It's frustrating. Especially when you aren't yet successful enough to rub it back in someone's face. It's hard being told to get a real job when you're working more hours and more intensely than most of the population. It's hard being told you're gambling when you're steadily increasing your monthly returns. It's hard when you get sick and you have no health insurance and you have to withdrawal money from your account to pay for your doctor's visit (okay, maybe that one was just me). But still, it's no walk in the park. It takes a strong constitution to look at everyone, including me and this post about how you are going to fail, and tell them to shove it.

But it's not all bad. Sometimes it's amazing. I can't remember the last time I didn't wear sweatpants at least
three times in a week. My monitor setup is amazing for surround gaming. I choose when I want vacations. And I do very well for myself. Not to mention, I get to stick my success back in everyone's face who ever said, "So I hear you want to start trading?" and looked at me like I was a slacker who would never make anything of myself. So if you've heard all this, and you really think you can do it, believe in yourself. Maybe you can. Maybe you'll be part of the small percentage of people who do really well trading on their own and get to define the rules of their own lives. If you can't, you'll figure it out soon enough and pick up the pieces.

As for me, as I've mentioned before, I was a professional poker player, and I decided to teach myself to trade stocks and options. Short-term trades for the most part, but not really day trading. Over the last six years I've had the pleasure of creating and perfecting a successful proprietary trading strategy, and have been able to meet and work with many traders who were independent like myself, traders who worked for hedge funds, investment bankers, profile managers, hedge fund managers, product development specialists - you name it. I've also been lucky enough to learn a lot from many people who come from many different asset class backgrounds. My flexibility has allowed me to pick up and join projects when I want, and my success has garnered the respect of my peers.

It's been a great life. So go get after it. And then prepare for it to suck.

And of course, if you want to agree or argue with me based on your own experience, ask for advice, talk about your own struggles or successes, I'd love to hear from you in the comment section.

Until next time,
This is The Uncontortionist

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Comments (64)

Oct 14, 2016

I'll take the bait on this

Favorite book about trading?

Favorite trader profiled in Market Wizards?

What markets do you trade? Equities and equity options? U.S. only? Do you have a preference on size (small/mid/large cap? Futures on...

Do you have a Bloomberg? And depending on that answer, why do you or don't you feel it's necessary for what you do? Given what you've said about quantity of information, I'd imagine you're in the yes camp but would like to hear your thoughts either way, and if it's the no camp, what are some of your preferred alternative sources of data/information/news

It sounds like you have your setup at home. In the last six years, did you ever evaluate renting a small space to house your setup and work from, to keep the two separate?

Best Response
Oct 23, 2016

Hi there, Lizard Brain.

Rest assured, I was not trying to bait you.

Favorite book about trading: Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications by John Murphy. This book was one of the first I read and set me down the ultimate path I took as a trader. There are more technical books out there, more current books, but it inspired me and I will never forget it as my favorite.

Favorite trader in Market Wizards: Honest (and possibly embarrassing) truth, I haven't read it. Never been much of a listen-to-what-other-guys-did kind of person. I'm sure there's more to it than that in the book, but in the dozens of books I read on trading before I was too busy to read anymore and doing well enough to not feel compelled to read so frequently, I was not drawn to interview type books. Therefore, I'd rather decline to answer than Wikipedia it and give you some BS answer.

What markets do I trade: U.S. equities and equity options. Dead on. When I first started I played around with futures and various other things, but I eventually settled into equities and never looked back. In terms of size, my strategy focuses more on liquidity and historical trends and data points combined with current technical analysis than it does on size, so I am fairly size indiscriminate. Obviously when I started I favored small to mid-size, as that was really all I could afford, and I found that most of my biggest scores have come from mid-size companies in transition of some sort. But on the whole, I don't look for or prefer one over the other.

When I started I had access to a Bloomberg terminal. This was essential for data compilation, and before I knew what I was doing or had worked out spreadsheets and other things to pull data for me from cheaper/free sources, I think it was essential. It helped me immensely in figuring out what I wanted to do and what kind of data and parameters I was looking for. After I figured things out a bit, I was able to do things without the terminal, still watching Bloomberg news, but primarily pulling in news feeds from my trading platform as well as from the web. For what I needed in particular (mostly data on pricing at different dates, though many other things were included that were harder to find), I have learned to find it for free/cheap on the web. So, yes and no. Was immensely important to my success in the beginning, less so after I got my head around my strategy. And no, I'm not being super specific. Some of that is intentional. My apologies.

