[quote]tedro wrote:
Is it time to consider a tariff on oil imports? Perhaps only seabound imports?[/quote]
…inflating the cost of domestic oil and further reducing demand for Arabian oil?
Perhaps some of the proceeds could even be used for conservation efforts to appease the environmentalists and build support for pipeline construction and modernization.
[quote]theuofh wrote:
[quote]tedro wrote:
Is it time to consider a tariff on oil imports? Perhaps only seabound imports?[/quote]
…inflating the cost of domestic oil and further reducing demand for Arabian oil?
Perhaps some of the proceeds could even be used for conservation efforts to appease the environmentalists and build support for pipeline construction and modernization. [/quote]
Why not? Would like to see multiple non-partisans studies on the impact first though.
I had another thought: What do you all think of decreasing (or eliminating) the federal gas tax and then creating a tariff on imported oil & gas? The goal would be to make it revenue neutral to the US government and thus limit the increase to consumers.
[quote]tedro wrote:
I had another thought: What do you all think of decreasing (or eliminating) the federal gas tax and then creating a tariff on imported oil & gas? The goal would be to make it revenue neutral to the US government and thus limit the increase to consumers.[/quote]
Then the EU would be downright indignant and unfortunately we are a bigger trade block than you are.
Just as we sign a trade treaty between the US and the EU.
No.
No, you keep on digging and become a net exporter by 2030 and then you tell the Middle East to suck it, tell the OPEC to blow a goat and hand them all over to China who will need lots of oil by then.
[quote]Dr. Pangloss wrote:
[quote]on edge wrote:
Doc, can you see this leading to a downward economic spiral on the other hand?
[/quote]
No. Energy only makes up ~9% of the S&P. There will be heavy (and have been) heavy losses within the energy sector, but certainly no systemic contagion effect.
Edit: my comment above refers to both the stock market as well as the broader economy. Oil is an input in nearly every good. The benefit to consumers will far outweigh the damage to specific energy companies.
That’s not how professionals trade (although I’m not saying it hasn’t been done). You get out of your losers and keep your winners. Selling winners and keeping losers is amateur-hour; if I caught any of my guys doing that we’d have a very frank discussion about their future in the business.
[/quote]
Hey do you have any good books, forums, etc. that you could recommend me?
[quote]squating_bear wrote:
Hey do you have any good books, forums, etc. that you could recommend me?[/quote]
How much do you currently know? Are you looking for an introduction to markets and how they work, or do you have the basics down and are looking for books on trading, specifically?
[quote]Dr. Pangloss wrote:
[quote]squating_bear wrote:
Hey do you have any good books, forums, etc. that you could recommend me?[/quote]
How much do you currently know? Are you looking for an introduction to markets and how they work, or do you have the basics down and are looking for books on trading, specifically?
[/quote]
I would be interested too. For me, I have 5 mutual funds in addition to my 457 and my pension. I would like to look at something more aggressive with a 10 year time frame. Single stocks?
And my favorite? TRowePrice’s Heath Science fund. Check it out. Now
[quote]Dr. Pangloss wrote:
[quote]squating_bear wrote:
Hey do you have any good books, forums, etc. that you could recommend me?[/quote]
How much do you currently know? Are you looking for an introduction to markets and how they work, or do you have the basics down and are looking for books on trading, specifically?
[/quote]
I would really appreciate anything you would recommend to anyone
I’ve been studying trading for about two years which might not have been the best way now that I see how you asked that. I’ve been studying trading specifically, and I think I could benefit from intro to markets stuff also.
I was paper trading options spreads earlier this year and did really good but when I started actual trading it has not gone well. I estimate that I have some decent skills and knowledge but that my psychology isn’t right yet. I also found that slippage makes a big difference when live trading and with paper trading it isn’t really an issue. An embarrassing percentage of my losses could probably be chalked up to high bid/ask spreads on options contracts that didnt have high volume and open interest - something I am becoming more careful about. I haven’t put any more in than I could afford to lose tho and I value the time I have spent more than the money I have lost
I’ve studied only technicals so far but I recently decided to read Ben Grahams The Intelligent Investor. I was thinking that I could combine different approaches and start looking into a company through many different lenses when I see a technical trigger or setup in a chart, and start being more selective and aggressive with a smaller number of trades.
