Firstly, thanks for the overwhelming comments and feedback. Genuinely really appreciated. I am pleased 500+ of you find it useful.submitted by getmrmarket to Forex [link] [comments]
If you didn't read the first post you can do so here: risk management part I. You'll need to do so in order to make sense of the topic.
As ever please comment/reply below with questions or feedback and I'll do my best to get back to you.
Letting stops breatheWe talked earlier about giving a position enough room to breathe so it is not stopped out in day-to-day noise.
Let’s consider the chart below and imagine you had a trailing stop. It would be super painful to miss out on the wider move just because you left a stop that was too tight.
Imagine being long and stopped out on a meaningless retracement ... ouch!
One simple technique is simply to look at your chosen chart - let’s say daily bars. And then look at previous trends and use the measuring tool. Those generally look something like this and then you just click and drag to measure.
For example if we wanted to bet on a downtrend on the chart above we might look at the biggest retracement on the previous uptrend. That max drawdown was about 100 pips or just under 1%. So you’d want your stop to be able to withstand at least that.
If market conditions have changed - for example if CVIX has risen - and daily ranges are now higher you should incorporate that. If you know a big event is coming up you might think about that, too. The human brain is a remarkable tool and the power of the eye-ball method is not to be dismissed. This is how most discretionary traders do it.
There are also more analytical approaches.
Some look at the Average True Range (ATR). This attempts to capture the volatility of a pair, typically averaged over a number of sessions. It looks at three separate measures and takes the largest reading. Think of this as a moving average of how much a pair moves.
For example, below shows the daily move in EURUSD was around 60 pips before spiking to 140 pips in March. Conditions were clearly far more volatile in March. Accordingly, you would need to leave your stop further away in March and take a correspondingly smaller position size.
ATR is available on pretty much all charting systems
Professional traders tend to use standard deviation as a measure of volatility instead of ATR. There are advantages and disadvantages to both. Averages are useful but can be misleading when regimes switch (see above chart).
Once you have chosen a measure of volatility, stop distance can then be back-tested and optimised. For example does 2x ATR work best or 5x ATR for a given style and time horizon?
Discretionary traders may still eye-ball the ATR or standard deviation to get a feeling for how it has changed over time and what ‘normal’ feels like for a chosen study period - daily, weekly, monthly etc.
Reasons to change a stopAs a general rule you should be disciplined and not change your stops. Remember - losers average losers. This is really hard at first and we’re going to look at that in more detail later.
There are some good reasons to modify stops but they are rare.
One reason is if another risk management process demands you stop trading and close positions. We’ll look at this later. In that case just close out your positions at market and take the loss/gains as they are.
Another is event risk. If you have some big upcoming data like Non Farm Payrolls that you know can move the market +/- 150 pips and you have no edge going into the release then many traders will take off or scale down their positions. They’ll go back into the positions when the data is out and the market has quietened down after fifteen minutes or so. This is a matter of some debate - many traders consider it a coin toss and argue you win some and lose some and it all averages out.
Trailing stops can also be used to ‘lock in’ profits. We looked at those before. As the trade moves in your favour (say up if you are long) the stop loss ratchets with it. This means you may well end up ‘stopping out’ at a profit - as per the below example.
The mighty trailing stop loss order
It is perfectly reasonable to have your stop loss move in the direction of PNL. This is not exposing you to more risk than you originally were comfortable with. It is taking less and less risk as the trade moves in your favour. Trend-followers in particular love trailing stops.
One final question traders ask is what they should do if they get stopped out but still like the trade. Should they try the same trade again a day later for the same reasons? Nope. Look for a different trade rather than getting emotionally wed to the original idea.
Let’s say a particular stock looked cheap based on valuation metrics yesterday, you bought, it went down and you got stopped out. Well, it is going to look even better on those same metrics today. Maybe the market just doesn’t respect value at the moment and is driven by momentum. Wait it out.
Otherwise, why even have a stop in the first place?
Entering and exiting winning positionsTake profits are the opposite of stop losses. They are also resting orders, left with the broker, to automatically close your position if it reaches a certain price.
Imagine I’m long EURUSD at 1.1250. If it hits a previous high of 1.1400 (150 pips higher) I will leave a sell order to take profit and close the position.
The rookie mistake on take profits is to take profit too early. One should start from the assumption that you will win on no more than half of your trades. Therefore you will need to ensure that you win more on the ones that work than you lose on those that don’t.
Sad to say but incredibly common: retail traders often take profits way too early
This is going to be the exact opposite of what your emotions want you to do. We are going to look at that in the Psychology of Trading chapter.
Remember: let winners run. Just like stops you need to know in advance the level where you will close out at a profit. Then let the trade happen. Don’t override yourself and let emotions force you to take a small profit. A classic mistake to avoid.
The trader puts on a trade and it almost stops out before rebounding. As soon as it is slightly in the money they spook and cut out, instead of letting it run to their original take profit. Do not do this.
Entering positions with limit ordersThat covers exiting a position but how about getting into one?
Take profits can also be left speculatively to enter a position. Sometimes referred to as “bids” (buy orders) or “offers” (sell orders). Imagine the price is 1.1250 and the recent low is 1.1205.
You might wish to leave a bid around 1.2010 to enter a long position, if the market reaches that price. This way you don’t need to sit at the computer and wait.
Again, typically traders will use tech analysis to identify attractive levels. Again - other traders will cluster with your orders. Just like the stop loss we need to bake that in.
So this time if we know everyone is going to buy around the recent low of 1.1205 we might leave the take profit bit a little bit above there at 1.1210 to ensure it gets done. Sure it costs 5 more pips but how mad would you be if the low was 1.1207 and then it rallied a hundred points and you didn’t have the trade on?!
There are two more methods that traders often use for entering a position.
Scaling in is one such technique. Let’s imagine that you think we are in a long-term bulltrend for AUDUSD but experiencing a brief retracement. You want to take a total position of 500,000 AUD and don’t have a strong view on the current price action.
You might therefore leave a series of five bids of 100,000. As the price moves lower each one gets hit. The nice thing about scaling in is it reduces pressure on you to pick the perfect level. Of course the risk is that not all your orders get hit before the price moves higher and you have to trade at-market.
Pyramiding is the second technique. Pyramiding is for take profits what a trailing stop loss is to regular stops. It is especially common for momentum traders.
Pyramiding into a position means buying more as it goes in your favour
Again let’s imagine we’re bullish AUDUSD and want to take a position of 500,000 AUD.
Here we add 100,000 when our first signal is reached. Then we add subsequent clips of 100,000 when the trade moves in our favour. We are waiting for confirmation that the move is correct.
Obviously this is quite nice as we humans love trading when it goes in our direction. However, the drawback is obvious: we haven’t had the full amount of risk on from the start of the trend.
You can see the attractions and drawbacks of both approaches. It is best to experiment and choose techniques that work for your own personal psychology as these will be the easiest for you to stick with and build a disciplined process around.
Risk:reward and win ratiosBe extremely skeptical of people who claim to win on 80% of trades. Most traders will win on roughly 50% of trades and lose on 50% of trades. This is why risk management is so important!
Once you start keeping a trading journal you’ll be able to see how the win/loss ratio looks for you. Until then, assume you’re typical and that every other trade will lose money.
If that is the case then you need to be sure you make more on the wins than you lose on the losses. You can see the effect of this below.
A combination of win % and risk:reward ratio determine if you are profitable
A typical rule of thumb is that a ratio of 1:3 works well for most traders.
That is, if you are prepared to risk 100 pips on your stop you should be setting a take profit at a level that would return you 300 pips.