Working from home: Excellent question! When I started I lived in Manhattan in a fairly small condo (~750 sq. ft.). For about 9 months it was fine, until I found myself wanting to rip my hair out one day when I realized that I could never escape work. To save space I had a projector for a TV, and pulled the screen down in front of my desk set up in the living room. I was trying to relax in the same space as I worked, and it was no good. Had a hard time sleeping, relaxing, anything. I eventually moved to the Philadephia area where I gained more space, and now recently to the Bay Area, and currently have a separate office in the back yard that is finished and has all the power and internet amenities I require. This is definitely the best set up, and I believe had I rented a place out when I Iived in my previous places I would have been happier and perhaps more successful. I have come to believe that separating the work space and the living space is essential, even if just by the space of a back yard.

Thanks for your questions.

Oct 14, 2016

Thanks for taking the time to write this up. What platform do you use to execute your trades?

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Oct 23, 2016

TD Ameritrade's "thinkorswim" platform is really quality, which I was surprised about. I use certain freeware programs/custom programs that overlay it for more extensive and particular graphs etc., but for the most part, I started with TD, and have found it to be more than adequate

Sep 2, 2018

Thinkorswim... really? No professional traders who do this for a living would use that platform...

    • 1
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Oct 14, 2016

are you a part of the financial twitter community? (lots of individual traders on there)

Oct 15, 2016

Interesting that you chose equities; my short term trading is strictly in futures (indices, bonds and crude oil) markets because of their favorable tax treatment, increased liquidity and leverage.

Oct 14, 2016

@The Uncontortionist good post and thanks for the write up. Without giving away too many details (unless you want to) can you describe your greatest trade if possible or a trade that was successful that stood out for you?

What about a trade that backfired? What did you learn from the above experiences?

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Oct 23, 2016

Thanks for your question RedRage.

Almost immediately after I had fully developed and completed my trading system, I came across some data that pointed to a pretty intense spike in the near future for Big Lots, Inc. (BIG). I didn't know what the stock was or anything about the company, but the numbers were there. I kept going over it and it seemed pretty extraordinary. I put all of my liquidity into it as well as my available margin, and rode it for about two weeks. It was a crazy ride and I'll never forget that moment of "holy shit, it worked."

My worst trade was when I had first gotten into options. It wasn't one trade in particular, but it was my first spread of options. I had tens of thousands spread across a handful of options, and I had my bail out numbers set (gains and losses). The first week they all plummeted in value. I'd never had such an intense loss and I was terrified. I will admit I panicked. A lot. Nearly all of the options were within a few percentage points of my "get out now or lose it all number" and I pulled the trigger early, not willing to risk the loss. I didn't take time to think, I just did it. Within hours they had flipped around, and by the end of holding period I had set I would have seen gains two to three times as large as expected. Instead I lost an insane amount of money. It was depressing. But again, there was that moment where I said, "holy shit, it worked." Only it was more like, "you idiot. why didn't you trust it?" I think my biggest lessons were to trust my work. I worked hard and for a long time to develop my trading system, and it was foolish for me to ever doubt it. That's not to say, of course, that if I hit my bail out numbers I shouldn't have bailed. But I hadn't, I was just too afraid to fail.

Oct 14, 2016

Tip: you'll probably never make as much $ trading your own account as you will at a BB. (unless you have 500k to spare at 22 years old)

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Oct 23, 2016

That's probably true for some, Hopeful-Incoming-At-GS. But in my case, I was an English and Philosophy major, with no job history. I was a professional poker player, which got me an interview at at least one major trading firm, but wasn't enough to get me a job. And there are other benefits to working alone as well. It's a give and take. For some, a BB is the way to go, for others, not so much (and like me, it may not even be a real option).

Oct 14, 2016

Tip: you probably won't get GS

Oct 14, 2016

Just the quick tip: my account name is a troll aiming at mocking prestige whores.

Oct 14, 2016

You definitely pulled it off

Oct 14, 2016

Chip on your shoulder, buddy?