The two routes I have been considering are continuing with options and getting more careful by incorporating non chart data with all of my decisions, or continuing with purely technicals and going into FX and trading small lots where psychology should be a much smaller issue. Maybe also get into automated trading on FX
Basically I’m still trying to build a style and I see from your posts here that you have several styles that work for you. Also you seem to be managing several traders who also probably each have their own styles so I estimate you have a lot of insight into what I’m trying to do - that’s why I rambled about me. I imagine I would eventually get around to reading everything you would recommend, but I would take time.
Thanks
[quote]squating_bear wrote:
An embarrassing percentage of my losses could probably be chalked up to high bid/ask spreads on options contracts that didnt have high volume and open interest - something I am becoming more careful about. [/quote]
Basically I lack perspective and its only natural that I would ramble when asked
[quote]Dr. Pangloss wrote:
[quote]squating_bear wrote:
Hey do you have any good books, forums, etc. that you could recommend me?[/quote]
How much do you currently know? Are you looking for an introduction to markets and how they work, or do you have the basics down and are looking for books on trading, specifically?
[/quote]
Well I can’t speak for Bear specifically but I would love any and all information from the ground up. So to speak.
An introduction into the markets as well as an over all understanding of the basics in trading
Here’s part of the reading list I give my new traders:
General Knowledge:
Complete Guide to the Futures Markets by Schwager
Option Volatility and Pricing
Further reading: Fundamental Analysis by Schwager, Technical Analysis by Schwager, Options as a Strategic Investment
Psychology of Trading:
Zen in the Markets (this will either resonate with you or it won’t)
Trading in the Zone, or
Trading to Win
Mastering Trading Stress
Development:
Complete Turtle Trader
Steidlmeyer on the Markets
Market Wizards
New Market Wizards
General Reading:
Reminiscences of a Stock Operator
Charlie D
Extraordinary Popular Delusions and the Madness of Crowds
The Big Short
Liar’s Poker
Bringing Down the House
Metal Men
First, I think you need to define your goal. Are you looking to become a sophisticated investor or a professional trader?
Trading is a very, very difficult way to make a living. The industry looks nothing like it did 20 years ago when I first started. My career started on the floor of an exchange where physical size and a booming voice were you’re biggest advantages. It was really an amazing time and a very valuable way to learn the business. Essentially, I was shoulder-to-should with - and competing against - the best traders in the world. Imagine you wanted to get better at basketball and had the ability to play one-on-one against Jordan every day, for 7 hours a day. You’d either improve or you’d quit to go pursue something else. Same thing. Looking back, it was embarrassingly easy to make a low six figure income. There are stories that predated my time on the floor of guys who were so fucking annoying to be around, they’d essentially be given $500 worth of winning trades a day just so they’d leave and let everyone else concentrate on the markets.
A wave of change came around 1999-2000 as computerized trading took hold in the US. If I had to estimate, %50 of the local trading population were not able to make the transition and either left the business or took another position within the industry. For whatever reason, I was able to make the transition smoothly and loved being able to trade multiple markets. I was no longer limited to just the pit that I stood in. If oil was moving, I could trade that, if the euro was screaming higher, I hop on that trade. If the 10 year was getting smoked I could sell some of those (but probably buy, traders are natural contrarians).
Finally, another wave of change came after the financial crisis in 2008-2009. High frequency trading firms would run algos to hunt out institutional orders on electronic exchanges. It became extremely difficult to make money day to day and many of the guys I had traded with for years and years could no longer compete. To use a common economic analogy, they were some of the best buggy whip makers around but their skill set was no longer needed with the advent of the automobile.
So fast forward to the current day. Before anyone wanted to become a professional trader I would ask, “What is your edge?” That is, what do you know (or what tech do you have) that will allow you to carve out profit in the market? On the floor, the edge was geographic. I stood in front of brokers who represented all the largest banks. Up until the advent of the HFT firms, my edge was a combination of market experience and tech. In 2001, I was paying $2500/mo for a T1 line to connect to the exchange. In 2006, I dug up a couple city blocks to lay fiber directly to the building where the exchange housed it’s trading servers. That was closer to $5,000/mo. In 2008, I leased space in a rack adjacent to the exchange servers so I could run my trading strategies directly from the server. Being 1.5 miles away was no longer competitive; I needed to be less than 10 feet away. I don’t want to tell you how much that cost.
