Making a Living while Cruising

[bottomend]

Originally Posted by Aargau

I would recommend that nobody follows the primary advice in this thread. With statements like:

"Without completely recovering old ground, spread trading is, in my opinion, a very low risk investment strategy because if done right, it covers multiple commodity categories, which results in a lower overall risk beta for the portfolio when compared to equities, bonds, or whatever."

Is really at such a shallow understanding of the markets that your odds of success are less than even.

Most artisan crafts that don't require huge, heavy, equipment are probably the best source of making a living while on board. Graphic design/contracting programming/web site generation are options if you can reply daily to customers. Outsmarting very smart people with better resources, faster reactions, and more complete knowledge is not a winning strategy.

I repeat as Kramer says on CNBCs "Mad Money" ..Do your homework{due diligence} before you lose your money" , I do not want or intend to insult anothers stock strading strategies as some a re like Martha Stewart was and have inside info so be it. However i dont have inside info and spend hours studing news releases of companies and fundamentals etc, I really dont recommens this method of income if you can allready go buy annuities and relax on a fixed income until you die, The CNBC series on TV is full of suckers who got ripped off looking for 20% returns on "American Greed" TV series on Cnbc, I laugh that so many would actually trust some fleeceartist with their life savings. They must be retarded or greedy or stupid or all three, IMHO

[bottomend]

Originally Posted by bottomend

Yea, just go in tyhe casino and keep doubling your initial minimum bet at the blackjack table until you get your money back , No due dilegence except remembering to order "black russians" or "gin and tonics" ,And hey? if you are at a no limit table you can keep on doubling your bet till you WIN your money back OR cant afford to double your bet at blackjack again, Man i been kicked out of sooo many casionos i give them the popes name for a client card. cheers

Hey, and if your DFS{dead fookin serious} AT stock is below old 53wk lows and expected to trade at 4.75 after last fridays 3% loss from recent 11$ closes . Many believe this is the monthly dividend paying stock to buy tomorrow as the clas=action lawsuit is going to drop their price to 4.50 share from feb28 levels of 11$ share.Just thoughy i woulfd mention that if some are looking for some more monthly dividend stock that might gail PPS bvalue in the short term lk HOLA mia non brute hombre

[Delfin]

Originally Posted by Aargau

Is really at such a shallow understanding of the markets that your odds of success are less than even.

Most artisan crafts that don't require huge, heavy, equipment are probably the best source of making a living while on board. Graphic design/contracting programming/web site generation are options if you can reply daily to customers. Outsmarting very smart people with better resources, faster reactions, and more complete knowledge is not a winning strategy.

Since I've been trading spreads since 2001, paying for a boat with the proceeds, I hope I know something about the markets I trade in. Then again, it does take me around an hour a week to do this, so maybe I'll look into your advice to give it up and do something sensible. Like graphic design.

Thanks.

[Delfin]

Originally Posted by Caribsailors

Just Me.

I started looking at spreads in the early 80's and found them very intriguing, but a life changing accident diverted that path.
I would like to thank the OP for this thread, as I will have to agree, from my recollection the returns were very similar.
But as OP said it has to be money you won't miss.
Thank you again for twigging my interest in spreads.

My pleasure. The Moore research folks have done a good job of identifying and explaining historic relationships between commodities, as well as developing what appears to be pretty good software to do the retrospective analysis required. It doesn't take a great deal of imagination to understand that in general, heating oil to be delivered in December is likely to rise more or fall less than unleaded gas to be delivered at the same time, although as some posters here demonstrate, even simple relationships can be mystifying if you work at it.

[Delfin]

Originally Posted by Zonker

That is a little bit too easy ... :-)

Just face it, probability you get away successfully with your kind of trades (directional !) is about 20% (buy 50%*sell 50% - commissions). That fits perfectly to the stats which say 89% of all retail traders lose long term. If you are making profit, it might be because the markets go straight up recently. But be aware of the times the markets get turbulent. I really wish you all the LUCK - cause it's all rigged and if you are not super clever, you gonna hit the wall. It's just a matter of time.

PS : why should a mentor want you to make money or to be successful ??? Think more then twice about that !