Oct 15, 2016

It's unlikely that anyone, including aspiring ibankers, will make it to or make similar compensation to the senior levels in investment banking. It's also unlikely that most people who attempt to trade from home won't wash out for the same reason most small businesses fail. Personally, I think trading as a sole means for income from home is a foolish endeavor because of the career risk involved. Trading on the side is a much more viable option, that can also be lucrative.

Having said so, at least in the futures indices, 5 contracts goes off as easily as 120. To put that into perspective, most of the traders I know who are full time average somewhere between 5-10pts per contract per week. Keep in mind it's not a linear distribution, but on the low end (5pts), that's $250/contract. What I'm trying to say is whether this is a hobby you run as a business, or eventually are able to make a living off of, or whatever--the profit potential is definitely there if you're successful.

Not to go off too much into a tangent, but hypothetically speaking, if you averaged a 35% win rate and your profitable trades were 2x your losses, for example a 4.5 point target and 2.25pt loss, you would essentially breakeven after transaction costs. Anything beyond that and your profitability rapidly increases. There are many ways to asses trade location and the proper risk/reward, but do you think you have a higher than 35% chance of a profitable outcome if you bought near the previous day's low? Once you've found out how you determine trade location (where you'll buy or sell), you can begin to study and asses the proper risk reward and go from there. It's a blend between volume profile and statistical analysis to give them an 'edge.'

Oct 17, 2016

"And kids, if you bat .300, you'll make it into the hall of fame."

"Everyone has a plan until they get punched in the face."

Oct 14, 2016

Someone from 'simplertrading' e-mailed me about a 'finance' job - looks super scammy. Ever heard of them?

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Oct 14, 2016

Great post and I've SB'd accordingly.

Can you tell me what day-to-day life looks like for you these days? I know you mentioned you worked 16 hour days for a long while to get things going but now that you have refined your system, do you have more downtime?

Regarding your system, could you speak to how automated your system is at this point and, if any, future plans for additional automation?

Could you give us an idea how much you've grown in the last 7 years since your initial 20K investment?

Lastly, could you speak to your social life? Working solo for X amount of hours would force one to be resourceful after work hours to socialize. Where / how do you fit in social?

Congratulations to your successes. I find the lone-wolf type of enterprise to be invigorating, intellectually stimulating and ultimately, seriously rewarding

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Oct 23, 2016

Thanks for your question Dedline.

I absolutely have more downtime now. My decision making is easier and faster, my system is more streamlined, and far more automated. Basically my 14-16 hour days have turned into more regularly 10 hours a day, though that includes going to the gym for an hour after markets close. Also, I'm an early bird, so I'm up crazy early and I usually only work for one more hour to wrap things up after I get back from the gym. And on days where I am positive I won't be making trades I often either take an extra day off, or work part of the day just prepping for the next day so I can have a lazy morning. (And on the rare occasion where I am not going to trade for a week I will just take random vacations which is nice)

I'm always working on automating my system more, but I believe that my system is built, at least in part, around human decision making. This isn't true for everyone's situation, but I don't know how to begin to make a program to do some of the decision making I do regularly. Still, the data-pulling and sorting information which used to be nearly manual is now done while I sleep, which is a big plus, as well as flagging potential positions.

I had a really great first year, saw over 100% growth, and then had some people invest in me, which really helped. I don't want to go into too many specifics here as they are quite personal, but I have already mentioned I recently bought a house in the Bay Area. That should give you an idea.

Social life is probably the most interesting question for me here. It took a while for me to figure this out, and in some regards I still am. Luckily, I'm one who is pretty content with a few close people in my life. I have a best friend, a wife, and my family, and a few other friends. The rest of the people I hang out with or see are generally people I have met through networking, and while we get along just fine, it isn't exactly a purely friends relationship. But I have had the chance to meet a lot of people through finance, and it keeps me socially occupied.

Oct 14, 2016

Just one question

Do you use technical analysis

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Oct 23, 2016

I will assume you are not a troll and are serious (though that might be a mistake, I really can't tell). Part of how I make my decisions are based in technical analysis, but to say "I use technical analysis" would be rather simplified.

