Trader Meetups (Part 8)

A main theme of my last post was that while a Meet & Greet sounds nice and full of good cheer, I need something more to progress as a trader.  Today I will define that “more” by offering a template for a real trading group.

The real trading group (meetup) would be comprised of advanced traders each having a good work ethic.  Everybody must have something to contribute.  I mean no offense to newbies just looking to learn.  I was once a beginner.  I am a beginner no more as a result of the laborious work described here.  Consider that part of the undergraduate material.  The work to be undertaken by the real trading group is more akin to graduate study.  Members should ideally have live trading experience.  At the very least, members should have knowledge about how trades work and react in different market conditions.  Members should have some academic knowledge about different aspects of trading/finance and be willing to take the extra steps necessary to get educated about important elements they don’t know.

The real trading group would be comprised of individuals willing to share expenses rather than being sponsored by any company or service.  This group is a collaboration with the potential to develop new and improved trading plans for all involved.  The potential for consistent profit over time should far outweigh the costs.  Even food/drink costs should be willingly shared by all.

I strongly believe that food and drink should kept to a minimum, though.  Just humor me and consider it a matter of karma.  Provisions fall under the “eat, drink, and be merry” category.  I do this at parties and celebrations.  To invoke this here is putting the proverbial cart before the horse.  Much work awaits and only when complete do I have reason to celebrate and reward myself.  In my opinion, celebrating before accomplishment is just the sort of arrogance that Mr. Market would eagerly avenge in full force and losing large sums of money is not good business practice.

Trader Meetups (Part 7)

Yesterday I mentioned that all trader/investor meetups in my area have been organized by people with commercial interests.

In this regard, a “Meet & Greet/Business Card Exchange” (see here) would be useful for the organizer because every attendee is a potential new customer.  While it sounds like fun people and good cheer, the event threatens to distract me from the real focus unless it provides something more.  At the risk of sounding repetitive, my real focus pertains to the laborious work mentioned here.  Mr. Market doesn’t give one iota about networking or good cheer.  It’s actually a little-known secret that Mr. Market will eagerly take my money if I mistake too much good cheer for a means to consistent profit.

Can I find someone able to help me become a better trader through this networking event?

The deck is already stacked against me in finding other traders with whom to work (see here).  This particular event was a joint production of Power Trader Investment Group (PTIG) and Metro Detroit Business Networking Group (MDBNG).  Only two people RSVP’d from the former and one of these was the organizer (of both groups).  Recall that I already attended a PTIG meetup (as described here), which provided little more than yummy chocolate chip cookies.  The organizer runs a subscription web site.  If he were interested in anything more than my business then he would be have been trying to get inside my head like everyone does (and vice versa) to find out what I know about trading rather than simply representing himself as a professional guru.  This leaves just one RSVP from PTIG:  a beginner I already met.

I believe any serious traders involved in MDBNG would be involved in PTIG.  Why waste time associating with a variety of entrepreneurs when you could associate specifically with traders?  Since PTIG didn’t help me and MDBNG probably lacks traders, I estimated the potential utility of this Meet & Greet as slim-to-none.

Trader Meetups (Part 6)

As you may recall from Part 1, this thread was inspired by an invitation to a “Meet & Greet/Business Card Exchange” through the Power Traders Investment Group (PTIG).  Part 5 summarized my take on the laborious effort required to become a successful trader over the long-term.  I do not believe participation in the former qualifies as part of the latter.

In Part 1, I mentioned that for many years, meetups have been used by IBD as a marketing tool.  I believe the main goal of all trader/investor meetups to be sales and marketing rather than helping me to become a better trader.

