Episode 274: The Irresponsible Podcaster and the Euronaut

by robbooker on July 23, 2014

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Euronaut

For Episode 274 of The Traders Podcast, your host Rob Booker and the producer Jason Pyles bring you another mailbag episode, where we delve into the listener feedback. But first Rob talks about the new apps (for iPhone, for Android) that are available for The Traders Podcast.

Next we read e-mails from Jonathan, as well as Ryan, a software engineer in California who’s begun to write his own Expert Advisors (EA’s). Then Jason recommends a unique zombie-type of movie called “Pontypool” (2008). Then we got a request from FX Outlier and Mark regarding guest appearances on The Traders Podcast. Next we read part of an e-mail from Dave. We also got comments from Chris and Glenn, and it’s an overall, rip-roarin’ great time. Join us! Thanks for listening.

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{ 3 comments… read them below or add one }

Tom July 24, 2014 at 10:38 am

I would like to comment on GBPCHF trade and technology podcast. Here is my 1000 words: http://www.fxentourage.com/2014/07/do-you-think-gbp-is-ready-to-drop.html
Thank You

Reply

Brian F. July 24, 2014 at 1:48 pm

Thanks for the offer of an interview, but I really loath the sound of my own voice, and can’t be trusted to speak with Rob without launching into a feeding frenzy of market adages, trading heresy, analogies, and silly movie quotes. If Brad couldn’t control us, nobody can.

I got a chuckle when Rob said I drive some of the listeners crazy. I can’t say I always do it on purpose, but I’ll have to admit, you sure don’t learn anything from getting people to agree with you.

My topic today is Rob’s critic who objected to his short Pound/Swiss trade. I have a long list I keep of things people say that show they can’t trade, and that’s near the top. I am definitely not criticizing him for doing what everybody does, but people who don’t get it tend to denigrate other traders and their trade ideas. This is because they are obsessed with the loser’s game of prediction and trade selection. They say things like, “that will never work” and “that trade is senseless.” Really? There’s “sense” in a game where 10k shares held by geniuses ALWAYS lose to 10K +1 shares held by morons? Reasons don’t matter. Be he smart or be he stupid, the last guy in the door decides the order flow.
Trading isn’t about making sense, it’s about making money. If you are not willing to do the crazy thing, you can take your place alongside the thousands of genius losers. Price changes dynamically. Even if you are correct in your assessment that one side of the trade is, for example, 66% probable, the other side that’s only 33% probable is likely to offer twice the payout (or more), so neither side of the trade offers any advantage. If it did, price would have already acted before you got there.
Trading isn’t about prediction. Trading is about money. If you take one trade, THEN trading is about prediction. But if you take 1000 trades, ignoring the issue of edge, the task becomes creating an imbalance between 500 winners and 500 losers (Defense IS offense given a large enough series). Rob said it: “I have never taken a good trade in my life that wasn’t controversial to a large number of people.” Yes, the losers never take those trades Rob, the winners do. That’s one exploitable market inefficiency that is available to you, but you just can’t see it because you want to win the guessing game.
I’ll get this over with because most traders aren’t going to listen anyway. You need a bull for every bear, so if the losers are usually clustered on the obvious side, where does that leave room for the winners? The people you trade with decide your fate. Trading with the winners won’t make you a winner in one trade, but it sure doesn’t hurt in 1000 trades. There’s a tidal effect over the long haul. If you always trade with retail, you will always be on the side with traders who are oversized, undercapitalized, fearful, and inexperienced, people who actually believe you can predict the future, learn to read noise, and who think trading has to make sense. No matter how smart you think you are, the illiquidity they create when they: a) Read something in the noise, or b) Have their common beliefs dispelled, will move price against you. On the other hand, you can take the “unlikely” trades, the side with a higher number of pros, inside traders, and disparate opinions. These people know you can’t read noise, and usually have a wider range of reasons to be in the trade. Therefore, they are less likely to break together, and more likely to hold winners and force a higher payout.

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Matt LaCoco July 28, 2014 at 4:10 pm

Brian. You’re awesome man. Love it!

I look at it this way: if you give a flip what other traders are doing, you’re probably not making any money trading.

Most people are so consumed with “becoming a trader”, that they forget all about “making money”. I breath a sigh of relief whenever someone tells me a trade is senseless. Especially if it’s someone who “knows what they’re talking about”. It’s usually the first clue it’s going to work out.

Trading is deeply personal and subjective. No one can know the motivations and objectives behind another’s idea. There’s a whole (albeit relatively small) segment of retail traders that understand this, and they kick ass day in and day out. They have no need to criticize anyone else’s ideas, because they have no need to make themselves feel “like a trader”. They are interested in one thing, and one thing only: Making Money.

In fact, if given the opportunity to watch a highly experienced and highly effective day trader, most “traders” would simply fail to conceptualize what is being done. In the end, one must decide if they want to be a “trader”, or if they want to make money from trading. If it’s the former, get a *job* as an analyst with a broker. Then you can be all the trader you want to be, and get a paycheck to live on.

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