Oct 14, 2016

Props to you. If you trade for the short-term, I assume your system flags either unusual options activity, or various timef rame resistance/support breaks of equities. If not, can you briefly elaborate on what you track in your system? Also, how do you manage risk? Do you put in a stop for every order (perhaps a mental stop), and is the size of the bet and the stops similar for every position?

    • 1
Oct 23, 2016

Thanks for your question, and thanks for the props showtime321.

My system flags A LOT of things, which is where human intervention comes into play. Kind of the genius of my system, if you can stand the self-patting-on-the-back for a moment, is what I track and flag. I keep an eye on a lot of unusual things, and I am proud of how I learned to put those things together. But basically, I pull in a shit-ton of data and then sort through it looking for certain patterns that send me looking for further patterns among those that have been flagged. Pretty much it takes something numerous flags to reach a level where I will make a decision on it, and then I evaluate all of the data myself to be sure.

In terms of managing risk, I have a mental stop for every position both high and low. My system helps me predict what a typical loss will be if it goes the wrong direction, as well as a typical gain. I choose positions based on that relativity, and I choose the size of the position based on other parameters. I then mentally set stops (I also draw lines on the live graphs as well to keep myself hyper-aware). But as long as the price is floating within a healthy range, I will continue to hold it until the allotted time has expired that I believe the position should be profitable.

Oct 15, 2016

What are the programs/language you use?

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Oct 16, 2016

I like the monkey madness description you started out with on your trtading carreer as a day trader. however i was wondering if you ever traded in the futures market? or at least tried your strategy out there?

Oct 23, 2016

Thanks for the question ddkk.

I started initially by playing with futures and had limited success, as I was still very much in a learning phase and should have been practicing and studying instead of trading. The system I sort of fell into was based around equity and option equity pricing and timing, and I never really went back to futures. If I ever get bored and want to try something new, I'd love to apply it to futures and see what happens, hypothetically speaking. But I've never had the need to spend that extra effort and apply it elsewhere.

Oct 17, 2016

Can you describe how you felt after market close on your absolute best day of trading? How about on your worst?

Oct 23, 2016

After the best day, saying I felt like a God is an understatement. After the worst, I was literally in tears. I don't remember much of either because they were so intense that I kind of blocked them out. But some of my best and worst days were in the beginning before I developed the mental toughness to deal with struggles of trading. I am much more consistent both in application of methods and achieving results, as well as emotionally now. But those first few - it's hard to explain. It can be wild.

Oct 17, 2016

Thanks for AMA
You mentioned that you are a professional poker player, how much of the skills you use in poker can be translated into trading, do you think that poker can make you a better trader or vice versa ?

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Oct 23, 2016

Good question, CanadianWIB, though very frequently asked.

I think it helps for sure. I don't know many traders (on a floor or independent) that would argue that point. But as edwin1210 mentions below, it isn't a strict 1:1. That said, there are nuances to learn about trading that, IMHO, can't be learned from poker or a blog or anyone else in any way shape or form, and vice versa. Some things just come down to experience.

Oct 17, 2016

Thanks I SBed

Oct 17, 2016

Trading isn't that simple, read my blog, tradeelliott, and you can see where, and when, you have to get in, and out.... It is a underestimated thing, trading.

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Oct 17, 2016

do you short stocks at all or just use options?

alpha currency trader wanna-be

Oct 23, 2016

Thanks for asking watersign,

I absolutely short stocks. I also use margin whenever I deem it appropriate. My strategy incorporates all there is to use regarding equities and options. I don't just long positions and use options to hedge, I fully engage in all that equity and equity option trading has to offer.

Oct 17, 2016

i used to trade FX and what i liked about it was the fact i didnt have to worry about going long or short since liquidity is always there ..99% of the time.

do you have a list of stocks that you know are capable of being shorted? (corret me if im wrong ..but i heard some stocks cannot be shorted at all)

also...do you focus on single equities or do you utilize a scan/select method? ive created a script in python that downloads every US equity from yahoo finance and i have a backtesting tool with graphs i made in excel that lets me dump any equity into a strategy i code up and i get basic metrics like win rate, equity curve, etc

ive noticed some stocks respond well to basic moving average strategies in regards to win rates but others are dismal.

i want to trade equities but want to get a 'system' somewhat down before i dump $$ into it and would like your opinions.

alpha currency trader wanna-be

    • 1
Oct 23, 2016

@watersign

FX is interesting but IMO takes a lot of capital to become profitable in a substantial way.

