Saturday, December 13, 2008

The Weekend Trader - 2008 Wish List

Some tidbits on a Saturday Morning.

Hockey or Trading? -Here's a quote from the Eastern Conference Leading (I can't believe I just typed that) Boston Bruins' coach Claude Julien, in referencing last night's sloppy 7-3 win over Atlanta: "Maybe we didn't make the strong plays all the time," said coach Claude Julien. "We're trying to work ourselves out of a little bit of a funk. You're going to say it's 7-3 and we're still doing some good things. The way we played the month of November, I guess the expectations are high for everybody. I think that's why we have a tendency to look for all those sloppy plays at times. There's still a lot of good things going on, but we have to kind of settle ourselves down a little bit to make some stronger plays at times."

Hmm .... you'd think he was describing my recent trading. Just goes to prove once again that trading is indeed a sport ... game, set, match.

2008 Win-Loss Ratio - OK, here's something for the stats folks. Through 11/30, my daily win-loss ratio for the year was 4.15. Keep in mind I define a net gain at the end of the day as a "win" and a net loss at the end of the day as a "loss" ... regardless of the results of specific trades. And you know my feelings on stats ... they're simply an interesting after-the-fact anecdote, and I don't do anything to "manage" to get to a certain number. Doing so would be like a pitcher saying he's planning to throw 80 strikes and 20 balls in the next game.

I can't draw many conclusions from the 4.15 figure, other than perhaps that I screw up about 20% of the time.

Christmas Wish List for the Industry - It's a short list: (1) Either full regulation or abolishment of free and subscription trading-based chatrooms, and (2) Full disclosure of performance results for anyone providing trading or investment results/advice, including "mentors" and chatroom "gurus".

Make a stock or futures "call"?, I want to know if you're trading it, your exact entry and exit fill (missed fills alone would eliminate 90%+ from room "calls"), and your result with full audit rights. If you're not trading it, why the hell not?? And don't give me the "First Amendment", "we can't legally disclose our client's trades", "we're precluded from trading what we advise", "it's simply entertainment", "I'm not really providing advice", "buyer beware", or "I'm a mentor, not a trader" arguments -- all of which are self-serving either for subscription revenues or their own front-running purposes.

As for the last point re: mentoring/teaching, sorry, I wouldn't want to learn to stop smoking from a coughing doctor, learn to lose weight from the hot dog eating champion, or learn to fly a plane from someone who's a "good teacher" but has never flown extensively and successfully. Frankly, I want to see the detailed records of Suze Orman, Jim Cramer, Mario Gabelli, every interviewee on CNBC with a recommendation, and every chatroom "leader". This will of course all but seal I never get invited again to a chatroom interview.

Sorry folks, but we're talking money here and accountability should be first priority. The gig should be up and it's time the curtain is fully opened. If you're legit and can comply with ramped up regs, you'll have no problems. And yes, everything I've posted in this blog would withstand a 100% audit. You can take away my exchange seat if it didn't.


Heading to Foxwoods for a day of poker cash games and to take the mind off trading. Enjoy the weekend.

9 comments:

Eric D said...

Don - Great post. Sometimes its eerie how similar trading & sports are.

I recently got annoyed watching Cramer & having people ask me if I follow his guidance so I have decided to embark on building a mechanical system to fade Cramer, just to see if it is possible. It is surprisingly difficult to find a clear list of recommendations that he has made over time.

It is frustrating being classified, by many people, as being in the same league as those companies & people that are blamed for the financial problems of today. Finance has a lot of shady characters, especially on the internet, but there are a lot of great people in the industry. Its just that they aren't as visible publicly as the shady ones. I think the industry could benefit from a re-invention of itself to better handle the internet based tipsters.

Regards,
Eric

Anonymous said...

Don-

I could not disagree more with you on the chat room rant.

There are plenty of teachers that do not trade or are not good traders, but can convey techniques that are useful, just as there are plenty of great traders that don't teach well or are stuck with the "I'm not sharing my secrets" complex. Quite frakly, if you were starting out again, who would you want to learn from? I know I have learned much from various chat rooms, and am happy they are in existence.

By the way, I think this blog is great.

Ken Folds

M said...

Don,

enjoying your blog from Aus. Keep up your great trading !

good to see you standing apart from the 'guru' crowd and saying what needs to be said.

cheers,
MT

Don Miller said...

Hi Ken -

Thanks for your post, and I respect your opinion.

It's a topic that often debated, and while I'm actually not usually a "more regulation" guy and am a huge supporter of virtual learning via the net, I've just seen too much shadiness firsthand.

Years ago, many know I was very active in some of the early rooms, having taught in a few notable venues, and I believe there's a place for legit rooms so long as they comply with regulation that should either be better policed (if it exists) or implemented (if it doesn't).

Stuff I've seen firsthand include rooms teaching traders how to illegally circumvent the uptick rule when it was existence, "guru" room leaders who hire marketing agencies to promote themselves or their books when they have absolutely no track record aside from "borrowed" concepts and snake oil, rooms locking anyone questioning or respectfully disagreeing with the "guru" out of the room and removing such discussion from historical logs, etc.

Aside from the illegal stuff, my largest beef is actually with live "calls" and posted records of gains. Even in the few legit rooms, I believe it's simply ethically wrong to recommend/suggest/tell (pick one) members to enter a trade if leaders or their companies are trading it themselves or for a client without full disclosure.

And if they're offering suggestions and not trading it, I believe there should be full historical performance documentation of the method or system being promoted, as is required in the futures industry. Many get around this legality by saying they're "not providing trading advice per se", which is often B.S.