One needn’t be religious about these numbers - 11 pips and 28 pips would be perfectly fine - but they are a guideline.
Again - you should still use technical analysis to find meaningful chart levels for both the stop and take profit. Don’t just blindly take your stop distance and do 3x the pips on the other side as your take profit. Use the ratio to set approximate targets and then look for a relevant resistance or support level in that kind of region.
Risk-adjusted returnsNot all returns are equal. Suppose you are examining the track record of two traders. Now, both have produced a return of 14% over the year. Not bad!
The first trader, however, made hundreds of small bets throughout the year and his cumulative PNL looked like the left image below.
The second trader made just one bet — he sold CADJPY at the start of the year — and his PNL looked like the right image below with lots of large drawdowns and volatility.
Would you rather have the first trading record or the second?
If you were investing money and betting on who would do well next year which would you choose? Of course all sensible people would choose the first trader. Yet if you look only at returns one cannot distinguish between the two. Both are up 14% at that point in time. This is where the Sharpe ratio helps .
A high Sharpe ratio indicates that a portfolio has better risk-adjusted performance. One cannot sensibly compare returns without considering the risk taken to earn that return.
If I can earn 80% of the return of another investor at only 50% of the risk then a rational investor should simply leverage me at 2x and enjoy 160% of the return at the same level of risk.
This is very important in the context of Execution Advisor algorithms (EAs) that are popular in the retail community. You must evaluate historic performance by its risk-adjusted return — not just the nominal return. Incidentally look at the Sharpe ratio of ones that have been live for a year or more ...
Otherwise an EA developer could produce two EAs: the first simply buys at 1000:1 leverage on January 1st ; and the second sells in the same manner. At the end of the year, one of them will be discarded and the other will look incredible. Its risk-adjusted return, however, would be abysmal and the odds of repeated success are similarly poor.
Sharpe ratioThe Sharpe ratio works like this:
You don’t really need to know how to calculate Sharpe ratios. Good trading software will do this for you. It will either be available in the system by default or you can add a plug-in.
VARVAR is another useful measure to help with drawdowns. It stands for Value at Risk. Normally people will use 99% VAR (conservative) or 95% VAR (aggressive). Let’s say you’re long EURUSD and using 95% VAR. The system will look at the historic movement of EURUSD. It might spit out a number of -1.2%.
A 5% VAR of -1.2% tells you you should expect to lose 1.2% on 5% of days, whilst 95% of days should be better than that
This means it is expected that on 5 days out of 100 (hence the 95%) the portfolio will lose 1.2% or more. This can help you manage your capital by taking appropriately sized positions. Typically you would look at VAR across your portfolio of trades rather than trade by trade.
Sharpe ratios and VAR don’t give you the whole picture, though. Legendary fund manager, Howard Marks of Oaktree, notes that, while tools like VAR and Sharpe ratios are helpful and absolutely necessary, the best investors will also overlay their own judgment.
Investors can calculate risk metrics like VaR and Sharpe ratios (we use them at Oaktree; they’re the best tools we have), but they shouldn’t put too much faith in them. The bottom line for me is that risk management should be the responsibility of every participant in the investment process, applying experience, judgment and knowledge of the underlying investments.Howard Marks of Oaktree Capital
What he’s saying is don’t misplace your common sense. Do use these tools as they are helpful. However, you cannot fully rely on them. Both assume a normal distribution of returns. Whereas in real life you get “black swans” - events that should supposedly happen only once every thousand years but which actually seem to happen fairly often.
These outlier events are often referred to as “tail risk”. Don’t make the mistake of saying “well, the model said…” - overlay what the model is telling you with your own common sense and good judgment.
Coming up in part IIIAvailable here
Squeezes and other risks
Crap trades, timeouts and monthly limits
Disclaimer:This content is not investment advice and you should not place any reliance on it. The views expressed are the author's own and should not be attributed to any other person, including their employer.
Welcome to the third and final part of this chapter.submitted by getmrmarket to Forex [link] [comments]
Thank you all for the 100s of comments and upvotes - maybe this post will take us above 1,000 for this topic!
Keep any feedback or questions coming in the replies below.
Before you read this note, please start with Part I and then Part II so it hangs together and makes sense.
Squeezes and other risksWe are going to cover three common risks that traders face: events; squeezes, asymmetric bets.
EventsEconomic releases can cause large short-term volatility. The most famous is Non Farm Payrolls, which is the most widely watched measure of US employment levels and affects the price of many instruments.On an NFP announcement currencies like EURUSD might jump (or drop) 100 pips no problem.
This is fine and there are trading strategies that one may employ around this but the key thing is to be aware of these releases.You can find economic calendars all over the internet - including on this site - and you need only check if there are any major releases each day or week.
For example, if you are trading off some intraday chart and scalping a few pips here and there it would be highly sensible to go into a known data release flat as it is pure coin-toss and not the reason for your trading. It only takes five minutes each day to plan for the day ahead so do not get caught out by this. Many retail traders get stopped out on such events when price volatility is at its peak.
SqueezesShort squeezes bring a lot of danger and perhaps some opportunity.
The story of VW and Porsche is the best short squeeze ever. Throughout these articles we've used FX examples wherever possible but in this one instance the concept (which is also highly relevant in FX) is best illustrated with an historical lesson from a different asset class.
A short squeeze is when a participant ends up in a short position they are forced to cover. Especially when the rest of the market knows that this participant can be bullied into stopping out at terrible levels, provided the market can briefly drive the price into their pain zone.
There's a reason for the car, don't worry
Hedge funds had been shorting VW stock. However the amount of VW stock available to buy in the open market was actually quite limited. The local government owned a chunk and Porsche itself had bought and locked away around 30%. Neither of these would sell to the hedge-funds so a good amount of the stock was un-buyable at any price.
If you sell or short a stock you must be prepared to buy it back to go flat at some point.
To cut a long story short, Porsche bought a lot of call options on VW stock. These options gave them the right to purchase VW stock from banks at slightly above market price.
Eventually the banks who had sold these options realised there was no VW stock to go out and buy since the German government wouldn’t sell its allocation and Porsche wouldn’t either. If Porsche called in the options the banks were in trouble.
Porsche called in the options which forced the shorts to buy stock - at whatever price they could get it.
The price squeezed higher as those that were short got massively squeezed and stopped out. For one brief moment in 2008, VW was the world’s most valuable company. Shorts were burned hard.
Porsche apparently made $11.5 billion on the trade. The BBC described Porsche as “a hedge fund with a carmaker attached.”
If this all seems exotic then know that the same thing happens in FX all the time. If everyone in the market is talking about a key level in EURUSD being 1.2050 then you can bet the market will try to push through 1.2050 just to take out any short stops at that level. Whether it then rallies higher or fails and trades back lower is a different matter entirely.
This brings us on to the matter of crowded trades. We will look at positioning in more detail in the next section. Crowded trades are dangerous for PNL. If everyone believes EURUSD is going down and has already sold EURUSD then you run the risk of a short squeeze.
For additional selling to take place you need a very good reason for people to add to their position whereas a move in the other direction could force mass buying to cover their shorts.
A trading mentor when I worked at the investment bank once advised me:
Always think about which move would cause the maximum people the maximum pain. That move is precisely what you should be watching out for at all times.
Asymmetric lossesAlso known as picking up pennies in front of a steamroller. This risk has caught out many a retail trader. Sometimes it is referred to as a "negative skew" strategy.
Ideally what you are looking for is asymmetric risk trade set-ups: that is where the downside is clearly defined and smaller than the upside. What you want to avoid is the opposite.
A famous example of this going wrong was the Swiss National Bank de-peg in 2012.
