Unemployment For My Dad

[lets get it right]

Martingale systems only work if you have infinite money.

The reality is that if you can not make a profit betting at level stakes then you wont make any with any other staking plan since all they do is magnify existing profits or losses.

Errr, I thought that was the point I was making.

[Charlie The Tramp Returns]

Errr, I thought that was the point I was making.

Personally, I blame it all on the Trade Unions.

[markyh]

I do some spread betting on the forex and am coming up to nearly a year on it. Currently I am sitting on about a 30% loss, though I have improved and have had a couple of good months recently. I am gambling with money I can afford to lose. I do not believe I will be able to live off the proceeds anytime soon. I have a slight advantage in that a family member does this for a living and has been able to give advice. He lost about 60% to 70% of his initial account when he started a decade ago before turning it around.

Here are some of my thoughts:

1. The learning curve is measured in years. You do learn quickly though, I have learned a phenomenal amount in the last 12 months.

2. You will make losses to begin with. Even some people who have gone onto be some of the most successful traders have. Your losses are your tuition fees.

3. Coming up with an idea that works on paper is reasonably straightforward. The problem is playing it and not second guessing yourself. All systems will have a drawdown period. Will your father be able to take a signal after 5 - 10 straight losses? He will need to, to be profitable

4. It is all about coming up with an idea on paper which has been (i) meticulously backtested and (ii) paper traded which (iii) suits your personality. My first trading idea appeared to work on paper, but it had significant drawdowns which I found emotionally difficult to trade. I would become discouraged on losses then not take signals. Signals then turned out to be big winners, which would discourage me further. hence the 30% loss. I have switched to a system which suits my personality better which is currently at break even.

5. I spectulate with the full knowledge and support of Mrs Shylock. I have placed a sum of money which we have both agreed we can afford to lose. The understanding is if I lose the account, that's that.

5. Once you are a decent trader I would argue that 1% a week gain is totally achieveable. If your Dad wants to earn £25k a year for example, that would mean he would need to make £480 per week. That means he needs a £50k account to trade.

IMHO if your father is a beginner he has no chance of making a living. He won't be able to afford losses, which mean he will trade in a tense, angry and scared mood. This will lead to errors. Not having the support of his family and believing he has something to prove isn't going to help either.

Some other observations:

1. Some say you can lose more money than you put in. If you spread bet with a limited risk account with guaranteed stops this won't happen - the maximum you lose will be the account.

2. It is incorrect to say you need to outsmart everyone else in the market. You can make money on trend following systems following the herd. Ie shorting the euro recently was a no brainer - the problem would be managing the risk, determining entry and exit.

3. The only reason I believe money can be made on this is my personal knowledge of a family member who has done this for years. If I didn't know the chap then I probably would not believe it.

4. IMHO the reason most lose money is because the markets attract precisely the sort of personality which will fail - thrill seeking get-rich-quick idiots. In order to be an effective day trader you need to have a perosnality more resembling that of Spock or the Dalai Lama.

It's a feasible long term idea (depending on his personality), but not something that will make any money in the next year or two. Whatever happens I wish your father the very best.

It can be done if you find the right system. I have been trading a system for 8 weeks now that spreadbets on cable , 2% MM, mechanical system, strict times and has been in profit for 11 of the 13 months it has been going.

It is not for sale anymore but it is possible to work it out for free off our forum. We are like a small community now. To make a living off it you really need at least £15k pot so you can stake £10 a pip. I am now up to £4 a pip having started @ £1 pip 8 weeks ago.

Today I made £94, but I am not spending or wiothdrawing but accumulating to get the pot up to get £15k or more. I have banked over 300 pips in the last 8 weeks, admittedly by taking a few risks @ 4%MM, but I got away with it. Now I'm on £4 pip I stick to 2% MM.

Tell you dad if he's curious or if anyone else is curious please google "MNT33S" and read either all the posts or at least all the posts from june onwards. However I must warn you we post all our trading daily and hence there are over 3500 posts on the thread, so some reading time will need to be invested.

In truth it is gambling, but the system is easy, and spreadbetting profits are tax free. 100 pips a month via this system are a fairly attainable target IMO, some months might be only 40 pips, others will be 200 pips, but it has a current average over 100 pips a month profit.

so to draw a ok living say £2k a month this would mean £20 a pip and a £30k pot fopr 2% MM. The hardest bit is the pyscology of possibly losing 30 pips a day.

