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Trading vs gambling

Glad my Gold hedged me along the way
Quoting merlin
crucial posts narafa, i can see youve learned a lot from dr. tharp. thanks for the refresher course
Ya Merlin, I actually got a lot of information from the book of Dr. Tharp...This man is really great and I really admire him very much and have a huge respect towards him...

I think this is what they call the Eureka Moment, if Diallist can remember his post about the 5 stages


Thanks,

Nader
Quoting narafa
Ya Merlin, I actually got a lot of information from the book of Dr. Tharp...This man is really great and I really admire him very much and have a huge respect towards him...

I think this is what they call the Eureka Moment, if Diallist can remember his post about the 5 stages


Thanks,

Nader
Hi Nader,
a question: Does Dr. Tharp trade currencies or just stocks? Remember that Forex and stocks are 2 different animals. What works for stocks may not work for currencies and vice versa.
  • Post #44
  • Quote
  • Edited 9:17am Dec 24, 2005 9:09am | Edited 9:17am
Quoting Fanat
Hi Nader,
a question: Does Dr. Tharp trade currencies or just stocks? Remember that Forex and stocks are 2 different animals. What works for stocks may not work for currencies and vice versa.
To my knowledge, Dr. Tharp doesn't trade at all...I got this tip from the "Market Wizards", the last interview was with Dr. Tharp, and when Shwager asked him why he don't trade, he said that he likes what he is doing (Mentoring traders, giving out seminars and so on), so it's not a matter if you trade or not, it's a matter if you like what you are doing or not...

In the book, he is explaining different examples for different trading systems for stocks, futures and currencies...He says that everyone always has a system, no matter what the difference between the stock market and the forex world, or the commodities...

Remember also that he is not offering an insight for a certain market, he is offering or telling how can you discover yourself and adapt your strategies for the market you are trading, based on your objectives from trading any particular market, your account size, your risk tolerance and your overall emotional and personal attitude...That's mainly why you will find the first half of the book as boring as hell, although it actually isn't...He stressing that everyone must know himself very very well, or else he won't be able to succeed in trading...

For example, he explains that Warren Buffet has a system for trading or investing...There are many setups for Buffet and they all have to occur before he goes on with the buying decision...On the other hand, Buffet exits are unknown as he says everytime he is asked that he buys and holds forever...Dr. Tharp however says that this is eligible for Buffet as long as the setups he bought based on are still the same, but if one of the setups changed, sure he will be selling his holdings...

For example, one of Buffets' merits is to buy companies with great and honest management...What if the management changed and the new ones are not good and honest?? Will he still stick to his holdings?? Not at all...When the cause vanishes, the effect goes out of the window too...If Buffet don't do this, probably he will end up his life either broke or he is lucky enough to get out with his as little mistakes as possible...

I am not sure why Dr. Tharp is not a trader, but what I know that it's better to read what he wrote without him being a trader than to read it with him being a trader, at least he won't be biased in his books towards a certain market, a certain trading strategy or even a certain risk management algorithm...


Thanks,

Nader
Hey Narafa,

I am kind of a newbie to this Forex thing myself, but I do know a thing or two about markets. Yes it is a zero sum game, but as long as it is expanding there is room for everybody. Lets look at it this way. If I go down to my local Pigly-Wigly Market and buy a 12 pack a Pepsi, they are going to rip me off for 5% margin (or spread if you want to look at like that). Now I could get all upset and think that the market was rigged against me, just because my wife went to Sams Club and got Pepsi for a lot less.
So the next day is Satururday and we have a yard sale, and it is realy hot. It gets like 42C here in the summer (105F). There are a lot of swetty shoppers, I ice up a bunch of Pepsi and sell them for twice what I paid for them. Im I conspring aginst the shoppers? Taking advantage of them? No I am just working the market. There was a buyer and a seller. We were both willing and we knew the risk. and we got what we wanted.
I am just saying that we all know that some brokers may be crooks. We accept that. We factor it into the risk and move on. We make our pips and don't wory if Pigly-Wigly is ripping us off. If it gets too bad, we drive over to Sams Club and get the big box. So What. Don't wory about the money we can't make. Find ways to make the money we can make!
Nolite dormiens pungere ursum. -- Latan Proverb.
Quoting MrWhipple
Hey Narafa,

I am kind of a newbie to this Forex thing myself, but I do know a thing or two about markets. Yes it is a zero sum game, but as long as it is expanding there is room for everybody. Lets look at it this way. If I go down to my local Pigly-Wigly Market and buy a 12 pack a Pepsi, they are going to rip me off for 5% margin (or spread if you want to look at like that). Now I could get all upset and think that the market was rigged against me, just because my wife went to Sams Club and got Pepsi for a lot less.
So the next day is Satururday and we have a yard sale, and it is realy hot. It gets like 42C here in the summer (105F). There are a lot of swetty shoppers, I ice up a bunch of Pepsi and sell them for twice what I paid for them. Im I conspring aginst the shoppers? Taking advantage of them? No I am just working the market. There was a buyer and a seller. We were both willing and we knew the risk. and we got what we wanted.