The Swiss National Bank had said they would defend the price of EURCHF so that it did not go below 1.2. Many people believed it could never go below 1.2 due to this. Many retail traders therefore opted for a strategy that some describe as ‘picking up pennies in front of a steam-roller’.
They would would buy EURCHF above the peg level and hope for a tiny rally of several pips before selling them back and keep doing this repeatedly. Often they were highly leveraged at 100:1 so that they could amplify the profit of the tiny 5-10 pip rally.
Then this happened.
Something that changed FX markets forever
The SNB suddenly did the unthinkable. They stopped defending the price. CHF jumped and so EURCHF (the number of CHF per 1 EUR) dropped to new lows very fast. Clearly, this trade had horrific risk : reward asymmetry: you risked 30% to make 0.05%.
Other strategies like naively selling options have the same result. You win a small amount of money each day and then spectacularly blow up at some point down the line.
Market positioningWe have talked about short squeezes. But how do you know what the market position is? And should you care?
Let’s start with the first. You should definitely care.
Let’s imagine the entire market is exceptionally long EURUSD and positioning reaches extreme levels. This makes EURUSD very vulnerable.
To keep the price going higher EURUSD needs to attract fresh buy orders. If everyone is already long and has no room to add, what can incentivise people to keep buying? The news flow might be good. They may believe EURUSD goes higher. But they have already bought and have their maximum position on.
On the flip side, if there’s an unexpected event and EURUSD gaps lower you will have the entire market trying to exit the position at the same time. Like a herd of cows running through a single doorway. Messy.
We are going to look at this in more detail in a later chapter, where we discuss ‘carry’ trades. For now this TRYJPY chart might provide some idea of what a rush to the exits of a crowded position looks like.
A carry trade position clear-out in action
Knowing if the market is currently at extreme levels of long or short can therefore be helpful.
The CFTC makes available a weekly report, which details the overall positions of speculative traders “Non Commercial Traders” in some of the major futures products. This includes futures tied to deliverable FX pairs such as EURUSD as well as products such as gold. The report is called “CFTC Commitments of Traders” ("COT").
This is a great benchmark. It is far more representative of the overall market than the proprietary ones offered by retail brokers as it covers a far larger cross-section of the institutional market.
Generally market participants will not pay a lot of attention to commercial hedgers, which are also detailed in the report. This data is worth tracking but these folks are simply hedging real-world transactions rather than speculating so their activity is far less revealing and far more noisy.
You can find the data online for free and download it directly here.
Raw format is kinda hard to work with
However, many websites will chart this for you free of charge and you may find it more convenient to look at it that way. Just google “CFTC positioning charts”.
But you can easily get visualisations
You can visually spot extreme positioning. It is extremely powerful.
Bear in mind the reports come out Friday afternoon US time and the report is a snapshot up to the prior Tuesday. That means it is a lagged report - by the time it is released it is a few days out of date. For longer term trades where you hold positions for weeks this is of course still pretty helpful information.
As well as the absolute level (is the speculative market net long or short) you can also use this to pick up on changes in positioning.
For example if bad news comes out how much does the net short increase? If good news comes out, the market may remain net short but how much did they buy back?
A lot of traders ask themselves “Does the market have this trade on?” The positioning data is a good method for answering this. It provides a good finger on the pulse of the wider market sentiment and activity.
For example you might say: “There was lots of noise about the good employment numbers in the US. However, there wasn’t actually a lot of position change on the back of it. Maybe everyone who wants to buy already has. What would happen now if bad news came out?”
In general traders will be wary of entering a crowded position because it will be hard to attract additional buyers or sellers and there could be an aggressive exit.
If you want to enter a trade that is showing extreme levels of positioning you must think carefully about this dynamic.
Bet correlationRetail traders often drastically underestimate how correlated their bets are.
Through bitter experience, I have learned that a mistake in position correlation is the root of some of the most serious problems in trading. If you have eight highly correlated positions, then you are really trading one position that is eight times as large.
Bruce Kovner of hedge fund, Caxton Associates
For example, if you are trading a bunch of pairs against the USD you will end up with a simply huge USD exposure. A single USD-trigger can ruin all your bets. Your ideal scenario — and it isn’t always possible — would be to have a highly diversified portfolio of bets that do not move in tandem.
Look at this chart. Inverted USD index (DXY) is green. AUDUSD is orange. EURUSD is blue.
Chart from TradingView
So the whole thing is just one big USD trade! If you are long AUDUSD, long EURUSD, and short DXY you have three anti USD bets that are all likely to work or fail together.
The more diversified your portfolio of bets are, the more risk you can take on each.
There’s a really good video, explaining the benefits of diversification from Ray Dalio.
A systematic fund with access to an investable universe of 10,000 instruments has more opportunity to make a better risk-adjusted return than a trader who only focuses on three symbols. Diversification really is the closest thing to a free lunch in finance.
But let’s be pragmatic and realistic. Human retail traders don’t have capacity to run even one hundred bets at a time. More realistic would be an average of 2-3 trades on simultaneously. So what can be done?
The key thing is to start thinking about a portfolio of bets and what each new trade offers to your existing portfolio of risk. Will it diversify or amplify a current exposure?
Crap trades, timeouts and monthly limitsOne common mistake is to get bored and restless and put on crap trades. This just means trades in which you have low conviction.
It is perfectly fine not to trade. If you feel like you do not understand the market at a particular point, simply choose not to trade.
Flat is a position.
Do not waste your bullets on rubbish trades. Only enter a trade when you have carefully considered it from all angles and feel good about the risk. This will make it far easier to hold onto the trade if it moves against you at any point. You actually believe in it.
Equally, you need to set monthly limits. A standard limit might be a 10% account balance stop per month. At that point you close all your positions immediately and stop trading till next month.
Be strict with yourself and walk away
Let’s assume you started the year with $100k and made 5% in January so enter Feb with $105k balance. Your stop is therefore 10% of $105k or $10.5k . If your account balance dips to $94.5k ($105k-$10.5k) then you stop yourself out and don’t resume trading till March the first.
Having monthly calendar breaks is nice for another reason. Say you made a load of money in January. You don’t want to start February feeling you are up 5% or it is too tempting to avoid trading all month and protect the existing win. Each month and each year should feel like a clean slate and an independent period.
Everyone has trading slumps. It is perfectly normal. It will definitely happen to you at some stage. The trick is to take a break and refocus. Conserve your capital by not trading a lot whilst you are on a losing streak. This period will be much harder for you emotionally and you’ll end up making suboptimal decisions. An enforced break will help you see the bigger picture.
Put in place a process before you start trading and then it’ll be easy to follow and will feel much less emotional. Remember: the market doesn’t care if you win or lose, it is nothing personal.
When your head has cooled and you feel calm you return the next month and begin the task of building back your account balance.
That's a wrap on risk managementThanks for taking time to read this three-part chapter on risk management. I hope you enjoyed it. Do comment in the replies if you have any questions or feedback.
Remember: the most important part of trading is not making money. It is not losing money. Always start with that principle. I hope these three notes have provided some food for thought on how you might approach risk management and are of practical use to you when trading. Avoiding mistakes is not a sexy tagline but it is an effective and reliable way to improve results.
Next up I will be writing about an exciting topic I think many traders should look at rather differently: news trading. Please follow on here to receive notifications and the broad outline is below.