It has taken me 8 weeks to break this psycolgical barrier and treat pips as pips on 2% MM and not assign a £ value to them. If you can't acheive this then you will fail IMHO as you will start to pull trades early when it £10 pip+ because you will bottle the loss, even though each daily trade is only 2% of your pot so the system would have to have a run of 50 trading days losses to wipe you out.

Last month was the 2md only ever loss month sop far, -80 pips, July so far is amazing, and up to today running at 199 pips from the official results by the inventor, I am running slightly better @ 204 pips.

So 204 pips so far in July @ £20 pip would be £4080, but plenty of days to have losses left, then you have to face the fact that last month was the worst ever and you might have lost £1600.

But it is averaging over 100 pips a month. since it started in June 2009.

Good luck to anyone in this situation, I am now self employed aafter being made redundant in 2009 and things are ok but the forex trading for me is working ok so far and looks like it could suppliment or generate and income when you can build up a trading pot big enough.

M

Edited July 12, 2010 by markyh

[Giordano Bruno]

I am very sorry for your Dad and all of you.

Having been through a similar experience I can recognise that he is having a bit of a panic with an over-optimistic reaction.

I wasted some money on hopeless projects, but it gave me some self-confidence back and engagement.

Sounds like you are all trying to get your Dad through this, which is the great thing, he needs understanding in this crisis in his life.

Do the numbers. Let him try, but agree a timescale, strategy and (minimal) budget.

And pray that something turns up to take him in a different direction, it did for me.

Good luck, be patient.

As I understand it, a trader for a firm makes his/her money from a commission, about 1% on all trades. They are gambling with other people's money but they win on every deal. But your father will be simply gambling his own money, I take it? Could you not point out the important difference between the two types of 'work' and that he is just gambling in a system where there is a lot of shenanigans going on, insider trading and so on, of which he will have no knowledge. He is onto a sure-fire loser, imo.

I sympathize. I know when one loses one's source of income, even if one has rainy day money, one panics. It happened to me and I signed up to a MSCE course, but luckily I got a job in administration, from a temp agency, before I wasted too much time on that.

Good luck.

[Greg Bowman]

It can be done if you find the right system. I have been trading a system for 8 weeks now that spreadbets on cable , 2% MM, mechanical system, strict times and has been in profit for 11 of the 13 months it has been going.

It is not for sale anymore but it is possible to work it out for free off our forum. We are like a small community now. To make a living off it you really need at least £15k pot so you can stake £10 a pip. I am now up to £4 a pip having started @ £1 pip 8 weeks ago.

Today I made £94, but I am not spending or wiothdrawing but accumulating to get the pot up to get £15k or more. I have banked over 300 pips in the last 8 weeks, admittedly by taking a few risks @ 4%MM, but I got away with it. Now I'm on £4 pip I stick to 2% MM.

Tell you dad if he's curious or if anyone else is curious please google "MNT33S" and read either all the posts or at least all the posts from june onwards. However I must warn you we post all our trading daily and hence there are over 3500 posts on the thread, so some reading time will need to be invested.

In truth it is gambling, but the system is easy, and spreadbetting profits are tax free. 100 pips a month via this system are a fairly attainable target IMO, some months might be only 40 pips, others will be 200 pips, but it has a current average over 100 pips a month profit.

so to draw a ok living say £2k a month this would mean £20 a pip and a £30k pot fopr 2% MM. The hardest bit is the pyscology of possibly losing 30 pips a day.

It has taken me 8 weeks to break this psycolgical barrier and treat pips as pips on 2% MM and not assign a £ value to them. If you can't acheive this then you will fail IMHO as you will start to pull trades early when it £10 pip+ because you will bottle the loss, even though each daily trade is only 2% of your pot so the system would have to have a run of 50 trading days losses to wipe you out.

Last month was the 2md only ever loss month sop far, -80 pips, July so far is amazing, and up to today running at 199 pips from the official results by the inventor, I am running slightly better @ 204 pips.

So 204 pips so far in July @ £20 pip would be £4080, but plenty of days to have losses left, then you have to face the fact that last month was the worst ever and you might have lost £1600.