Just by way of clarification, it matters not at all with spread trading whether the markets are going up or down. It only matters whether the relationship between the two legs of the spread widen. That widening is a function of real world realities, not market emotion. December cotton usually goes up more or down less than July cotton not because of traders getting greedy or frightened, but because more cotton is used in December to make clothes to keep people warm. The cotton crop can be bumper or lousy, but that doesn't affect whether people buy clothes. If it's a bumper crop, then December cotton goes down, but July cotton goes down more, resulting in profit. Or, the crop can be bad, in which case December cotton goes up more than July. People still buy clothes. Not too mysterious. That certainly doesn't guarantee a profit on that spread every year, just most years, which is the point. Consistent participation in multiple commodity markets making trades based on rational movement driven by real things happening in a real world results in enough trades being profitable that it makes it worthwhile. Not for everybody, obviously, just lazy people like me.

[Aargau]

What is your knowledge of the markets you trade? The advice given was poor for anyone else newly coming into trading without any specialized knowledge of a given market or who doesn't have a quant background. I just hope that your success is not attributable to survivorship bias. I don't like to see independent traders flame out, trust me.

2001 was a different ballgame from 2013. With the advent of carrier hotels and dark pools it's increasing hard to successfully trade on any analysis of publicly available information without a quite large time horizon, and especially for commodity contracts unless you can take physical delivery at Long Beach and sit on it, and especially without quant algos or privately gathered information.

Once could certainly get a Series 65 and make a percent off client's assets, but that's not what you're espousing.

Originally Posted by Delfin

Since I've been trading spreads since 2001, paying for a boat with the proceeds, I hope I know something about the markets I trade in. Then again, it does take me around an hour a week to do this, so maybe I'll look into your advice to give it up and do something sensible. Like graphic design.

Thanks.

[Zonker]

Sure Delfin ... :-) ... so eze, and why are you still posting here in a cruiser forum. If you are able to trade profitable because you have profound "knowledge" then you should be a billionaire after 10 years of trading ?!

See if you can make constantly lets say 1% a month on your total capital, just increase your capital by lets say 5x which is very possible in an 0-interest-environment. So you would make 5% a month, this for 10 years ... :-)

Again - if that stuff would be sooooo ezeeee ... no dude would work as an employee.

PS : I've been in that business for 15 years or so - believe me, if you made gains until now, be happy. Stats never lie.

[Delfin]

Originally Posted by Zonker

Sure Delfin ... :-) ... so eze, and why are you still posting here in a cruiser forum. If you are able to trade profitable because you have profound "knowledge" then you should be a billionaire after 10 years of trading ?!

See if you can make constantly lets say 1% a month on your total capital, just increase your capital by lets say 5x which is very possible in an 0-interest-environment. So you would make 5% a month, this for 10 years ... :-)

Again - if that stuff would be sooooo ezeeee ... no dude would work as an employee.

PS : I've been in that business for 15 years or so - believe me, if you made gains until now, be happy. Stats never lie.

Oh there will always be people who will be employees because there will always be people who prefer that to controlling their own destiny.

And I post on a cruising site because I spend a lot of time messing around in boats. I mention this investing strategy because some people are interested in the subject of how to use a little capital to sustain a pleasant lifestyle. Some people appreciate it. Others get hostile. Just human nature, I guess.

[Delfin]

Originally Posted by Aargau

What is your knowledge of the markets you trade? The advice given was poor for anyone else newly coming into trading without any specialized knowledge of a given market or who doesn't have a quant background.

You are mistaken. If you read what I wrote, you will see that I don't think that "specialized knowledge" is particularly helpful because it tends to make you think you can out think the markets. I'm merely pointing out that at certain times of the year the price of hogs will generally go up more than the price of live cattle for the same months delivery. I know nothing about livestock, nor do I need to. If I care, I can learn why feed prices seasonally change and why hogs eat more prior to marketing compared to cattle. But I don't care. All I need to know is that 14 years out of 15 the price differential between hogs and cattle widens for certain delivery months so I feel ok betting they will this year. Might be right, might be wrong. But generally, it will be right.