I recently attended a meetup of the PTIG that provided no actionable trade ideas and no new networking contacts.  I met a handful of new people who were beginners or hobby traders but no other full-time traders.  We analyzed some charts and talked some technical analysis but everything was evident only in retrospect or subject to curve-fitting (i.e. fallacy of the well-chosen example).  To be fair, we did not go around the room and have everyone share their leading trade idea(s).  We were not asked.  All discussion was led by the organizer:  a kind gentleman who provided cookies, veggies, dip, and who runs a subscription trading web site.  By his own admission, he has recently become interested in “internet marketing:”  a subject I hope to revisit later.

All trader/investment Meetup groups in my area have some for-profit bias.  Michigan Options Traders is a Meetup group organized and sponsored by a company that promotes itself as “the stock idea network.”  Michigan Market Traders is a Meetup group organized and sponsored by a trader education program.  The Detroit Area Day Traders Meetup Group was organized by “an independent Registered Investment Advisor offering a diverse blend of quantitative investment strategies.”

I will continue the discussion tomorrow.

Trader Meetups (Part 5)

Parts 2 and 3 of this series included thoughts and experiences of an advanced option student on the road to full-time trading.  I was somewhat appalled in reading them and you can see my response here.

I went on to cite Malcolm Gladwell’s book Outliers and the “10,000-hour rule.”  This is consistent with my experience of working 50-60 hours per week over the first four years.

Trading for a living requires a tireless devotion toward learning the craft.  One does not become a pharmacist, a physician, or a lawyer overnight.  Any professional discipline requires years of study.  Human greed makes it difficult to ignore the plethora of advertisements offering fool’s gold like “great money investing that takes just a couple hours per week.”  This is optionScam.com.  It’s not going to happen.  It’s not reality.  If you fall for the sales pitch then you can expect to lose money in the pursuit each and every time.

Learning how to trade is easily stated and hard to do.  Follow the suggestions given here.  Do hundreds of backtested and paper trades.  Execute tens upon hundreds of small, live trades.  Monitor these trades.  Analyze them.  Think hard about how they are working and what leads to different outcomes.  Think about generalities and apply tenets of System Development as I have discussed in numerous blog posts.  When you see something, is it curve-fit and specific to that trade or is it robust and applicable to different types of environments?

Do all this and you will have your hands full.  I can guarantee that you won’t be thinking about other things to occupy your time or about how to be perceived as busy (absurdly suggested here).  Your brain will hurt many times over from analyzing and studying everything there is to know and putting yourself in a good position to succeed over the long-term.

Tomorrow I will return to the beginning.

Trader Meetups (Part 4)

I recently came across a thread in an option education forum where a beginning student asked for thoughts and experiences of full-time traders.  He wanted to know how to bridge the gap from traditional job to trading as a business.  You can read the response of an advanced student here and here.

After reading this response, I followed-up with some feedback of my own:

> I have to say that I was rather shocked to read your post.  Here’s a very
> important question:  are you looking to trade for a living or to trade as a
> hobby?
>
> In my opinion when you graduate, you are ready to start trading real
> money in small size.  You will not be ready to trade large or come
> anywhere close to replacing a full-time income.  In order to do that,
> you need to do *many* live trades.  You should also spend generous
> time backtesting in order to see how trades work and how they may
> be adjusted.  While not as valuable as live trades because your
> emotions won’t be involved, I believe backtesting is extremely
> valuable when done properly and a practical way to augment your
> trading experience.
>
> Backtesting, paper trading, and live trading in small size can easily
> take full-time devotion–and by this I do mean at least 40 hours per
> week.  This says nothing for additional study/learning about other
> topics like technical analysis, stocks and futures, trading system
> development, money management… this list could go on.
>
> No insult intended but if you don’t feel you have enough to fill
> your time then I believe you just aren’t working hard enough.  In
> my opinion, the thousands of hours many traders spend tracking
> trades is the only portal to trading for a living.
>
> If you want to trade as a hobby and make some small change here
> and there then it’s another story altogether.

Trader Meetups (Part 3)

This blog mini-series was inspired by an invitation I received to a “Meet & Greet/Business Card Exchange” extended to traders.  My last post introduced some thoughts and experiences of an advanced student directed toward a beginning student in an option education program.  Please review the contents here.