But it is averaging over 100 pips a month. since it started in June 2009.

Good luck to anyone in this situation, I am now self employed aafter being made redundant in 2009 and things are ok but the forex trading for me is working ok so far and looks like it could suppliment or generate and income when you can build up a trading pot big enough.

M

Very readable and interesting post.

[Guest_FaFa!_*]

Very readable and interesting post.

Agreed.

Going with systems that you didn't invent yourself can be problematic as you may not trust it fully. However if it works for markyh then fair play to him. One thing I was confused about is how he works out risk. Talking about amounts per pip implies an identical stop on each trade which doesn't seem right to me. I wonder how he calculates the risk on each trade?

[markyh]

Agreed.

Going with systems that you didn't invent yourself can be problematic as you may not trust it fully. However if it works for markyh then fair play to him. One thing I was confused about is how he works out risk. Talking about amounts per pip implies an identical stop on each trade which doesn't seem right to me. I wonder how he calculates the risk on each trade?

Our community has been tweaking it from June to suit the market more due to Euro volitility affecting cable. Yes it has fixed stop loss and limit elements, in a ratio favouring the limit, but as it is over a fixed short morning timeframe you exit at the same time daily even if stop loss or limit are not reached, you just exit the market and take profit or loss at exit.

Some days max profit limit is reached and banked before the exit time, some days the stoploss is reached before the exit time, some days the market moves away from you before your order is filled so you have a safety stop no trade day.

Some days you use the indicators of the system to determine the market has no clear direction so you don't trade and sit out. No trade, no loss. The mantra is if in doubt stay out.

To date the wins outstrip the losses and it is sitting on +1919 pips from June 09 to today, 13 1/2 months. Only loss months are Feb 2010 @ -29 pips and June 2010 @ -80 pips.

Best month to date July 09 +410 pips, and this month is looking to maybe repeat that @ +199 pips so far. Like I said officially it may be released for sale in the future again, for now the offer closed on 31/5/10. It did cost me £247 to buy. Profits have now paid for what it cost.

But it can be worked out from the forum as we are quite chatty. Google "MNT33S" to find a link to the forum.

M

[stormymonday_2011]

Errr, I thought that was the point I was making.

Err. I was agreeing with you

[billybong]

http://ftalphaville.ft.com/blog/2010/07/14/285776/the-banking-miracle-debunked/

Yes. Reminds me of Mr Munger's imaginary land "Basicland" where gradually the citizens of Basicland spent more and more of there time at casino which eventually amounted to 25 percent of Basicland's GDP, while 22 percent of all employee earnings in Basicland were paid to persons employed by the casinos (many of whom were engineers needed elsewhere).

[ParticleMan]

I have been trading a system for 8 weeks now that spreadbets on cable

If you're still pair trading currencies you need your head checked no matter how good your risk management is.

There's still room left to basis trade the future against spot (or the gilt against spot or even the gilt against the future if you think you're quicker at scanning newsflow than the market maker).

Just.

There's more room for flow trading...

... all you need to get going there is enough capital to bootstrap a large investment bank, then the stones to acquire a roll-call of clients needing inter- and intra-day liquidity...

These days I only take macro calls on individual pairs, and mostly* I lose even those.

(* it's the ones that win that matter)

Edited July 16, 2010 by ParticleMan

[200p]

GBP trend reversal it looks like today. Anyone long on GBP might have got creamed today. Systems invariably suffer from "trader effects" as more traders congregate or gravitate on the same trade.

[Abstra]

There's a foolproof plan to make a bad situation worse.

I have to agree. He has security, his home is paid for etc. If he trades and makes a dime he'll gamble the house. Now the profit, gets you a bigger house but does not make you necessarily happier. If he loses the house he will definatley be unhappier.

Put an axe to his computer. Day Trader, KING nutcase!

[pl1]

GBP trend reversal it looks like today. Anyone long on GBP might have got creamed today. Systems invariably suffer from "trader effects" as more traders congregate or gravitate on the same trade.

Is this self-fulfiling prophecy. I always get the impression that Candlestick trading would be reliable indicator if nobody else knew about it.

