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Quote from Paul Tudor Jones

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I read an interview of Paul Tudor Jones. Here are some good points that I would like to share.

“The secret to being successful from a trading perspective is to have an indefatigable and an undying and unquenchable thirst for information and knowledge. Because I think there are certain situations where you can absolutely understand what motivates every buyer and seller and have a pretty good picture of what’s going to happen. And it just requires an enormous amount of grunt work and dedication to finding all possible bits of information.

You pick an instrument and there’s whole variety of benchmarks, things that you look at when trading a particular instrument whether it’s a stock or a commodity or a bond. There’s a fundamental information set that you acquire with regard to each particular asset class and then you overlay a whole host of technical indicators and that’s how you make a decision. It doesn’t make any difference whether it’s pork bellies or Yahoo. At the end of the day, it’s all the same. You need to understand what factors you need to have at your disposal to develop a core competency to make a legitimate investment decision in that particular asset class. And then at the end of the day, the most important thing is how good are you at risk control. Ninety-percent of any great trader is going to be the risk control.

Review week ended 09-Feb-2007 : Staying Flat

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It was an interesting and yet disappointing week. I have more losing trades than winning ones, and I closed the week flat. It would have been a positive week if Tradestation did not play some monkey tricks and forced me to close my position early. Anyway, I don’t wanna find an execuse for my performance.

money4.jpgThere were couple of lessons learned this week.

There were two trades, where I was too eager to establish position when NQ was still in trading range. I got stopped out. And, in contrast, there were two trades, I patiently waited for setup outside trading range, I was rewarded (though one of them exited prematurely due to platform problem). I have missed out opportunity in the Friday afternoon. It happened after lunch hour.

Two good trades (1 screwed up by platform), 2 bad trades

Summary:

  • Total P/L(after commission): +0.02 R
  • Trades taken: 5
  • Winners: 2 (40%)
  • Losers: 3 (60%)
  • Expectancy: 0 (well, +0.004..)
  • Biggest winner (after commission): +2.81 R
  • Biggest loser (after commission): -1.12 R

Trade stocks before learning futures? My rant

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tradingfloor1.jpgI read some trading bloggers mention “If you can’t trade well in stocks/ETF, then don’t think about trading options or futures”. And comes to comparison why trading ETF is a better choice to trading futures or options. blah blah blah. It is really a BLAH.
Well, it sounds logical and right. However, I am giving another thought of this. I think something is missing here. OK, I have never traded Options before, so I am using Futures trading as example.

Why should I trade QQQQ first before I start trading NQ futures? It makes no sense to me. Absolutely. ETF and futures are different games, though we are trading something similar and related by nature. Yes, futures trading comes with leverage, which is always thought as a double edge sword. But, I don’t see any difference when an ignorant trader who doesn’t care/doesn’t know about risk management trades stocks or futures or even options. The result will be the same. It comes to my old saying : I don’t need to know how to play table tennis before I start learning tennis.

The key point is, when you start trading one instrument, be it stocks, futures or options, you should focus on it. Work extra hard to understand the rules of game, play it. master it , and even kiss it. If the instrument you are trading comes with leverage, then think about how to utilise it, be disciplined. Is there a real advantage if your are profitable in stocks trading and start trading futures? I don’t think so, in fact, I saw more failure than others. Maybe there is, but, I don’t see it as significant. Profitable stocks/ETF trader failed in derivatives trading, most of time is because, they are focusing on the excitement of leverage that derivatives trading brings, and forget about the increase of risk involved. The most important thing is, don’t try to jump around differrent instruments before you have put in effort and master it.

You can do a comparison of instruments when you have mastered them and traded them for a period of time.

Next time, if somebody again stops you from learning futures trading because you’ve never traded stocks, it just because he himself is a loser in futures trading. It doesn’t matter which instrument you are trading, it all on depends on one element, YOU.

ah..just another piece of random rant from me.