'Paper' traders

I am getting so many emails and positive feedback on my posts lately I keep thinking of other topics to write about. I was thinking about what I could put together to help people look at forum posts and try to get the most out of them, and be appropriately critical of what they read. What I wanted to do was put a process together that made some common sense that I could pass along which might help people out.

Let’s look at what happens when we read a post. We have a few choices. We can take it at face value, we can read it skeptically, we can require proof, and so on. For me, I first think what is it I am trying to get out of it. For example, the other day I read a post where the poster described a specific technique, offering it up for all to use. Now, what if my first response was: I need to see statements. Prove to me you are a ‘real’ trader, or I reject what you posted. Imagine if someone posted that.

The person would likely say look, I posted a technique, try it out, see if you like it. If so, use it. If not, don’t. That’s all. Now, using common sense, does it matter in any possible way if that person has never traded, has traded some, trades all the time, or is the best trader who has ever lived? No matter their record, the technique is either useful to you, or it isn’t. You have to try it out. What that person’s track record is is not material to the value of the technique they are showing.

Now, perhaps if you get the idea they don’t know what they are talking about then maybe down the line, after dozens of things posted are of no use to you, you might stop trying suggestions from that poster. That still tells you nothing about their skills, only that what they offer is not of much use to you. Also, if the person sells, or has ever sold anything related to trading that has no bearing whatsoever on the potential value of that technique. If that was the case, how could someone take a post, word for word, post it elsewhere under their own handle, and somehow since it is not associated with a seller any longer, the technique could magically change from something useless to something useful? The usefulness is independent of the source.

Now, let’s look at trying to decide how to better evaluate someone who is posting. One system is the reputation system (be it a numerical approach, a ‘street cred’ approach, or some other approach), which many like. One of the downsides to this can be seen in crowd behavior, and easily envisioned with politicians. For example it has been shown that if a post has a large positive score people will tend to vote it up regardless of the content. Negative scores draw more negative votes. It is this very same crowd behavior that makes the markets ‘work’ for trading.

Notice how one search engine becomes dominant and most everyone uses it? One politician rises to popularity, or just a few rock stars or actors? Why isn’t it more evenly distributed? Crowd behavior. Everyone reading this will surely understand, or you wouldn’t be a trader. Now, does that popularity necessarily indicate higher integrity? Well, looking at politicians, rock stars, or actors one would surely say no. So, judging posts by reputation may be a good indicator, or it may just be an indicator of popularity, which tends to be a crowd behavior thing.

Myself, I think the role of a good forum is to present ideas and discuss them, so everyone can learn. Even if a person didn’t find the idea useful for themself, they may still present it so others may use it, if it suits those readers. Imagine how strangulated a forum would be if the only ideas that could be presented were those verified to ‘work’ for the poster. So, I think it is a disservice to require a poster to verify they have traded an idea and proven it makes them money to present it. Any forum that gets away from this concept of open idea presentation is not geared towards helping people, in my opinion.

I think the safest approach is to assume, then, that all posters are ‘paper’ traders until they have proven otherwise with the only acceptable means recognized by this forum, and that is posting statements (which begs the unanswered questions from my topic on this, such as the statements are completely unverifiable and easy to fake). To date, unless I am mistaken, not one single poster from this forum has ever posted a single statement in here. This leads to an issue for the readers.

How do they decide if the person is a ‘real’ trader or a ‘paper’ trader? Well, some would say the person’s reputation. I wonder, though, if a person has a popular posting style, is very personable, and crowd behavior kicks in, is this a reliable indicator to judge if the person is a ‘real’ trader or a ‘paper’ trader? I suspect not. And why would any forum use double, or multiple standards for deciding this? If you have a good reputation your standard is whatever you say is believed. If you have little reputation, well, probably best not to post any trade sequences, but maybe we’ll let it slide. If you sell things, definitely statements only. And so on.

The only sensibly thing is to assume everyone is a ‘paper’ trader until proven otherwise. As has been said so many times in here ‘It’s no big deal to post statements, so just do it’. Yet it has never been done even once. I think we can safely say that no matter how great a person calls the market in real time, or how much help they offer, some say the person is only a ‘paper’ trader because they won’t produce statements. I think it is a big double standard if that only applies to some people. In a forum everyone is a ‘paper’ trader until proven otherwise because as has been pointed out, it’s just so easy to fool people.

Now, here’s why I think all this is completely moot. The point of a forum should be to share ideas and help each other. If the posts are useful, then the person is a valuable contributor. If they are not, the person is not that valuable of a contributor. The question we should all ask is does what the person post help me? What if people read a lot of posts from a ‘real’ trader and they just don’t get the techniques, or can’t understand how they are presented, or they simply don’t ‘work’ for the reader. Now, what if someone presented a technique and the readers understood it, and it ‘worked’ for them, but the presenter was a beginner, maybe only been working on trading for six months and still losing money overall (perhaps because they trade too much, use too many techniques, not just the one, or for whatever reasons). Who made a more valuable contribution?

If a person wants to draw attention to themself, maybe to have more ‘street cred’ or a higher reputation very quickly, they could state straight out in a post ‘I am a ‘real’ trader, I am consistently profitable, and that profit is not nominal, it is a respectable percentage over a long period of time.’ I have not seen that done in here with anyone. People imply, they indicate, they hint, they suggest, but state it right out like that, I haven’t seen it. I think a statement like that would require backing it up (but how, since none of the issues I brought up in my two statement posts have been addressed). And imagine how silly it would be to make such a statement and then say they won’t post statements, they have nothing to prove, or whatever.

So, again, by reputation some forum posters ‘indicate’ they are profitable traders (but don’t say how profitable, since making $1 a year is technically profitable) and no proof is required, or even indicate they are just ‘real’ traders, and that would be true even if they lose money every year. This doesn’t make sense. I think the standard should be no talk about any of that, let’s focus on posting ideas that are useful to other traders. No one in here is going to prove they are a ‘real’ trader, not one single person. And even if they tried (I can’t imagine anyone will), it is all unverifiable, so it’s a moot point. That brings us back to everyone should be assumed to be a ‘paper’ trader until proven otherwise, unless you just want to be a sucker, believing whatever someone tells you. And like I said, none of this matters at all to the point of the forum: to share ideas so we can all improve. Steven Tyler said it best in Dream On: “Lived and learned from fools and from sages”. All that matters is: is what is being presented helping you?

End note: Yes, haters can twist all this (in this post and all the others), imply a bunch of things ('That's just what a paper trader would say...', etc.), and so on, instead of seeing the value in what is presented. Haters gonna hate. The feedback I am getting from people is telling me there are enough of you out there seeing value in what I have been posting lately that I feel it is worthwhile posting it.