News Trading Part I
Disclaimer:This content is not investment advice and you should not place any reliance on it. The views expressed are the author's own and should not be attributed to any other person, including their employer.
|I have a good friend who is a VP at your firm . They blamed the entire Financial crisis on ' poor people who could not afford their mortgages ' they said this was pretty much he opinion among the investment banks . How do you feel about what happened to Greece and Goldmans hand in it ?||That is not true. Opinion is very much split within the investment banks and there is no right or wrong answer. I personally don't believe at all that the crisis was caused by 'poor people' - and I don't like that sort of categorization of people in the first place. There are perhaps 15/20 different institutions you could blame for the crisis, there's no way of isolating individuals. I'm not sure what exactly you think GS's hand in the Greece affair was. Of course it's a sad story and I feel remorseful - I recently donated £50,000 at a charity ball to help rebuild one of the islands which has almost been burned to the ground. But ultimately Greece employed GS at the time because they wanted to fudge their finances so as to meet entry requirements for the Euro i.e. the greek government was knowingly employing GS to help perform an extremely risky task - GS didn't force anything upon them. If the experiment explodes 10 years later (as it did), should GS really be the party to blame?|
|The next day, you are flipping through television channels and randomly come across a pre-season CFL game between the Toronto Argonauts and the Saskatchewan Roughriders. Knowing your inevitable future, do you now watch it?||Yes of course i fucking do. The future is inevitable. Chuck Klosterman i like your name.|
|I love seeing the ignorance that emerges in these AMA's relating to investment bankers. I am really interested in a career in either IB or Consulting, have a few questions for you.||Thank you to fletch below for answering this question.|
|1) How did you cope with the hours? I like working hard, I like working for my money but I also like enjoying free time and having a social life. When working a 100 hours as an analyst that would certainly have to suffer 2)What were you academic results like through your degree? I'm currently in my second year and will be realistically looking at 2.2, 2.2, 2.1 and 2.1 (years 1-4). This summer I'd hope to get an accountancy internship in one of the big 4 followed by an internship next year in one of the large IBs. I know there's more to a candidate than solely their academic credentials + internship but would this stand me well for a BB in London? (Top Irish university, undergrad will be in Business and French) 3) What is it that makes you enjoy this job? I know the paycheck is certainly a bonus but you've said there's more to it than that?||Whatever your breakdown between modules is, you need a 2.1 overall. Even if your average is 60% or 61%, that's enough to get you past the minimum requirements and through to interviews. After that it's up to you - they'll take someone with a good business mind and strong communications skills irrespective of whether they average 60 or 78 or 92. I disagree with him. My job is extremely rewarding and i wouldn't swap it for any other industry at the moment. If you want evidence of people enjoying their jobs look at the number of years they spend at their respective firms. Most of the partners at GS are 'home-grown' and have spent 20/30 years sweating away but don't regret it for a second.|
|Do you realize that in countries like Spain you're seen as an evil person that only wants to get profit and don't have any soul or feelings and probably kicks puppies for fun? If so, how do you feel about it?||Yes and understand their anger but it should be re-directed to politicians!|
|Proof? and of course... how much did you make in 2012 approximately?||Approx 600k. How do upload proof e.g. photo evidence?|
|Sorry, new to reddit!|
|Do you have free ticket for me? Always looking for handouts.||What is it young people say, lolz??|
|I'm very curious of your opinion of Secretary Geithner's role in LIBOR. Do you think he was guilty? innocent? Thanks!||LIBOR scandal is way too complicated to explain at 2.30 am after a few beers. Many active players are implicated and i think he will be seen in the wrong eventually like many others.|
|What hours do you work?||Approx 80 hours a week not incl. flight time I go to festivals in Europe but would love to go it. Do you have free ticket for me?|
|If the concept and idea of a monetary system was replaced with something better (hypothetically) what would you do? As in for a career or what not since now you are jobless.||Resources will always be scarce so someone will have to ensure an optimal allocation. There will always be a market of some kind whether it be a public market or an internal government one.|
|Hypothetically we could have unlimited power, molecular production, and master matteenergy conversion. Would that change your answer?||Good interview question. I'll keep it in mind.|
|In your view, are there any regulations that could meaningfully alter the moral hazard typified by the 2008-2009 bailout of the financial sector? If so, what might they be? And if not, to what extent does regulatory capture play a role?||Regulatory capture is a seriously problem not just in banking e.g. also in the energy business. How do you reduce it? It won't happen unless the public demand it, as everyone with power tends to benefit from it and so they won't make meaningful steps to change anything, i.e. its a win win situation for government and business. However it needs more than just 'occupy movements' but rather i am talking the mass voter population.|
|Have you seen @gselevator on twitter? if so have you ever contributed/is it legit?||Haha yes i have seen it and no its not legit, well at least i think its not. Seriously though the elevator chats can be quite entertaining and revealing.|
|Do you use a mouse when you work on excel?||Are you joking?|
|In your opinion, do you think the money you make is worth the hell that you go through to make it?||I love my job and so i am lucky that the money is not the only motivator.|
|But yes i love checking my bank balance at an atm.|
|How can i break into finance with a sub-par gpa?||Network and try non BB firms.|
|A company founded by 100 duck sized horses. or A company founded by 1 horse sized duck?||100 duck sized horses every time. Basic risk management theory - don't put all your eggs in one basket. If that 1 horse sized duck isn't exceptional, your business is going down the tubes.|
|Prior to the collapse, did you have any idea what was about to happen?||It was getting obvious that there was a bubble, but never predicted how great the fallout would be and that in 2013 we would still be suffering|
|What do you do day to day?||I work in the energy field in Europe but don't want to get too specific. Day to day we advise natural resource companies on all things financial such as m&a and financing strategy and then execute on their behalf. So I am on the corporate finance side rather than sales and trading. However I work closely with the syndication and sales guys such as if we are executing an IPO or a follow-on share offering.|
|I have a buddy who's small but established clean tech company needs money building biodiesel manufacturing plants around the US that run off garbage and wood chips. The technology is actually coming from a company based in Sweden. Can you help him on the money side?||Send me a link to their website.|
|I find clean tech very interesting.|
|How did you get your job?||Did a summer internship then got FT conversion.|
|What college did you go to?||I went to LSE (university in the UK)|
|What jobs did you work before getting this one?||Did another internship whilst at university at an oil company.|
|At what age did you get this job?||22.|
|I hear the GS company culture is like " a frat on steriods" true or false?||False more than true but depends on team.|
|Is it as cut throat as I have heard with the bottom 50% of people getting sacked each year to make way for new guys who will probably be sacked the year after?||Bottom 5% is more accurate. 7-8% in a bad year, 3-4% in a good year. It's a fine line between 'cut throat' and having a 'healthy competitive atmosphere'. But we'd be out of business very quickly if we kept firing half of our staff every year...|
|Is there any stock I should look into in 2013? Long term or short term.||Short term- African Barrick Gold. The chinese walked away and so the share price plunged and despite serious operational issues, the massive drop has presented a golden buying opportunity.|
|Long term- anything to avoid inflation, inflation scares the crap out of me and is going to be a big problem in the Uk and elsewhere in the future.|
|Also buy into soft commodity boom e.g. meat in africa, think zambeef etc if you can find an attractive entry point.|
|What's the best preparation for an interview with an i-bank? I'm over here in the states and come from a non-target.||Read WSO, the forums are full of useful hints and tips especially for non target guys. Depending on what area you are applying for, make sure you know some really good examples and stock pitches as it is amazing how many candidates lack knowledge e.g. if applying for ECM for god sakes know some of the recent IPO's and likewise for equity research have good stock pitches and have conviction when presenting. Best of luck!|