I totally agree, but in the case you are saying, you are SPECULATING that the price of the Pepsi cans is going to shoot up during summer time, so you are actually TRADING Pepsi cans and not consuming them, that's exactly what we are doing in the forex market, BUT there has to be a consumer at the very end of the cycle, someone who actually takes delivery of the currency in our forex case, or someone who buys the Pepsi cans, open them and simply drink them happily...The money paid from the consumer is your profit, the middle man don't like you, why?? Because if everyone is speculating Pepsi cans, nobody is going to actually buy, so speculators must lose for the dealer or the retailer to make money, so he sells you the cans of the Pepsi for $2 each, and then buys them back from another speculator for $1...

I am just trying to make things clear so that we can always know who profits when we lose and vice versa....That's all....Sure there is room for everyone, and the expansion provides this, but at the end of the day, there MUST be some losers so that winners get their profits...The point to make is that everytrader needs to focus on getting his profits from the customer even if he doesn't have a direct contact with him or don't know him...Because the customer is the only person in the cycle who doesn't conflict speculators, he is happy that they are there actually...


Thanks,

Nader
Quoting narafa
To my knowledge, Dr. Tharp doesn't trade at all...
Then there is very little point in reading him... There is a big cliff between THEORETICAL and PRACTICAL knowledge. MM depends a lot about the time of mathematical model of price, and you can't talk about One-Size-Fits-All because there isn't one.

Quote
I got this tip from the "Market Wizards", the last interview was with Dr. Tharp, and when Shwager asked him why he don't trade, he said that he likes what he is doing (Mentoring traders, giving out seminars and so on), so it's not a matter if you trade or not, it's a matter if you like what you are doing or not...
Thanks,
Nader
So he gave a standard excuse....
Quoting Fanat
Then there is very little point in reading him... There is a big cliff between THEORETICAL and PRACTICAL knowledge. MM depends a lot about the time of mathematical model of price, and you can't talk about One-Size-Fits-All because there isn't one.
I agree that there is a big difference between theoritical and practical knowledge, but Dr. Tharp studied the behavior of hundreds of traders through questionnaires, 1 to 1 interviews, books written by those exact traders and so on before he created his views and theoritical points...

For example, he is applying every single aspect in his book for the Turtles trading system, O'neil CANSLIM method, Warren Buffet, Kaufman and so on, so he is talking mainly about what other great traders are doing and breaking it down...Those great traders won't tell you how they managed to make it through until they found their system, but they are willing to tell you how their system works, that's the huge difference between Dr. Tharps' book and their books...

Plus, he is not talking about a One-Size-Fits-All methods...On the contrary, he is always saying that you must have your own size, appraoch, mind and so on, so probably all of these systems won't work for you because many of them don't suit you...He is stressing that everyone must find what he actually can trade and make money through rather than how other people out there are making money...

Talking about MM, he considers MM as the position sizing and he introduces 4 different position sizing strategies in the bookm so it's not a One-Fits-All-Size by any means...


Thanks,

Nader
Quoting narafa
I agree that there is a big difference between theoritical and practical knowledge, but Dr. Tharp studied the behavior of hundreds of traders through questionnaires, 1 to 1 interviews, books written by those exact traders and so on before he created his views and theoritical points...

Nader
I still think that personal trading experience is the best... Just because you know everything about Aerodynamics and aircraft engineering, it doesn't make you a good pilot. Talking about flying and flying are totally different thing...


Happy Holidays to All!!!
Quoting Fanat
I still think that personal trading experience is the best... Just because you know everything about Aerodynamics and aircraft engineering, it doesn't make you a good pilot. Talking about flying and flying are totally different thing...


Happy Holidays to All!!!
Agreed, the field experience is the best of all, but don't you think that sometimes great aircraft Engineers know many things pilots of large and extensive experience don't actually know???

Let's take a good example, a sniper for example in the battlefield...Is it better for us to read a book written by that great sniper about "How to become the best sniper", or is it better to read a book written by another fellow who was always talking with the sniper, getting information from him about how he do things out, and why he did them and so on???

Everyone of use is a driver, yet can anyone of us write a good book about driving?? I don't think so, yet a man who can't drive can certainly write an excellent book about driving by talking to drivers all over the world, observing them while they drive in different road and traffic situations...