I don't have a list of stocks that are capable of being shorted, but I do have an extremely large excel program that all my data dumps into in order to flag things and give predictions. this, in turn, already lets me know if i should consider shorting or longing the equity, and would not come up as a short option if it were not available. So sorry I don't really have an answer for that one.

And yes, some stocks respond well to moving average while others do not. I avoid the process entirely.

Sorry, I'm not going to detail out my trading strategy, but keep working. It sounds like you're on a good path to finding your "system". There are many ways to win at trading. There are far more ways to lose. But a difficult path was never a reason for someone to give up if they enjoyed what they were doing.

Oct 16, 2016

Thanks for getting back, Did you SIM trade for a while in TOS ? im using it at present and seems to have everthing you could possibly need, however im not a funded account yet so data is twenty min delayed, but i found a way to work with that. what plattform are you using? Also do you think options and equities are easier or just a less risky asset class to trade? seems as though you are swing trading? Thanks

Oct 23, 2016

I did in fact SIM trade for a while. However, I didn't SIM trade until I was a funded account, so my data wasn't delayed. I don't think they are easier or less risky. They are just the asset classes that I seemed to understand the best first. And I'm not really swing trading, but it's something like that I suppose. Either way, good luck, and thanks for your comment ddkk.

Oct 18, 2016

Well done and best of luck going fwd!

Oct 23, 2016

Thanks! You too.

Oct 18, 2016

Thanks for the insights

Oct 23, 2016

You're very welcome. I very much enjoyed writing up this post.

Oct 18, 2016

Hi, please describe your approach, do you short vol? trade spreads?

You killed the Greece spread goes up, spread goes down, from Wall Street they all play like a freak, Goldman Sachs 'o beat.

Oct 23, 2016

I described it quite clearly I think earlier in the comments, Arti. If you have any further questions feel free to PM me and I'll be glad to discuss it.

Oct 20, 2016

That's a very helpful article, Thanks OP, and good luck trading you'll need it.

Oct 20, 2016

Do you play online poker/online games? All the best and thank you for writing this article.

Oct 23, 2016

I do in fact. If you are interested, here is an article I wrote earlier about lessons I learned from video games and trading!

As far as poker is concerned I typically play cash games in person, and tournaments online, across various sites.

Oct 21, 2016

Thanks for the insight. Before Black Friday, I played a lot of online poker as a supplemental source of income so I'm familiar with your background.

My questions:

1) In your experience, which was more volatile, online poker or day trading? For clarity, let's compare volatility for times you were properly bankrolled for the games and when you were properly bankrolled for day trading.
2) Did you play cash or tournaments?

Thanks

    • 1
Oct 23, 2016

Thanks for your questions beepbeepimajeep3

I never technically day traded. I did short term trades between a week and a month long. As far as that goes, over the long haul I was far, far more consistent trading. The difference was a matter of diversification. On the average very bad month I was just under even. On the average very good month I did very well, but within reasonable volatility ranges. Compare this to poker where I could be down 10-15 buy-ins in a month, and up 30-100 buy-ins playing poker.

I play mostly cash, but also major tournaments in person, and smaller tournaments online. Tournaments can also really screw with your volatility as winning a major tournament can make 3-6 moths positive for you at once.

Oct 21, 2016
The Uncontortionist:

Thanks for your questions beepbeepimajeep3

I never technically day traded. I did short term trades between a week and a month long. As far as that goes, over the long haul I was far, far more consistent trading. The difference was a matter of diversification. On the average very bad month I was just under even. On the average very good month I did very well, but within reasonable volatility ranges. Compare this to poker where I could be down 10-15 buy-ins in a month, and up 30-100 buy-ins playing poker.

I play mostly cash, but also major tournaments in person, and smaller tournaments online. Tournaments can also really screw with your volatility as winning a major tournament can make 3-6 moths positive for you at once.

Thanks, and I agree with your point on tournament volatility - figured I'd throw that question in so I could get a better sense of the swings on a relative basis.