|How important is your undergrad majogpa I'm double majoring in Econ/Conflict resolution studies with a possible minor in poly sci (depending on how the credits work out) I got a 3.9 gpa last semester but it only brought my overall gpa to a 2.4 because fuck klonopin. I should have at least a 3.0 by graduation, but I'm wondering its worth it to pay for and retake my first semester. Can I have $373 dollars? :D :D I promise only to get moderately drunk with this money. Sorry, a lot of questions, thanks for answering. Oh also, one last thing, all else being equal, is calc I enough math to apply for analyst job? or do I need more?||Undergrad course choice is not that important for IBD but obviously for more quant roles you need maths skills Again i am sorry but i am not very clued up on GPA Ok i give you money but first you have to register yourself as a charity so that you can gift aid it and get much more!|
|Where did you go to college?||LSE.|
|As an undergrad? How hard was it? I hear it's very difficult.||Yes, undergrad.|
|Harder than most places depending on your course. Especially as you are competing with loads of kids from Asia who do extra calculus to relax.|
|How do you see regulation affecting the overall banking culture? Everything I have been reading and what people have been saying is that the culture is changing. Have you been seeing this?||I recommend reading "The Culture of Success" by Lisa Endlich.|
|Also how do you like the goldman culture?||Regulation is hurting us...but: Link to business.financialpost.com|
|How much total did you make in each of your years at the firm?||I don't want to get into specifics.|
|But for your first three years as an analyst roughly 50k-70k (£ not $)|
|As an associate 120k-160k.|
|After that the numbers get exciting.|
|What tools do you use on a regular basis?||Excel, Outlook, Excel, Outlook, Excel, Outlook...powerpoint.|
|What is the biggest reward of working in IB? Where I study, students with high grades are pushed to chase the prestigious internships firms like GS, MS, etc offer. Their reasoning why they chase these jobs is that they think it is the highest (prestige) in finance they can go or are attracted by the money. It seems shallow to me. What does IB offer that makes your career personally fulfilling? Why didn't you choose to work elsewhere?||I find what i do at the front end of the energy sector fascinating. If your interested in business or globalisation or other similiar areas then IBD is pretty much at the cutting edge of it.|
|Thanks for the reply! When you were first starting out at GS, were you able to balance a personal life aside from your work? Has it gotten easier as you have gained more experience? Would you recommend IB as a field to pursue to your own children today? Thanks again!||I'd say during my first 3 years as an analyst the 'balance' was almost non-existent i.e. i was regularly working 100+ hours/week. Since then it's become easier year by year and i think that's true for most. And yes certainly i would encourage my children to pursue it - not that i have any yet.|
|Where did you go to uni what was your gpa? how many physics majors work their? did you start off as an intern? sorry for rapid firing questions.||LSE (london school of economics) - first class honours but don't know how that translates into GPA.|
|I know only 3/4 physics majors in the office at the moment.|
|Yes started as an intern.|
|Do banker run the world? how much political influence do they really have?||It works two ways. Some bankers have their fingers in politics in a way they perhaps shouldn't. But equally many politicians have their fingers in banking and can force our hands.|
|How hard is it for a non ivy leager studying finance to get an entry level job at GS? what about internships?||Tough. But with enough internship experience beforehand it's possible.|
|What do you think of Forex? Would you ever trade on it with your personal money?||Difficult to answer - you can trade forex in a million different ways - some ways are more interesting than others. I don't personally trade it, but others forge a very successful career out of it.|
|What was your bets investment in? (If that's how it works)||That's not really my role in IBD.|
|But outside GS I invested in the Shanghai property market a decade ago or so. My 4 flats there are now worth 10-12 times what they were worth then.|
|WTF caused the 2010 flash crash?||Good question. Nobody knows for sure.|
|From the link you've provided, I find no.2 the most plausible explanation. But I would also add 6. UBS did something stupid again.|
|As hardcore capitalists what is your feeling about (management of) banks that seem to live under the impression that profits are for a happy few while losses should be carried by tax-payers?||That's not what I believe at all.|
|And by the way all of us are tax payers too. The top 5% contribute approx. 50% of the government's taxation revenue. So if losses are being 'carried by tax-payers' - that doesn't exclude people in the banking industry by any means.|
|Matt Levin at Dealbreaker (former GS guy) describes Investment Bankers as "Travelling money salesmen". Do you feel that this description is apt?||The operative word in your question is 'former'|
|Do you think that's how he described investment bankers whilst he was still with the firm?|
|People tend to get very bitter and sensitive after they get fired. See Gregg Smith for further evidence..|
|Is an MBA necessary to be competitive when looking for a job or is a B. Comm enough to compete with others when looking for jobs in the industry?||Depends on what entry point - if you do an mba then you apply for associate entry whereas b.comm is an undergrad degree and so you apply for analyst roles. If you do a b.comm at a top university/college and get some internships then you should be well placed. Good luck!|
|Do any of your co-workers frequent Reddit?||I imagine less than 0.1%.|
|Then again 2 people on this feed at least have claimed to be my co-workers, so who knows...|
|Since you're new to Reddit, what made you want to do an ama here?||I'd like to alter the public perception of bankers - not all of us are the obnoxious greedy individuals you read about in the media.|
|I'm also extremely interested in hearing what non-finance people see as our key economic issues at the moment - this seemed a good way to find out.|
|Proof?||How do i upload photos? i will upload photo proof. Sorry not very experienced with reddit!|
|I am a senior in high school and I am interested in majoring in either accounting or finance, but I don't think I know enough about either career path to make the best decision, can you explain the large differences the two paths I would go down depending on major, or any advice that may influence my decision that I would not know at this point?||What you choose to study doesn't necessarily determine the industry you'll end up in. We have guys in the office who studied history, languages, even medicine. Just go for what interests you the most and focus on getting high marks.|
|Curious as to what kind of degree you hold/what was your GPA in college?||BSc. Economics degree from LSE. First class honours, don't know about gpa|
|I used to work for the swiss banks and swiss stock market indirectly, and have a few friends in the banking business, including GS and Nakamura in London. What is your personall opinion on prostitution, cocaine, and medication misusage in your business? Also, also what is your stance on GS' questionable involvment in Backpage.com?||With regards to backpage.com, the guys on the deal did not do their KYC checks properly. KYC checks are crucial for banks- your reputation and future success is more important than any single customer. Look up riggs bank and the Obiang family and then you'll see!|
|Possible. But realistically those kind of excuses are given no matter what really happened. For a company as big and powerful as GS I can only take it with a grain of salt. Are you content in the way GS does business from a moral point of view?||It's either a pinch of salt, or a grain of sand...|
|Thanks. I'm not a native english speaker and have not used it regularly for years, so it's gotten pretty shit. Any chance you answer the other questions?||Yes, apologies. I think some of our deals have been morally reprehensible in the past. The same goes for any major investment bank. But i think we've done a very good job in 'cleaning up our act' over the past few years and the public has played a large part in that. With any luck we will see a much healthier banking industry soon.|
|How accurate is what is said on the Twitter handle @GSElevator?||It's grossly exaggerated, but not entirely inaccurate...|
|You guys got trolled hard. A GS IBD guy not knowing how to upload something to the internet? Seriously wtf. Probably some guy from wso who wanted to feel like he was "in".||Link to i.imgur.com Just doing some work now! Link to i.imgur.com In case you wondered what Lloyd's signature looked like.|
|Is there anyway you can help me out, connections or anything, someone I should talk to to get a interview? Can you interview me, I shall forward you my resume!||Private message me and we will discuss. Sure i can help you out. I know how tough it is for you guys who are trying to get in!|