My purpose in this isn’t to illustrate how much money I wasted, but to let you know what you’re up against. After the latest iteration, I decided I was fast enough for my purposes and the law of diminishing returns would prevent any more meaningful tech investment on my part. It certainly didn’t stop the firms who were paying $1MM/month to lease microwave bandwidth. Additionally, they have rooms full of PhDs testing and retesting strategies I couldn’t even dream up. Trading right now, for myself and the guys I know who are still going at it, has never been riskier. We each have strategies we use to cope with the risk, but at some point I’m going to decide that putting my net worth at risk every day doesn’t seem like such a fun way to make a living anymore.
So, what’s your edge?
I’d pay a community college $200 bucks to teach me the basics & vocabulary. Then I’d start on Doc’s reading list.
[quote]Dr. Pangloss wrote:
So fast forward to the current day. Before anyone wanted to become a professional trader I would ask, “What is your edge?” That is, what do you know (or what tech do you have) that will allow you to carve out profit in the market? On the floor, the edge was geographic. I stood in front of brokers who represented all the largest banks. Up until the advent of the HFT firms, my edge was a combination of market experience and tech. In 2001, I was paying $2500/mo for a T1 line to connect to the exchange. In 2006, I dug up a couple city blocks to lay fiber directly to the building where the exchange housed it’s trading servers. That was closer to $5,000/mo. In 2008, I leased space in a rack adjacent to the exchange servers so I could run my trading strategies directly from the server. Being 1.5 miles away was no longer competitive; I needed to be less than 10 feet away. I don’t want to tell you how much that cost.
My purpose in this isn’t to illustrate how much money I wasted, but to let you know what you’re up against. After the latest iteration, I decided I was fast enough for my purposes and the law of diminishing returns would prevent any more meaningful tech investment on my part. It certainly didn’t stop the firms who were paying $1MM/month to lease microwave bandwidth. Additionally, they have rooms full of PhDs testing and retesting strategies I couldn’t even dream up. Trading right now, for myself and the guys I know who are still going at it, has never been riskier. We each have strategies we use to cope with the risk, but at some point I’m going to decide that putting my net worth at risk every day doesn’t seem like such a fun way to make a living anymore.
So, what’s your edge?[/quote]
That’s pretty crazy. I’m glad you shared that.
[quote]Brett620 wrote:
I would be interested too. For me, I have 5 mutual funds in addition to my 457 and my pension. I would like to look at something more aggressive with a 10 year time frame. Single stocks?
[/quote]
Ironically, because I know how difficult trading it, I invest all my retirement money/savings in one of 6 mutual funds and let those pros figure out what to buy.
I do buy some single names, but it’s usually in the context of a larger option trade. I discuss some strategies in the Tesla thread in GAL.
If I wasn’t trading professionally, most of my “at-risk” money would be in options with a few caveats. First, I wouldn’t be a buyer of options, and second, I would not use options solely as a directional tool. That is, if I think a stock is going up, I’ll buy the stock. It’s hard enough getting direction correct, let alone fighting decay.
[quote]Dr. Pangloss wrote:
Here’s part of the reading list I give my new traders:
General Knowledge:
Complete Guide to the Futures Markets by Schwager
Option Volatility and Pricing
Further reading: Fundamental Analysis by Schwager, Technical Analysis by Schwager, Options as a Strategic Investment
Psychology of Trading:
Zen in the Markets (this will either resonate with you or it won’t)
Trading in the Zone, or
Trading to Win
Mastering Trading Stress
Development:
Complete Turtle Trader
Steidlmeyer on the Markets
Market Wizards
New Market Wizards
General Reading:
Reminiscences of a Stock Operator
Charlie D
Extraordinary Popular Delusions and the Madness of Crowds
The Big Short
Liar’s Poker
Bringing Down the House
Metal Men
First, I think you need to define your goal. Are you looking to become a sophisticated investor or a professional trader?
Trading is a very, very difficult way to make a living. The industry looks nothing like it did 20 years ago when I first started. My career started on the floor of an exchange where physical size and a booming voice were you’re biggest advantages. It was really an amazing time and a very valuable way to learn the business. Essentially, I was shoulder-to-should with - and competing against - the best traders in the world. Imagine you wanted to get better at basketball and had the ability to play one-on-one against Jordan every day, for 7 hours a day. You’d either improve or you’d quit to go pursue something else. Same thing. Looking back, it was embarrassingly easy to make a low six figure income. There are stories that predated my time on the floor of guys who were so fucking annoying to be around, they’d essentially be given $500 worth of winning trades a day just so they’d leave and let everyone else concentrate on the markets.