[88Crash]

5 If he is not a member of a gym he should be in my opinion. Feeling fit and keeping as fit as you can is paramount in my opinion. It's the best mood changer there is bar none. For a couple of bucks a day (or quid) it's surprising what good ideas you come up with when you are knackered physically! No BS it works for me anyway.

Good luck.

I'm almost 50 years old and I agree with the above 100% - not easy and requires some effort and its not about trying to act/appear yournger than you are, but when your youth is gone - it really is worth the extra effort IMO

I read somewhere that if you are fit, you can have approx 80% the same strength/stamina as when you were 21

However that would assume that you were at peak fitness at 21 - how many of us (apart from proffessional sportmen/women) were?

Its worth a go :-)

Edited July 17, 2010 by 88Crash

[sammysnake]

Yeh, I have to say if I found myself out of work, my personal well-being would to paramount importance.

Obviously the conditions for employment are not that good, so keeping active and fit will ensure your mental agility and persona stays positive.

Money is a necessity we all know, but without health its pointless

[tomwatkins]

Why not do some maths for your Dad.

There are a lot of good shares yielding good amounts right now. Tell him to sell his house, and rent somewhere smaller, sounds like the kids have moved out. Look at the big shares, Shell yields nearly 7% for example. Put the money into that whilst renting, I bet his income would cover all the costs.

And then when house prices fall, he can sell his shares at a profit and move into somewhere much larger, all for no work.

Yep then Shell does a BP and he loses the feckin lot.

[tomwatkins]

At odds of 2/1 - to win £400

Bet £200 - lose - now you need to win £600

Bet £300 - lose - now you need to win £900

Bet £450 - lose - now you need to win £1350

Bet £625 - lose - now you need to win £1975

Bet £1000 - lose - now you need to win £3000

Bet £1500 - lose - now you need to win £4500

Bet £2250 - lose - now you need to win £6750

Bet £3350 - lose - now you need to win £10000

So, a racecard with 8 races and you back the favourite each time - by the 8th race you need to win £10 grand to cover your losses and still make your £400

Throw in a few races where the favourite is evens or worse - and if you have a run of say 11 or 12 races without a favourite winning - suddenly you need a 50k stake and you've got bookies that don't want to take your bet.

I don't disagree with your Maths which is why I say I never saw him again. Maybe he shot himself-I didn't say I agreed with him, he was just and interesting geezer who came in to a sportshop I owned way back then.

[tomwatkins]

Shares are all volatile, a few years ago the FTSE was at 3700 now at 5300 has been 6700, better to have fixed rate bonds etc that are safe but do not generate massive returns, IMHO capital protection is important and share are too much of a gamble (I do have some shares) and I have pensions which are essentialy FTSE based but over a longer term and I can control when they are converted to an annuity.

"It's not the return on my capital I'm concerned about. It's the return of my capital"-Mark Twain I think.

[pl1]

A real shock for me, I found out recenty that my Dad is now surplus to requirements at work. He's been working all my life that I can remember at the same place in the Civil Engineering field. Its been a real eye opener for me as it's one of those things that always happens to "other people". Work had been iffy for a long time with reduced hours and a slowly reducing workforce, so he's clung on for a while but finally his turn came to walk the plank. With all the troubles nobody's building anything except for the Government and now with the austerity measures even that is being cut back. The prospect of him finding a job in the same field anytime soon seems non-existence.

The silver lining is at least he's been fairly safe up to now with his money so has paid the mortgage off and has a rainy day fund. The lack of prospect of finding a job in the field he knows and loves means he's considering becoming a day trader, which really worries me. It's a really messed up situation, my parents could sit this one out, maybe get a lower paid job and reduce some luxuries, but instead this day trading idea (against my Mums wishes) is being considered and it just sounds like gambling down the bookies to me, and is the type of rubbish that got this country into this mess. I'm hoping he'll change his mind, its just a real disappoint to see my Dad reduced from earning a living doing something of value and playing a part in a team that produces something tangible and real and of use to society, to considering switching the the 'dark side' of becoming some bedroom city trader buying and selling figments of imagination that don't really exist and leaching money out of society (best case, the worst case I'm trying not to think about). He's got a background in shares but not daytrading but he's read books on it and says it's "all about the waves", which sounds like corporate BS to me.

It's a real worry, and I just don't understand how this is meant to be the recovery?