|Any thoughts on the MSI/SSG mini-scandal this week?||Yes but won't comment.|
|Very hush hush.|
|I also work for GS. Which building are you in? I'm based in PBC. Also IBD, North. Would do an AMA and provide proof.||I'm in PBC too, moved from RC quite a few years ago. I'm not sure exactly what sort of proof i'm supposed to provide...?|
|Would you say you were groomed for this kind of work from a young age? LSE is an elite school. Did you go to elite private schools growing up or were you an exceptional student at a normal school?||Yes, Jimmy groomed me from four years old|
|Do you like your job, or should i say career?||Yes. If i did not then i would go and sail around the world again.|
|From your experience, how relevant is CFA nowdays?||Definitely worth doing.|
|How large was your Xmas bonus and did it get taxed over 50%?||See below - total comp was c.600k and yes taxed above 50%|
|You said in other replies that you were 22 when you got this job and make 600K now. How old are you now, and how long did it take you to get the that salary level? Is it all commission?||Was analyst at 22 and then moved up the ranks. Just turned 30, feeling old now!.|
|Can you give some insight on the business model of Investment banking? (I have no clue to be honest) . And what does a portfolio manager do exactly?||Portfolio manager is not IBD. He/she would work in investment management e.g. for blackrock or GSAM or a hedge fund.|
|I'm currently writing a thesis on the future of rentierism in the gulf with an emphasis on Saudi Arabia. I don't have much of an economic background apart from this, but the international energy market is obviously important to my research. Can you recommend any good (preferably free or low cost) primers and newsletters on the subject?||Hmm there are many on energy market but not too sure about rentier specific ones. Will have a think. I did my university thesis on Saudi and so will have a dig around.|
|How do you live with yourself? Knowing that the company that you work for doesn't give a fuck about you or anybody. All they care about is money. They have ruined america many times over. Seriously, how do you live with yourself?||Actually our business is dependent on America and more importantly the rest of the world's prosperity. So actually our interests are nicely aligned.|
|Link to www.rollingstone.com. Seems to me like your bosses and former bosses don't give a flying fuck about anyone but themselves. Can you name one good thing Sachs has done since you have been there?||I think you meant 'don't give a flying fuck" in your comment.|
|Do you happen to work with quantitative analysts?||Depends which deal we are working on. Sometimes we need them, other times we don't.|
|What's your retirement savings invested in?||Property (international and uk), shares mainly through tax efficient ways e.g. isa and EIS, pensions and artwork.|
|No swiss bank account i am afraid.|
|"The first thing you'll realize is that they are extremely disciplined. You would never come across a Goldman employee, who would, after two or three beers, say "My colleagues are a bunch of dickheads" From Money and Power William D Cohan. What do you have to say about this?||I agree with it.|
|What advice would you give someone who is interested in going into finance and is currently in university. What would you have liked to do in your time spent at LSE now looking back?||Party more! You only live once. You can have that advice for free.|
|Thanks for the AMA. Do you know anybody I could speak with regarding interviewing and internship opportunities?||Private message me.|
|Doing an AMAA are you putting your job at risk for releasing company secrets/opinions whatever?||I've not released a single company secret.|
|Edit: added an A to AMA.||There's nothing in my contract to say I can't express my own opinions.|
|What do the hopes and dreams of Americans taste like?||Raspberry sorbet, in my opinion|
|What is your feeling on the separation of traditional banking and investment banking as is proposed by the FSA?||I think overall it's sensible - Barclays being the best example of why they should be separated.|
|At GS specifically of course we're not involved in traditional retail banking at all so it's not the most pressing issue for us at the moment.|
|You mentioned 80 hour work weeks. Could you explain the timeline for your typical work day. Do you work 7 days per week? Is your work more project based where you go non stop and have some time off between projects?||There's no typical working day - some days are 18 hours and others are 12. Depends entirely what stage of a deal we are at. Generally I work 5/6 days a week, but keep in email contact with the office 24/7.|
|Yes, entirely project based. But if we are doing our jobs properly there's not much 'time off' in between.|
|I'm currently on target for a 2:1 or a first at university in my economics degree. But due to a slight hiccup in my a-levels, in which i got A* A C, still managed to go to a top 10 university but do they look at the C, which was in maths.||Your university grades are definitely more important. If you do well in a mathematical module at uni that will allay any fears they have about an A-level grade.|
|Do they look at a-level grades and expect a minimum maths grade? I'm not bad at maths by any means, just an unfortunate anomaly in the exam season.||Which uni are you at and what do you study?|
|Manchester and economics BA - but i have econometric modules and another mathematical module for 2nd year.||Any chance of switching it to a BSc? Immediately reassures employers about your quantitative skills..|
|Hello there, first of all I want to thank you for doing this AMA. I am a dutch college student and currently I'm writing an essay about the BRIC countries. I used your book to write down predictions of their economic future, and I'd like to ask: did you participate in writing that book?||Are you referring to Jim O'Neill's book? I have a copy on my desk, but no I wasn't involved in writing it.|
|What do the guys at GS think about @gselevator?||See same q&a earlier on!|
|How often do interns get recommended to come back?||In a good year, approx. 50% of an intern class will get hired.|
|In a bad year (2008 for example) perhaps only 10% or 20%|
|Any opinion on Nautilus Minerals?||Can't comment on that company i am afraid.|
|How do you feel about manipulating the currency markets to screw over the average retail trader?||I don't know what you are talking about.|
|Have you ever seen American Psycho?||Yes.|
|I am going to copy and paste this in an email and send it around my team. You will famous at the firm, well at least in my team in london anyway! Yes of course i fucking do. The future is inevitable. Chuck Klosterman i like your name.||That would also be an awesome interview question! And i give them 5 secs to answer.|
|I highly doubt GS interns work for free. I've almost never heard of an internship in finance that didn't pay -- most firms I've encountered usually pay the same base wage as the first year full timer positions you are interning for.||Interns in front office at GS in london get circa £42k pro rata. So not bad for a summer job and remember no tax as they are below threshold across the year!|
|Gold Mansachs.||Not sure about that one.|
|I prefer Goldman Snachs, the name of our canteen.|
|Yes, Jimmy groomed me from four years old||But yes went to a private boarding school before. Widening the diversity of applicants in IB is a key target for HCM.|
|What is the future of investment banking in a new world order where both governments and the people are fed up with the excesses that led us into this credit crisis.||The industry is always evolving, that's what makes it an exciting industry to be in. I imagine it will take us a good few years to fully regain the trust of certain clients, but ultimately if this whole saga causes us to readdress our methods and practices to improve our service then in the long run it's a positive outcome.|
|PS. Do you not think people should be fed up with the governments too, as well as the banks?|
|Not OP but I can answer this as a 2012 intern who got converted for Programming. A Math degree is a good +. There are 2 ways. Either join in as a programmer, show your merit and change departments, ie move to Quant side. Other option is to get a MBA, and join the I-Banking dept you want.||What's your name?|
|Do you have any books or resources you'd recommend the layman for learning investment skills (i.e. the wealthy barber) I ask because i feel there is a lot of crap out there and would like to genuinely learn.||I have never heard of the wealthy barber.|
|I have $500, I'm also a web developer with all the skills required to do this. I still don't see how you can make money off them? Would the plan be to buy up 1 to start, customise it maybe give it a refresh, fiddle with the SEO then leave it for a month and try to see returns of the $500? Or would it be considerably less? Would the ROI be $500 over 3 months? Whats your usual ROI?||For the sites I sell on Flippa (quality, aged, established traffic/earnings) You can expect to buy the site for 30x monthly earnings.|
|How Do you buy a website that has already got an owner? Is there a website market? Do you approach them?||You can email them and offer to buy there website.|
|Thanks for the fast reply, so the ROI is fairly low... I don't see how you can make money this way without somehow getting 30x more traffic to offset the bad earnings. What's the usual strategy when you buy one of these things?||Tweak the ad placement/units, mess around with layouts, tweak SEO.|