A wave of change came around 1999-2000 as computerized trading took hold in the US. If I had to estimate, %50 of the local trading population were not able to make the transition and either left the business or took another position within the industry. For whatever reason, I was able to make the transition smoothly and loved being able to trade multiple markets. I was no longer limited to just the pit that I stood in. If oil was moving, I could trade that, if the euro was screaming higher, I hop on that trade. If the 10 year was getting smoked I could sell some of those (but probably buy, traders are natural contrarians).
Finally, another wave of change came after the financial crisis in 2008-2009. High frequency trading firms would run algos to hunt out institutional orders on electronic exchanges. It became extremely difficult to make money day to day and many of the guys I had traded with for years and years could no longer compete. To use a common economic analogy, they were some of the best buggy whip makers around but their skill set was no longer needed with the advent of the automobile.
So fast forward to the current day. Before anyone wanted to become a professional trader I would ask, “What is your edge?” That is, what do you know (or what tech do you have) that will allow you to carve out profit in the market? On the floor, the edge was geographic. I stood in front of brokers who represented all the largest banks. Up until the advent of the HFT firms, my edge was a combination of market experience and tech. In 2001, I was paying $2500/mo for a T1 line to connect to the exchange. In 2006, I dug up a couple city blocks to lay fiber directly to the building where the exchange housed it’s trading servers. That was closer to $5,000/mo. In 2008, I leased space in a rack adjacent to the exchange servers so I could run my trading strategies directly from the server. Being 1.5 miles away was no longer competitive; I needed to be less than 10 feet away. I don’t want to tell you how much that cost.
My purpose in this isn’t to illustrate how much money I wasted, but to let you know what you’re up against. After the latest iteration, I decided I was fast enough for my purposes and the law of diminishing returns would prevent any more meaningful tech investment on my part. It certainly didn’t stop the firms who were paying $1MM/month to lease microwave bandwidth. Additionally, they have rooms full of PhDs testing and retesting strategies I couldn’t even dream up. Trading right now, for myself and the guys I know who are still going at it, has never been riskier. We each have strategies we use to cope with the risk, but at some point I’m going to decide that putting my net worth at risk every day doesn’t seem like such a fun way to make a living anymore.
So, what’s your edge?[/quote]
Wow.
[quote]squating_bear wrote:
I was paper trading options spreads earlier this year and did really good but when I started actual trading it has not gone well. I estimate that I have some decent skills and knowledge but that my psychology isn’t right yet. I also found that slippage makes a big difference when live trading and with paper trading it isn’t really an issue. An embarrassing percentage of my losses could probably be chalked up to high bid/ask spreads on options contracts that didnt have high volume and open interest - something I am becoming more careful about. I haven’t put any more in than I could afford to lose tho and I value the time I have spent more than the money I have lost
I’ve studied only technicals so far but I recently decided to read Ben Grahams The Intelligent Investor. I was thinking that I could combine different approaches and start looking into a company through many different lenses when I see a technical trigger or setup in a chart, and start being more selective and aggressive with a smaller number of trades.
The two routes I have been considering are continuing with options and getting more careful by incorporating non chart data with all of my decisions, or continuing with purely technicals and going into FX and trading small lots where psychology should be a much smaller issue. Maybe also get into automated trading on FX
[/quote]
As you’re learning, fees, commissions, and the b/a spread will kill your returns. One of the major problems is that you’ll never be able to buy the bid or sell the offer. Most trading engines use one of two ways to apportion trades: FIFO or a weighted average. For FIFO if you’re the first bid on a price, you get the first trade at that price. The problem is HFT firms stack the book 50 prices deep precisely to game FIFO. So, you’re looking at an option on stock XYZ and you want to pay 23 and the current market is 23/25. There’s 500 contracts in front of you at 23 and 500 on the bid at 22 and 500 on the bid at 21 and so on. Additionally, the HFT firm has the ability to immediately cancel any and all orders if they start getting filled but don’t want them any longer.
So, when you’re finally able to buy your 23s, it’s because someone has dumped a ton at that price and the HFTs and other market makers have had their fill, or the price has gone offer. And now you’re looking at a market that’s 21/23. And if the underlying move is big enough, it might be 19/21. Now if you need to get out, you’re looking at a 4 point loser.