Let's suppose that an expert driver is going to write a book to teach people how to drive, what's the most automatic thing in driving, it's probably gear shifting and brake reflexes...Will an expert driver write about them extensively?? Of course not, he will mention how should gearing up and down be done, and how brakes work and that's all, because he already does them on autopilot...But an observer will want to write about why the driver brake reflex change from one person to another, why it changes between men and women, he might want to give you some advice to increase your reflex to avoid accidents earlier by maybe just a fraction of a second...All those details CAN'T be described by the driver because he is not watching, he is inside the battle, he can't think after the rashes, why he did this, he just did it automatically, but a series of Psychological questions about this exact situation might result in extremely important information....

Can you see now, why I am convinced that books written by non traders are better than those written by traders?? When you read a book by a trader, you are expecting to read how are you going to be successful in trading like that guy, but when you read a book by a non-trader, you are expecting to know how are you going to trade and capitalize over your experience as the time passes to be a successful trader...


Thanks,

Nader
Quoting Fanat
I still think that personal trading experience is the best... Just because you know everything about Aerodynamics and aircraft engineering, it doesn't make you a good pilot. Talking about flying and flying are totally different thing...
I very much agree that first hand experience >>>> theory knowledge, specially when it comes to something as down-to-earth and brutal as trading. That is why I dont pay attention to book writer or market erudites. I only listen to those people who trade real money because they are the ones who wrestle with the market every day.

I mean, how can you write and theorize about something you arent actually part of? Nop sorry, I value my money way to much to be influenced by people who do not actually bet in the markets with their own money.
Quoting WTB
I very much agree that first hand experience >>>> theory knowledge, specially when it comes to something as down-to-earth and brutal as trading. That is why I dont pay attention to book writer or market erudites. I only listen to those people who trade real money because they are the ones who wrestle with the market every day.
Please read my previous post and tell me if you have any comments about it, maybe you will change your opinion

Please remember too that many many great people who created theories were non-practioners and had ZERO field experience...

Einstein never entered a lab in his whole life, yet he is one of the most brillian scientists in history...

If you believe that trading is around 70% psychology, then probably reading books written by traders won't help that much as they will never discuss the issue extensively...


Thanks,

Nader
Quoting narafa
Please remember too that many many great people who created theories were non-practioners and had ZERO field experience...

Einstein never entered a lab in his whole life, yet he is one of the most brillian scientists in history...
Yes Nader, I do agree that in some fields it might very well be possible to obtain a valid opinion exclusively off theorical research (such as Einstein and all his mathematics/phisics work). However, there are other fields in which you OUGHT to be down in the pit to have a real understanding of what it all is about, and trading with real money is one of those fields.

For example: what would you think of an army general who was never a soldier in any battle, having graduated straight from the army academy into the high ranks and thus leading men into real combat? well, I feel the same about trading. It is just one of those things you gotta get your hands dirty if you truly wanna get a feeling of it.
Quoting WTB
Yes Nader, I do agree that in some fields it might very well be possible to obtain a valid opinion exclusively off theorical research (such as Einstein and all his mathematics/phisics work). However, there are other fields in which you OUGHT to be down in the pit to have a real understanding of what it all is about, and trading with real money is one of those fields.

For example: what would you think of an army general who was never a soldier in any battle, having graduated straight from the army academy into the high ranks and thus leading men into real combat? well, I feel the same about trading. It is just one of those things you gotta get your hands dirty if you truly wanna get a feeling of it.
WTB, what you are saying is non questionable...The debate here is do you agree that reading books by non-traders is of any good or not??? That's all...

Of course everyone needs the hands on experience, and everyone can get this hands on experience, but they are unfortunately broke and don't have any money to apply this experience and put it to real work to generate money...


Thanks,

Nader
Wern't we talking about gambling here?
Nolite dormiens pungere ursum. -- Latan Proverb.
Quoting MrWhipple
Wern't we talking about gambling here?
We were talking about TRADING vs GAMBLING, and not gambling alone


Thanks,

Nader
"Can anyone tell me what's the differences btwn gambling and trading?"

I believe there is none.

If I go to a Casino and play Roulette, the game is based on complex physical rules. The results occur to me as random. But guess I would have more information and I would be able to faster evaluate them. I believe I would beat Casinos Roulette.
Do you know the story about the guys who have done that? They had a laser and a simple working program. They were able to have a higher chance in which area the ball is dropping.

I think it is the same with the markets. Complex things are happening and they're happening fast. The movements of the price are occuring to me as random.

They are both geat chaotic system which are understandable with the right amount of information and the right speed to evaluate them.
I get free drinks when gambling
You can fix gambling but that's a bit difficult to fix the fx market. From what I've seen of casinos with all the cameras and dubious practices, gambling is a game of 'them against us', whereas trading is definitely a case of 'me against me'.
The framework is there; we just have to work on our frame of mind.
Quoting doragio
I get free drinks when gambling
I don't drink when playing balckjack or trading. (I sobered up when I was 18) Those "free" drinks are the most expensive ones you will ever get.
Nolite dormiens pungere ursum. -- Latan Proverb.
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