His response concluded as follows:

> We can easily live on my wife income alone but her family sees me not working and
> staying at home.  They ask about me.  We have decided not to tell them about my
> learning to trade options.  It could be opening a can of worms.  It stresses her out.
>
> I have thought about finding a job to keep myself busy and to look good to the
> family but I don’t want to get back into my old profession of telecom… they bleed
> you dry.  I would be frustrated and not be able to apply myself to trading as I am
> now.  I have even thought about applying to an Edward Jones or Merrill Lynch
> but I don’t think that I will do anything at these places other than get on the
> phone or hit the streets to bring in clients rather than learning to trade.
> I have even thought about selling cars at a dealership just to keep busy.
>
> I wish I could find a job that could supplement my learning to trade options,
> but not hinder my current trading.
>
> Hence, the other side of the fence is not as green as you might think.

Rarely do I read something in a forum and feel inspired to follow-up publicly.  I certainly did in this case, though.

I will give my response in the next post.

Trader Meetups (Part 2)

This blog mini-series was inspired by an invitation I received for a “Meet & Greet/Business Card Exchange” (see here).  The issue I want to address is whether or not this can make me a better option trader.

I recently came across a thread in a trading forum inquiring about full-time trading as a business.  The original poster was a beginning student of the option education program hoping one day to quit his full-time job and trade for a living.  The following response (slightly edited for clarity) is from an advanced student in the program:

> I am in the position that you want. I am on the other side of the fence where from your
> point of view the grass looks like a lush green field.
>
> My wife is involved with her family business and is bringing home the bacon while I am
> learning to trade.  When I first started with the curriculum, I was able to apply myself
> full-time.  Now that I am [near graduation]… I am concentrating on my paper trading
> and applying different trade strategies… I am trading my paper account as if it were
> real money…
>
> It’s a little harder now to apply myself full-time to trading…. 40 hours/week is a lot of
> time to allocate to trading. My trades are chugging along and I am keeping up with my
> due diligence.
>
> When I first started, my wife would ask what I was doing.  I told her about the classes
> I was taking.  I was busy.  When my wife asks now, I tell her everything is going fine
> but she can sense that I am not as busy as I used to be.
>
> My wife also asks, “When will you start trading real money?”
>
>”Soon,” I say.

I will post the rest of this response tomorrow.

Trader Meetups (Part 1)

After one week away on an awe-inspiring vacation to the Caribbean, I opened my e-mail to the subject line “Join 81 Power Traders at ‘Meet & Greet/ Business Card Exchange.'”  Such is the inspiration for this blogging mini-series.  In the posts that follow, I will discuss numerous concepts in hopes that at the end of the road, everything will converge on a few robust ideas that constitute optionScam.com.

I will begin by introducing meetups.  As stated on its web site:

> Meetup is the world’s largest network of local groups. Meetup makes it easy for
> anyone to organize a local group or find one of the thousands already meeting up
> face-to-face. More than 9,000 groups get together in local communities each day,
> each one with the goal of improving themselves or their communities.

The “Meet & Greet” invitation arrived courtesy of Power Traders Investment Group:  a meetup to which I currently belong.  I first learned about Meetup.com years ago through Investors Business Daily, which has devoted resources to marketing itself through a network of local meetups in different cities across the country (emphasis mine; please remember the exact wording).

One reason [stock/option] trading is a very difficult proposition is the social isolation traders often experience.  This originally made the prospect of networking with other traders through [Meetup] groups very promising.  Until 2007, I practiced as a pharmacist, which never offered any time for a dull moment.  Suddenly with full-time trading, I had nary a wayward sound in my physical space to distract me from the computer screen.

Five years later, I now find the prospect of [Meetup] groups more aligned with optionScam.com.  In my next post I will begin to explain why.