Monday, February 8, 2010

Monday Notes - Super Bowl Wrap Edition

Some random musings on the day after the big game.

Commission Analysis Follow-Up - MF Global's fee experts reviewed yesterday's commission analysis in depth today and they confirmed all the data is correct.  I've added the post to the Key Post list in the lower left hand margin for ease of future reference.  Based on record Sunday blog traffic, it seems the analysis was sorely needed.  Thanks to Dr. Brett for helping spread the word.

Why Don't I Purchase a Seat? - An excellent question as Jeb221's conclusions in yesterday's comments are indeed correct, and one that I've been considering for some time -- especially as lease prices have continued to plummet and are at multi-year lows (the last IOM seat recently sold for $175K vs. around $500K just two years ago).  For now, I've chosen not to make the investment, but the issue is definitely on the table again and I've ramped up dialogue with MF Global's seat liaisons.  Traditionally, I've preferred the variable cost (vs. initial investment) route for flexibility.

New York Prep - I'm putting the finishing touches on the NY Expo talk, which will include a segment on trader cost structure and expand on some of the elements in Sunday's commission analysis.  One of the general themes will be "If You Can't Beat 'Em, Join 'Em" to continue to try to get traders thinking about trading as the casino versus the speculator ... no matter how small their "casino" may be.  Why some traders refuse to acknowledge that cost structure may be the heart of their problem vs. simply barking at profitable traders who have figured it out continues to escape me.

TT Excel Programming - I've just about completed programming an excel spreadsheet that contains in-depth live trade logging and summarizing in a way that meets my preferences (many canned trading statistic platforms simply don't provide the data in the way which I prefer), which I'll make available for those trading via Trading Technologies' order entry system shortly.  As I mentioned the other day, one solid benefit to the TT platform is that it automatically links its live data feed to Excel which allows you to dice and slice the data any way you choose to.

Psych Coach Update - I had a good session with my psych coach on Sunday, which included a subconscious re-wiring of a thought pattern which often affects those of us who both teach and trade.  I'll provide additional data and results over time.  It also reinforced the need for me to LIMIT formal live teaching this year to the single upcoming effort.

Continuing Education Thoughts - Which brings me to my final thought in response to a few recent questions on my views on formal trader education. Yes, I've been highly critical of it over the years ... although I've recently chosen to stop whining and try to do something about it.  And I also believe that experience will always be the best teacher -- whether in trading or in life.

Here are my simple views, perhaps surprising to some: There are many solid educational efforts out there of which I'm not a part. And my suggestion is that if you have such a need and come across those efforts via reference, word of mouth, proven performance, or another bona-fide source, by all means pursue them!

Yet here's where I'm stumped.  There are some that refuse to believe that any education for which you have to pay isn't completely bogus, and/or that they should guarantee a certain level of earnings.  So let's not only throw the baby out with the bath water, let's add her two brothers as well.  Next, I suppose we'll be asking the government to provide "free" trading education for everyone ... and let's fund via some sort of hidden tax.  Oh, and let's also go ahead a pay losing traders an income so that everyone is guaranteed to come out the same regardless of personal dedication and application of skill.

Sound ridiculous?  Well, just a quick tour around the 'net will prove otherwise.

At my end, I budget a minimum of $10K in expense annually to fund a combination of personal coaching and continuing education.  I'll also spend about $80K this year to pay for two years of my two daughters' formal education, a total that will reach over $320K for their combined eight years, and that doesn't include likely graduate programs.  The expectation of course is that they'll both earn far more than that over their lifetimes to offset the cost.  I suppose I should have asked the college to guarantee they'd receive all As, as well as a lucrative job after graduation ... oh, and then success after that.

Yet in a business where one could literally out-earn the vast majority of professions, some continue to insist that even a single dollar paid for education is too much.  Have we really grown that cynical of this business??  Again, I'll take myself and any vested interest out of the picture by saying if you find quality teaching out there and are in need, pursue it.

One question I'm often asked is why do most traders fail.

There are of course many answers, yet one is poor cost management in the context of either paying excessive costs via over-priced commissions, or via underfunded investment in training.  Such are also classic reasons why some businesses in general fail or simply suboptimize their results.

You may find that doing your homework in both may pay off in the long run.


James Edwards-Marche said...


I was wondering if you know of a way to reduce Forex commissions as opposed to Futures??

I know that there are brokers who offer 'commission free' forex trading but the cost is more than made up for in the comparatively huge spreads.

It's also an OTC market, so my suspicion is that there isn't.

Any input from you (or readers of this blog) is appreciated.


Unknown said...

I keep hearing about the IOM lease. But no one discusses the breadth of trading that this covers. Does this lease cover all futures trading (gold, silver, natural gas, wheat, sugar, ES, TF, NQ and YM)?

Don Miller said...

Erwin -

The CME site has all that info. Here's the link that describes what each one covers:

MM -

Can't help you on Forex ... not my area of expertise.


SMW said...

As a trader using TT Pro, looking forward to having a look at your Excel spreadsheet.



AgeKay said...

I think the general scepticism comes from the fact that 99.9% of educational offers out there are in fact scams. If you've never seen a black swan, you'd think they didn't exist. If it wasn't YOU who was doing the jelly effort, then I would even think it was a huge scam. The reason I know it's not is the way you describe things. It's hard to explain, but I've come to the point that all I need to read a few paragraphs of a person talking about trading and I know whether they trade for real or not. Like the personal e-mail response I got from you with regards to averaging up. Just reading that, I knew, you know what you're talking about.