One follow up question: do/did you subscribe to an online community when teaching yourself short term trading strategies? I know a lot of folks use 2p2 for poker and was wondering if there is an equivalent.

Oct 21, 2016

Bro the average person is an idiot

Oct 23, 2016

I never disputed this. All I said is that the more confident that you aren't in that group, the more likely you are.

Oct 21, 2016

Hey man, this is awesome. I first want to applaud your diligence and resilience. I can't imagine on some days when things weren't going your way that you thought 'you know what I'm done trading for the day' and could have just sat on the couch and watched tv, but trucked on. Would have been the easy way to do it, amazing to see that you fought through it.

Only one question:

Has there ever been days when you thought to yourself "I'm done with this, I'm going to apply to a 9-5 job and wipe my hands clean of this." If so, what jobs were you thinking about doing or applying to?

Thanks for this thread, very inspiring.

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Oct 23, 2016

Thanks for your comment and question Tandem21.

It was definitely a struggle when I started, but poker hardened that part of me that made me fear losing money (for the most part), so I was at a slight advantage there.

That being said, I was never really a 9-5 kind of guy. I got a few interviews as a result of networking and people finding out about my trading results. In some cases I turned them down, in others I don't think my mindset was really what they were looking for. But those are really the only real jobs I entertained (and even those are not really normal or 9-5 jobs). In my mind, when I wanted to quit, I always went back to thinking I would just be a poker player. Something about having no upper limit and no fall back inspires me to do and be my best. I don't think I'd ever be happy in a "comfortable" job.

Different strokes for different folks. But I'm flattered I inspired you. Best of luck to you!

Oct 22, 2016

Thanks for the AMA.

What's your portfolio sharpe ratio and your daily VaR?

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Oct 23, 2016

Hi definingstrike.

Here's the long and short of it. I was self-taught, and in the beginning wanted to learn everything and apply it to my model. The sharpe ratio was one of the first things I really tried to look into and learn, at least I can talk about that (albeit minorly.) The reality is, after coming to ridiculously confusing and unreasonable results despite careful calculations, I realized I was never going to get a reasonable sharpe ratio due to an abnormal distribution of expected returns (kurtosis and negative skewness thanks to a unique model, as well as having non-linear risks, e.g. options.) To be honest, to teach myself all of this and attempt to apply it only to find that it was irrelevant to my model was, to say the least, disappointing.

So, in regards to VaR, I didn't even bother. I created my own methods of risk assessment that may or may not be variations of things that other people use that I never bothered to learn, and was comfortable with my results after months of confirmation.

Sorry I can't answer more specifically, but if nothing else, what I can say is that I truly believe it is more important to do things in a way that make sense to you and you are comfortable with than to do something the way someone else will teach you. Did I still have tons to learn? Absolutely. Did I try to learn everything I could that I felt even remotely would be relevant to my trading strategy? You betcha. But one only has so much time in a day, and my risk assessment models were pretty spot on, so I focused on other things.

Hope that makes sense. Best of luck to you.

Oct 18, 2016

This is a little weird. Surely, you can estimate your realized, i.e. ex-post, Sharpe? This should be very useful to you, I'd imagine. Moreover, it won't be invalidated or distorted by no stinkin' kurtosis or some such high-falutin' thang.

Nov 15, 2016
Martinghoul:

This is a little weird. Surely, you can estimate your realized, i.e. ex-post, Sharpe? This should be very useful to you, I'd imagine. Moreover, it won't be invalidated or distorted by no stinkin' kurtosis or some such high-falutin' thang.

Lol, right?

Oct 22, 2016

Thanks for the insights. I once aspired to do as you're doing, but I could never be consistent enough and the emotional volatility got to me. I also never had confidence in my method(s) because they lacked scientific basis. It became hard to trade even though I knew I was right.

That said, would you have any tips in developing the required fortitude and in coming up with a net-positive strategy? How did you manage to find reasonable confidence in correlating data to positive returns?

My experience has been that there are too many factors in play, so as a one-man unit it's better to 'play the players', if you know what I mean. Become really good at timing trades, then follow the money.

I understand you don't want to say anything about your strategy. I'm only looking for general tips as trading is still something I am interested in.

Thanks and best of luck! It's a tough game.

Jun 21, 2017
Nov 15, 2016
Sep 15, 2018