What did your dad do in the end? As you posted this many months ago I'm guessing he has now decided on a course of action. If he went with his gut and started trading when you posted this, he would have seen gains in the FTSE of 25% and much more than this in individual stocks. Please update us.

[Guest The Relaxation Suite]

It's a good idea, but I don't think it would work with my Dad. After having been the bread winner for so many years I think he feels a pressure to carry on bringing home the bacon. Using pretend money is a great, but then he'll know at the back of his mind he won't earn anything, so it's not really a "job". He swears it'll be a limited amount of money he uses, but these are the same arguments you here from gambling addicts. It's not a positive step in my opinion, and I feel a lot of anger at these Investment bankers and past senior cabinent ministers for the mess they created that they seem totally immune from, why should Sir Fred get such a fantastic pension, how the hell is he even still a Sir, how the hell have the bonuses returned already to the bankers, why the F*** are their salaries rising so quickly? I hate these people!

This is called paper-trading, and he should take care with this as well. Many years ago I paper-traded for three months and made an enormous amount of "money" but when I converted to real trading I made much less because of issues with delays in buying and selling shares and so forth. Paper-trading is only a very rough guide, so he should proceed with caution.

From your posts, you seem like you come from a very well-educated family, so I would urge your father to make day trading as small a part of his life as possible. As someone who has dabbled in this, albeit some time ago, it is boring, it is lonely, it is risky, and it is absolutely and totally unsatisfying.

EDIT - did not realise this was such an old post I was replying to, but sentiment remains the same so will leave me response.

Edited February 21, 2011 by Tecumseh

[Hyperduck Quack Quack]

Presumably the original poster's dad who's lost his job is middle-aged - e.g. 45-60 ish.

What is so crazy in this country is that whilst young people find it difficult to get a job and anyone over about 50 who loses their job is unlikely ever to work again, the over-65's are being encouraged to stay in work. So on the one hand we've got people who'd like to retire at 65 being forced to work on, while people 15 years younger than them who are desperate for work can't get it.

And by putting up the pension ages, the government might be saving on what they pay out in pensions, but that will be cancelled out by the benefits they have to pay to redundant, no-hope-of-a-job fifty-somethings.

EDIT....Please not that I never give reasons for editing

Edited February 22, 2011 by Hyperduck Quack Quack

[SarahBell]

t, maybe get a lower paid job and reduce some luxuries, but instead this day trading idea (against my Mums wishes) is being considered and it just sounds like gambling down the bookies to me,

It would worry me that a parent was being financially irresponsible. Not because of any inheritance but purely from the frittering away of money is wrong point of view.

The refusal to reduce some luxuries is insane though - the "can't a man have a biscuit" attitude needs a slap for sure.

It's got to be your mum who deals with it though - unless you still live at home.

[council dweller]

Presumably the original poster's dad who's lost his job is middle-aged - e.g. 45-60 ish.

What is so crazy in this country is that whilst young people find it difficult to get a job and anyone over about 50 who loses their job is unlikely ever to work again, the over-65's are being encouraged to stay in work. So on the one hand we've got people who'd like to retire at 65 being forced to work on, while people 15 years younger than them who are desperate for work can't get it.

And by putting up the pension ages, the government might be saving on what they pay out in pensions, but that will be cancelled out by the benefits they have to pay to redundant, no-hope-of-a-job fifty-somethings.

Yes, I think they should allow people to retire or just get Universal Credit from the age of 55. Seems like UC and the pension might be the same anyway. Isn't the government going to announce big changes to the pension/National insurance system this year?

[PopGun]

Yes, I think they should allow people to retire or just get Universal Credit from the age of 55. Seems like UC and the pension might be the same anyway. Isn't the government going to announce big changes to the pension/National insurance system this year?

nah, seems too much like common sense.

If my mortgage was paid up by 55, I'd happily retire to part time work to free up my full time position for someone else.

However I reckon we'll all be working four day weeks by then anyway.

[tim123]

nah, seems too much like common sense.

If my mortgage was paid up by 55, I'd happily retire to part time work to free up my full time position for someone else.

So would I PROVIDED that it's in the field that I am qualified for. Unfortunately, (most) employers in my field don't see it that way and it's full time or nothing.

I'm not semi-retiring to work in B&Q!

tim