If you’re long the 23s, are you hedging your delta? If not, why not. If so, are your delta hedges automated or are you trading them with discretion? If you’re hedged and the market continues to fall, you have to keep getting short*. If news breaks and the underlying stock gaps lower, you’re fucked because you might have to be short 30 shares from $5 higher.
lol, i have a huge pit in my stomach just from typing this and my hands are sweating. I’ve had this happen to me so many times, I have nightmares about it.
I’d be happy to answer whatever other questions you have or better describe the above scenario.
Great knowledge by Dr. Pangloss.
[quote]Dr. Pangloss wrote:
Here’s part of the reading list I give my new traders:
General Knowledge:
Complete Guide to the Futures Markets by Schwager
Option Volatility and Pricing
Further reading: Fundamental Analysis by Schwager, Technical Analysis by Schwager, Options as a Strategic Investment
Psychology of Trading:
Zen in the Markets (this will either resonate with you or it won’t)
Trading in the Zone, or
Trading to Win
Mastering Trading Stress
Development:
Complete Turtle Trader
Steidlmeyer on the Markets
Market Wizards
New Market Wizards
General Reading:
Reminiscences of a Stock Operator
Charlie D
Extraordinary Popular Delusions and the Madness of Crowds
The Big Short
Liar’s Poker
Bringing Down the House
Metal Men
First, I think you need to define your goal. Are you looking to become a sophisticated investor or a professional trader?
Trading is a very, very difficult way to make a living. The industry looks nothing like it did 20 years ago when I first started. My career started on the floor of an exchange where physical size and a booming voice were you’re biggest advantages. It was really an amazing time and a very valuable way to learn the business. Essentially, I was shoulder-to-should with - and competing against - the best traders in the world. Imagine you wanted to get better at basketball and had the ability to play one-on-one against Jordan every day, for 7 hours a day. You’d either improve or you’d quit to go pursue something else. Same thing. Looking back, it was embarrassingly easy to make a low six figure income. There are stories that predated my time on the floor of guys who were so fucking annoying to be around, they’d essentially be given $500 worth of winning trades a day just so they’d leave and let everyone else concentrate on the markets.
A wave of change came around 1999-2000 as computerized trading took hold in the US. If I had to estimate, %50 of the local trading population were not able to make the transition and either left the business or took another position within the industry. For whatever reason, I was able to make the transition smoothly and loved being able to trade multiple markets. I was no longer limited to just the pit that I stood in. If oil was moving, I could trade that, if the euro was screaming higher, I hop on that trade. If the 10 year was getting smoked I could sell some of those (but probably buy, traders are natural contrarians).
Finally, another wave of change came after the financial crisis in 2008-2009. High frequency trading firms would run algos to hunt out institutional orders on electronic exchanges. It became extremely difficult to make money day to day and many of the guys I had traded with for years and years could no longer compete. To use a common economic analogy, they were some of the best buggy whip makers around but their skill set was no longer needed with the advent of the automobile.
So fast forward to the current day. Before anyone wanted to become a professional trader I would ask, “What is your edge?” That is, what do you know (or what tech do you have) that will allow you to carve out profit in the market? On the floor, the edge was geographic. I stood in front of brokers who represented all the largest banks. Up until the advent of the HFT firms, my edge was a combination of market experience and tech. In 2001, I was paying $2500/mo for a T1 line to connect to the exchange. In 2006, I dug up a couple city blocks to lay fiber directly to the building where the exchange housed it’s trading servers. That was closer to $5,000/mo. In 2008, I leased space in a rack adjacent to the exchange servers so I could run my trading strategies directly from the server. Being 1.5 miles away was no longer competitive; I needed to be less than 10 feet away. I don’t want to tell you how much that cost.
My purpose in this isn’t to illustrate how much money I wasted, but to let you know what you’re up against. After the latest iteration, I decided I was fast enough for my purposes and the law of diminishing returns would prevent any more meaningful tech investment on my part. It certainly didn’t stop the firms who were paying $1MM/month to lease microwave bandwidth. Additionally, they have rooms full of PhDs testing and retesting strategies I couldn’t even dream up. Trading right now, for myself and the guys I know who are still going at it, has never been riskier. We each have strategies we use to cope with the risk, but at some point I’m going to decide that putting my net worth at risk every day doesn’t seem like such a fun way to make a living anymore.
So, what’s your edge?[/quote]
That’s one of the coolest personal career histories I’ve ever read. No bullshit.
Fantastic thread. I have nothing to contribute but I’m learning a lot.