|A 2.5 year return on investment isn't bad at all.|
|I am not sure why you got downvoted, but I think this will be interesting! If I were to get into something like this, how would I start? Thanks||If you have $500-$1000 to jump in with, I'd suggest buying some site so that you throw yourself into the deep end. Start looking through sites at Flippa.com. Since they are established websites for sale, they will be disclosing EVERYTHING. Earnings, traffic, how they get the traffic, etc. These are great examples to get you in the mindset of a web entrepreneur.|
|I've visited Flippa many times, most of the sites that claim to be making money with the classic "I'm focusing on other projects which is why I want to sell" seem like complete BS to me. Aren't the only people making money the guys selling the sites?||Not true at all. I actually sold off my inventory of 40+ sites because I'm literally too busy with other projects. The people who bought my websites are now enjoying the cash-flow that I used to have.|
|Also, there's pretty much no such thing as a "Set/Forget" website that makes you money. Everything needs some level of maintenance, and every site has the potential to stop making money overnight if google changes it's logarithm.|
|I'm not very familiar with all of this but it does look interesting. Can you break down what exactly it is you're doing? How are you earning money from this? So you buy up websites, place ads on the sites, and get money from the traffic? Am I getting this right?||Spot on!|
|I looked briefly at one of your links and you said that you work around 40-50 hours a week.||My hours fluctuate considerably. Some weeks are 10, some weeks are 50.|
|Is this something I could do on my spare time if I just wanted a little supplemental income? Can I just do 1-3 websites and monitor them occasionally? Is it a situation where unless you spend a lot of time and money on it, you won't see results?||I started my business part time while I was a full-time student with another part-time job. You can easily start up with 10 hours a week. Just depends on how big you want to go with it.|
|Will you be my dad? I'm probably the same age as you but I think we can make it work.||That depends. How hot is your mom? And do I get to have sex with her?|
|Another internet marketer here - congrats on your success bro. :) I never mess around with search or anything SEO related because I feel like it's too unreliable to rely on Google's (constantly changing) SEO algorithm. Just last month, thousands of people lost their entire income through that BMR debacle. Do you think you'll be able to keep up your income forever?||SEO can be unreliable if you are trying to cheat the system. I pretty much follow Google's golden rule of creating quality content for the user, and they have had my back so far with every update.|
|Can I have $200?||What are you going to do to earn it?|
|Do you have a background in graphic/web design? What niches did you find that pay the best and what the worst? How much traffic do you get a month? How do you market the site and generate traffic? SEO, social media, PPC, etc? Approximately how many hours do you put into the site a week and how long has the site been around? Do you need any additional help? If so would you be open to a possible partnership?||No, I actually studied Construction Management in college. - Best paying is like forex, mortgages, foreclosures, mesothilioma (sp?) etc. Worst are education, kids stuff, etc. But it doesn't matter what the niche is, you can still make money in any. And the higher-paying niches have MUCH more competition. - I get over a million visits a month. - SEO, Social Media, no PPC. The sites I buy, I do no marketing since they are already getting traffic. - My main site has been around 6 years. I probably put 10-30 hours a week into it. - Not interested in partnerships. I've got a few employees but don't need anymore.|
|I own loser.com ...there must be a way to monitize that. Any thoughts?||Probably sell it. I'm sure someone will pay a small fortune for it..|
|I make around $450-$500 a month off two sports forums.||Forums are better to get more user generated content. It's usually lower quality, but you get it for free. Forums are also typically harder to monetize because forum browsers know not to click on the adsense units.|
|Are forums or blogs better for adsense earning? Should I concentrate on bringing in more posters to the forum, or more readers to the blog?||Blogs can be tough because you have to do ALL the writing, however you can have higher quality content and probably more clicks since blog readers aren't quite as internet savvy as the interactive forum users.|
|Fuck dude, did I read that right? One hundred thousand pages of unique content? How much content constitutes a page, on average? Are we talking several hundred word articles? I can hardly think of any sites that approach that size, except social networking sites or forums. Did you create fmylife.com or something?||Reddit probably has several million pages of content. Many of the pages are forum threads. Not all the highest quality content.|
|If I were to buy a site from flippa, for example one of yours (to make things easy), what happens after I 'win' the bid? I get the domainname, the site, the hosting? Do I just need to replace your adsense-ID (and/or others) with mine, or do I have to place them manually?||Exactly. You can just replace the adsense ID with yours. You'll have to get your own hosting account, but that is relatively easy. I don't currently have any sites for sale though.|
|Be sure to look through Flippa for a while to get a feel for what is out there. There's a lot of junk, so it might take a while to find a diamond in the rough.|
|I'm kinda hesitant about buying one in the first place, I kinda read these horror stories about G banning these sites after the transfer was complete.||Just make sure you aren't buying some crappy site. Look for history of traffic/earnings.|
|How can you tell if they post legit traffic and earnings information? They could pad their stats a lot or a little, or the info could be legit -- but inflated because the owner buys traffic through Adwords, etc.||You can ask for access to their Google Analytics account. You can't fake that.|
|Is that what you usually do when buying a site? Can you describe your due diligence when purchasing? I researched site flipping, domaining, affiliate marketing etc etc ad nauseum a few years ago, but I didn't want to just throw my money away. There's a lot of devil in the details.||Also, use SEMRush.com, Quantcast.com, Compete.com, Alexa.com to verify that their site actually gets traffic.|
|Would you mind to give detailed practical tips to earn a 10th of what you earn? I understand the whole process might be complex, but I am sure there are certain tricks or considerations you could share. Finding a nice niche is the main thing as it appear... What cms do you use? -Where do you host your websites? vps, dedicated server? -Do you consider it "easy" to make a couple hundred a month? I am a computer science student, and I feel comfortable with administering servers, cms and programming. I've been thinking for a long time to start some useful website that could bring me some earnings, and I have a couple of ideas. But when I search for something like what I want to create, it seems everything is already invented, and I am late. One of my "brightest" idea, was to copy the concept of some rather simple foreign website which I liked and create the "spanish" version. What kind of website do you recommend? (forum, social website, a kind of wiki)||I prefer Wordpress for sites where I'm writing the content. - You can use any host. If you aren't a high traffic site, then anything will do. - It really depends how you spend your time. - Forums are easy to set up, and once you have a userbase established, they typically grow over time. You don't have to do all the content for forums as well.|
|People actually click the advertisements on websites? What the hell.....||Seriously! Just watch some internet newb surf the net. Literally ask them to google something, and stand behind them silently as they try to figure it out.|
|What's the advantage to doing this rather than say, buying domains that are typos of other major sites and putting a shit load of ads on them?||You aren't really creating any value in the internet by doing that.|
|My Adsense account has been disabled due to "false clicks" or however they put it. I never clicked on ads myself, and asked for proof, but they have never responded nor have they ever reinstated my account. Have you ever had this issue, and if so, how did you solve it?||Create a corporation, get an EIN and use that to sign up again. Or sign up as a friend/relative.|
|Where do you find outsourcers to write content for your lessor properties? Do you do any SEO at all to your sites or just hope for the best by having great content? Are you a BHW regular at all?||I find contractors through ODesk. Some are crap, but sometimes you do find a diamond in the rough. I also don't do much content creation at all.|
|I do basic SEO things, but other than that I hope for the best with great content.|
|Don't know what BHW is.|