Originally Posted by Aargau

2001 was a different ballgame from 2013.

No doubt true, but also irrelevant. The prices of stuff goes up, and the price of stuff goes down. And, as it turns out, two different examples of "stuff" go up or down relative to each other for reasons that have zero to do with proprietary information. Just common sense, which is one commodity that is frequently in short supply.

[Aargau]

Originally Posted by Delfin

The Moore research folks have done a good job of identifying and explaining historic relationships between commodities, as well as developing what appears to be pretty good software to do the retrospective analysis required.

I am happy to retract my statement upon further proof, but I think this is where Delfin makes his money, off referrals to software or systems that have foolproof ways to trade that all the brightest traders have never even considered. Most money in finance is through rent seeking, rather than any innovative analysis.

It's the same thing with gambling pick websites. If their picks were really great, they would be out placing bets, instead of charging $39.95 for their stone cold lock of the week.

Analysis can be done by Homer Simpson:

Barney: To Homer, the Wall Street genius!
[everyone claps as Homer bows]
[Homer lights a cigar with a $1, then puts out the flame and
puts it back in his wallet]
Lenny: Hey, Homer! How come you've got money to burn? Or singe,
anyway?
Carl: Yeah, Homer, what's your secret investment?
Homer: Take a guess.
Barney: Uh, pumpkins?
Homer: [pause] Yeah, that's right, Barney. This year, I invested in
pumpkins. They've been going up the whole month of October and
I got a feeling they're going to peak right around January.
Then, bang! That's when I'll cash in.
Barney: To Homer, and to Sergeant Pepper, who's growing out of the
middle of your back.
Moe: Uh, Barn, you gotta unwrap the plastic before you smoke those.

Everyone toasts Homer as the camera pans to a jack-o'-lantern. Not long
after, the pumpkin is a rotted pile.

Broker: Homer, you knuckle-beak, I told you a hundred times: you've got
to sell your pumpkin futures before Hallowe'en! Before!




Any software to do analysis at this level has already been done and optimized to run on specialized Linux kernels on private pipes which have milliseconds better access than you do. There's a great TED talk about what a normal human is up against for trading:

Dark pools and algo trading

I'm in Stanford research quant land. Have an expired series 65 (still do pro bono) as well as my PhD work in stochastics and algorithms. I'm happy to provide some proof of credentials, even including things outside trading like being in the top 99.9% of football betting, doing all the routing of streetview cars all over the world. Give me a city or region and I'll tell you the optimal analysis of visiting every street.

[Delfin]

Originally Posted by Aargau

I am happy to retract my statement upon further proof, but I think this is where Delfin makes his money, off referrals to software or systems that have foolproof ways to trade that all the brightest traders have never even considered. Most money in finance is through rent seeking, rather than any innovative analysis.

Who are you that I should spend any time proving anything to you?

I shared one way I make money with those who might be interested since it takes little time, can be done with little input and so is practical for those cruising, and has been very profitable for me for many years. But quite frankly, whether anyone follows my pattern or not is of the profoundest indifference to me, other than a general desire to be helpful and for everyone to be happy and prosperous. And no, I make no money off of "referrals" to a software service that charges about $600 a year as I recall, nor do I make money "rent seeking" whatever the heck that means. And not to be intentionally insulting in kind, if I suddenly was penniless and felt the need to shill advisory services to fill Delfin's 2,400 gallon diesel tanks, I would hope I am smart enough not to waste my time doing so to people who think that itinerant graphic design is a plausible way for someone on a boat to make a living.

Cheers!

[Aargau]

Originally Posted by Delfin

it takes little time, can be done with little input and so is practical for those cruising, and has been very profitable for me for many years.

We are in agreement on the desire to be helpful and for everyone to be happy and prosperous. We also share a common desire to help people who are cruising to look for the most profitable use of their time.

We are in disagreement on any financial advice that, in your words above, takes little time, can be done with little input, and so is practical for cruising while being immensely profitable.

Really?

That is the clear signal for a MAKE MONEY FAST or WORK AT HOME PART TIME spam.