Ironically, I come from a family of teachers. My grandparents and both parents were teachers, as is my sister. And I agree that there are many great teachers out there that convey important info.

Having been through a decade of trading wars though, I do feel strongly that some of the most important skills required for a good trader are best taught by someone that's been through the wars himself/herself with his/her money on the line under pressure situations. If I were starting from scratch all over again, I'd definitely want my mentor to have experience as well as a grasp of the conceptual.

I've admittedly been very vocal on this topic over the years, and will likely continue to be. I agree there's a lot of good out there. If they're truly above board, then they should be able to pass any tests -- legal or ethical -- easily.

My opinion only of course.

Good discussion though.

Don

Stan said...

Don -

Not to belabor this issue but I wanted to weigh in on the "guru/chatroom" discussion because I also happen to be quite passionate about it. I personally could not agree with you more. Perhaps one could make an argument not to throw the baby out with the bath water because there are a few helpful chatrooms/teachers but the problem is: how can one differentiate between a real professional and a con out to make a buck? In most cases, one has to first pay for admittance before ever having the opportunity to determine the true worth of the underlying information. I argue that most (self proclaimed) gurus are scam artists that are not worth their weight in salt. I also argue that the best teachers are those who can teach not only by word but also by example. Many can play Sunday afternoon QB but few can and have ever stepped out on the field. To draw comparison to sports, most of the best coaches were also once players.

As you suggest, I also believe that this industry would quickly improve its image with more transparency. If the results of the so-called gurus were really that good, wouldn't they want to prove it? It would only help their cause, not hurt it.

Furthermore, it doesn't take a real pro to look at a chart in hindsight and point out where all of the "proper entry and exits are" but it seems like that's all anyone does these days. What's more, they charge thousands of dollars for classes that are built on get rich quick marketing hype that offer no real value in the end.

Another issue for another time is the blame the consumer also shares. Those who are too lazy to work for their success are never going to earn it by simply buying some trading program that promises easy profits for only a few minutes a day... If you buy in to that nonsense then part of me has a hard time feeling bad when they get burned in the end.

Perhaps the best way to clean up the industry is to create and promote more blogs like yours. I have learned a lot by simply following you on a daily basis and your transparency is like a breath of fresh air. It is only getting easier to find good information on the web and that will only make it harder for all the sleaze-bags to sell their snake oil!

Stan

Don Miller said...

Hi Stan -

At the risk of stating the blatantly obvious, I'll continue your second paragraph thought with, "If the results of the so-called gurus were really that good" ... they'd be trading!

In fact, not only would they be trading, they'd be trading their own capital where they'd keep 100% of the profits.

Having said that, both Ken and you make excellent points in that there's certainly some good out there, and yes there are good teachers who teach. The problem is the bad is very bad, and even the well-known and experienced traders running rooms have a very difficult legal and ethical balance when they both trade and make calls, even if they say they've set up firewalls to separate them. And sometimes, they hire "assistants" with no trading experience or legal credentials whatsoever to do so after learning a few chart patterns.

I have no problem with concept teaching by people licensed or bona-fide experience to do so. As for entry and exit "calls", even the well-intentioned rooms sometimes end up giving in to lazy traders who are willing to pay month after month for a mirage in the desert by having someone tell them what to do. [It's a very slippery and tempting slope.] Again, if most were really that good, they'd be trading.

btw, I've long said if I ever start sounding like some sort of guru, please slap me. My own circuit breaker is that the minute I go there, it will be reflected in poor trading results -- without a doubt. Humility HAS to reign for a trader to be successful. [Ironically, the polar opposite of marketing that has to reign to drive subscribers.]

At times, I've had to catch myself even with this blog, especially as the readership exploded, and do an ego check. And I could probably link some of the trading losses on the equity chart on the left to feeling too good about myself. So when I slip, I pay. It's simple punishment.

Perhaps put another way, if there can be hidden skeletons for years at REGULATED entities such as Enron, AIG, Hedge Funds, and the auto industry, do we think there's none in a largely unregulated online trading world?

'nuff said I suppose. Again as you and Ken point out, there's some good out there. I just know I'd never want to learn to fly a plane, play professional (or even recreational) golf, or any other skill profession in a chatroom.

Unfortunately, "buyer beware" continues as one's primary seatbelt ... which is unfortunately a very costly approach.

Good discussion all around.

Don

Anonymous said...

I also was a teacher for almost 20 years. I have always believed you cannot pay a good teacher enough, and that we overpay our poor and average ones.

Remember the chatroom that touted Frank making 100k daily trading for only a few minutes a day? Turned out his supposed live trades were on a simulator!

For me it was an expensive journey finding the Don Millers and Kevin Haggertys of the trading world, but well worth the search.

The real voices of value, however, come from within while sitting in front of the computer and applying the concepts these masters teach with real bullets flying at you.

Developing our own unique style and methodology that works for us is the ideal.

A number of years ago I called a trader and sought his advice on chatrooms, and I wrote down his thoughts in my journal.

He told me that roooms run by competent professionals are helpul for beginners to learn the business, to help you deal with the isolation, and to provide you with another opinion to compare with your own insights to keep you balanced. The gurus, however, should never keep you from forming your own opinions and taking your own trades.

I still consider that some of the best advice I ever got from this true professional who took his valuable time to help a complete stranger. His name was Don Miller.

Thanks again, Don.

E.

Don Miller said...

Hi E.

I'll echo your comment,

"The real voices of value, however, come from within while sitting in front of the computer and applying the concepts these masters teach with real bullets flying at you."

Sounds like the student has become the teacher.

Hope all is well.

Don

AgeKay said...

Awesome post and comments. I fully agree, too much bullshit in this industry.