I'd be sad if anyone took their dream yacht nest egg and invested it then lost it based on that advice. The financial world simply doesn't work like that. Anything intellectually easy, and requires little thought, and can be done without any reactive intervention can be acted upon by anyone, and on both sides of a trade, and in addition, can be automated to happen much more quickly than any human can react to such information.

Originally Posted by Delfin

Who are you that I should spend any time proving anything to you?

Like you, I'm just some random person on an internet board. However, I did offer a way to show my track record, and given that you haven't heard of terms like rent seeking, I will leave it to others to determine who has a better grasp on truly effective ways to augment their income while enjoying a cruisers lifestyle.

[ImaginaryNumber]

Originally Posted by Delfin

Occasionally in the past I have referenced commodity spread trading based on historical trends identified through Moore Research. Without completely recovering old ground, spread trading is, in my opinion, a very low risk investment strategy because if done right, it covers multiple commodity categories, which results in a lower overall risk beta for the portfolio when compared to equities, bonds, or whatever. Attached are the hypothetical 2011 results of following a single 1 x 1 spread for every suggested trade provided by Moore Research, which would require around $50,000 to handle maximum margin requirements.

MR provides an entry and exit date, a stop loss amount and of course, the long and short legs of the commodity. I can verify these results, and have found them consistently obtainable for many years, sometimes slightly better, sometimes slightly worse. For 2011, the maximum draw down of equity was $10,000 and peak profit was $74,000 with an annual return for the 200 or so trades totaling $69,000. This would be reduced by around $1,000 in commissions if an electronic trading platform like Interactive Brokers were used.

I don't have any interest in Moore, and only offer this to fellow retiring boaters who may still wish to generate investment income. Buyer beware.

Images include:

1. The total returns by commodity category. Within each category there would be multiple spreads involved, for example long April hogs while simultaneously short June live cattle.

2. The total returns for 2011 by month.

3. A snippet of the current spread trades currently active, showing the legs, the entry point, the exit point, and the current equity in the trade.

4. The hypothetical returns for the last 30 days, showing winning trades and the loss amount of these that reached the stop loss point.

Those interested in Delphin's previous posts on this method of trading can find them starting at the URL below, and later throughout that thread:

http://www.cruisersforum.com/forums/...tml#post653828

I'd like to add my vote of appreciation to Delfin for bringing spread trading and the analysis of MRCI to my attention.

[Delfin]

Originally Posted by Aargau

Like you, I'm just some random person on an internet board. However, I did offer a way to show my track record, and given that you haven't heard of terms like rent seeking, I will leave it to others to determine who has a better grasp on truly effective ways to augment their income while enjoying a cruisers lifestyle.

So, other than using your first posts on a cruising forum to comment on how splendid the reflection in your mirror looks, do you have something substantive and actionable on the topic of how people interested in sustaining a cruising lifestyle with modest capital can accomplish that objective? We have your vote for web and graphic design, but I'm thinking more along the lines of financial investment, since the idea of standing on Front Street in Lahaina with a cardboard sign "will design your logo for food" wouldn't appeal to many. That might be constructive.

[Maren]

Originally Posted by Delfin

So, other than using your first posts on a cruising forum to comment on how splendid the reflection in your mirror looks, do you have something substantive and actionable on the topic of how people interested in sustaining a cruising lifestyle with modest capital can accomplish that objective? We have your vote for web and graphic design, but I'm thinking more along the lines of financial investment, since the idea of standing on Front Street in Lahaina with a cardboard sign "will design your logo for food" wouldn't appeal to many. That might be constructive.

There is an edge to the methodology you're purposing (returns are higher than the market) and a requirement the methodology be strictly followed.

Here is my concern: There is something philosophically wrong with the idea anyone can do this. The part of the discipline is relatively easy if the system is mechanically traded. Drawdowns can be managed by only using funds you can loose and having having faith in the system/ability to psychologically withstand drawdowns. But the part that can't be addressed is the edge. Think of it this way, what if 95% of the people were to do this, would they all be in the top say 10% of traders?

Obviously, no. The reason this makes money is because there is an edge. Once the edge goes away, so too do the returns.