|How do you feel about flash game portals? I've owned one for a few years, only spent 2 days making it, and haven't advertised it since. It's only making $5-10 a month, but I've been thinking about upgrading it lately and advertising again. Worth it? Tips?||Don't have much experience, but I know that flash games portals typically have low-quality traffic. Unless you are seeing huge traffic numbers, the traffic probably isn't worth a terrible amount.|
|Did you buy any cool "toys" with your earnings?||2000 BMW M5.|
|And the rest just sex toys.|
|I know the best way of getting into it is to jump head first, but what all is required for the maintenance? I'm sorry i'm totally ignorant to how this works but is it programming (more so what language i think it would be html?)? Or do you just alter the info of the website.||I've answered this several other places. I'll probably add an FAQ to the body of the post.|
|Do people ever buy specialty retail sites on Flippa? Or would they only be interested on autonomous ones (drop shipping, etc)? What is the value rate on such sites?||All types of sites are sold on flippa. No idea what the value rate is for those.|
|Can a brotha get a loan?||Try prosper.com or lendingclub.com if you are seriously interested in getting a hard money personal loan.|
|Did you just make this to piss off $500 a month guy?||Hahaha, yes, that is what inspired me to do this today. Although I'm not making it up.|
|How to best estimate what to pay for a website? I found some abandoned websites that I would like to buy, both without analytics and without adsense, but with great content. How to decide what to offer the current owner?||Use Alexa.com, SEMRush.com, compete.com, quantcast.com, etc. to estimate traffic then go from there.|
|So do you just sit at home and make a shit ton of money? please teach me?||It is my full time job. Read this thread - there's a lot of info I and others have been sharing.|
|What is adsense?||Google "Adsense"|
|I apologize if someone has asked this already, but how many unique visitors do you get a month on your main site?||Over a million.|
|I'm going to manage an affiliate program soon. Do you know of any good books with email templates? I'm looking for ideas for contacting potential affiliates. Any information on managing affiliates would be great. I'm in NV also.||I don't read any books. Too short of an attention span. When you contact potential affiliates, make sure that you are offering them value and have a customized email. I get emails for affiliate programs all the time and just ignore them because they are either recycled letters or don't fit my site at all.|
|NV rocks for business!|
|I've been interested in creating a site about something I am interested in. The only problem is that since I am interested in it, I've found many online resources that pretty much suffice. Is it worth making an online resource (for say, a hobby/sport) when there might already be some decent but not prevalent info out there?||Definitely, especially if you can do it better than the other sites. There are 10 google positions on the first page, so even if you have competition, you can still nudge your way in. Also, there are billions of search terms that people use to find different stuff...|
|Hopefully I didn't get here too late. I could put about $3000 towards a site. How much traffic do you think an average $3000 site would generate and how much would you expect to make monthly doing the things you've suggested in this thread?||If you bought a quality site for $3000, you could probably be looking at a starting cash flow of ~$100 a month. You could probably increase it, but there are too many variables so it really depends on what you buy.|
|What about if you made a domain that was the same as another other than the extension? Ie. "startknitting.com" exists but sucks balls and is out of date. Would "startknitting.org/net" still be a good idea?||You'd probably run into some legality issues there. I'd start with a different name and then try to blow them out of the water. Will take time though.|
|All right, I'll bite. I'm a graphic/web designer with far more coding experience than I'd like, and in that same vein I've ended up spending a good chunk of my time on SEO/staring at traffic graphics. How easy would it be for me to buy a site, flip it, and start earning money?||Given that you already have the skills, pretty good. My strategy was never to buy/flip. It was always to buy/hold, but eventually I decided to change that strategy to just holding onto one site.|
|Is there any particular industry I should be looking at for this venture? Or is it just "pick whichever site looks promising?" This wouldn't be something I'd want to focus on full-time, but I'm a freelance designer so I would be able to allot hours to work on it between projects as needed. What does typical maintenance work look like for you?||Pick something that looks promising, and also something that interests you at least somewhat.|
|What do you have to learn in order to start out doing this. Like, which books, websites should one read/study?||I just jumped in head first. Learned along the way.|
|I never read books. Just figure stuff out as you go along - Googling things works best.|
|Could you explain what affiliate links are?||For example, a link to a product on amazon with my Affiliate ID on it. If you click it, and then buy that product, I get a commission.|
|Could you please draw and post an image of how you have your google ads placed around / inside the content. Also, what link color schemes do you find works best?||Color schemes that match the site are best. I typically put my adsense units in the top left, above or in the middle of the content.|
|I have an established (10 years) useful user-generated content site that gets ok traffic (1500 uniques a day) but only generates 800-1000 a month between AdSense and TextLinkAds. I've had no luck whatsoever with Affiliate programs, very few clicks and no sales at all, with thousands of views. Any advice to increase my earnings?||Take a look at the FAQ. I don't give personalized advice. I've already answered questions like this all throughout the thread.|
|Are you, by chance, a local mom?||Hahaha, nope. I see those scammy biz opp ads all the time too. Freaking gives making money on the internet a bad name.|
|Can you give an estimated "$/pageview" on some of the sites you've had ? :)||All over the board. Sometimes a fraction of a cent, sometimes 10 cents.|
|Do you need to live in NV to have an S-Corp in NV?||You should be a resident or else it might look suspicious.|
|Wait, isn't it against the Adsense TOS to say how much you've made?||Already answered this a dozen times.|
|Do you actually make/work on/improve sites you own (other than your blog) to make money or just buy sites that are already making money?||Yes, I work on my own site.|
|Spare change?||Can you do a dance for me?|
|How do you actually make money though? Sorry i just wasn't sure by what you wrote on your blog/||Google "Adsense"|
|Are you a single mom that earns $5,000 a day from Google?||Stay at home mom.|
|So every once in a while someone comes along and says "hurr durr guys I make X thousand dollars / month off ads". "Invest Y thousand dollars and get 50% return within months!" How full of shit is this on a scale of bullshit to horseshit?||I don't see where I said anything about investing...|
|I didn't say you did.||I'm not sure I understand what you are asking then.|
|Other than buying a site, are there other significant costs involved in getting started right away?||Time!|
|How do you get a website to the top of the google results?||SEO.|
|Can I get my friend to write me a script or code for this?||Not sure if troll Or just extremely lazy.|
|Would I be able to sell my site, DominateDominion.com for anything? Getting tired of the game. It has a sponsorship from the creators of the game for weekly tournament prizes if that increases the value.||Check the FAQ. I don't offer personalized advice. You could try listing it on Flippa.|
|Alright, well are the sites that claim to value it accurate at all?||Hit or miss. Sometimes they get lucky and happen to be correct, but otherwise are pretty outlandish.|
|These are almost as bad as the "what you need, when you need it" spam sites. Thanks for polluting the Internet with your shitty web sites.||That is not at all what I do. I actually run a very helpful online community. My success is partly attributed to the fact that my site is extremely helpful for people.|
|You may be able to fool some people with that description, but it's a load of crap. These sites are, in your own words, "hands-off" and "auto-pilot". I'm willing to bet the content of most of those sites have changed very little, if at all, over the years.||How does that make it low content?|
|Have you ever thought of of shoring yourself and your employees to increase profit, there is some great talent out there in parts of the world where the average wage is significantly lower than the US.||I've used some overseas contractors with limited success. I do business primarily in the US, so going overseas would just complicate things in terms of taxes.|
|He got downvoted because he's a parasite. It is SEO at its basest, simply there to make ad revenue. Microsites provide nothing of value.||I don't have any microsites. Thanks though.|
|Um, you might want to watch out. It's against the TOS to post your adsense earnings, and with those exact figures it's fairly easy for them to trace it back to you.. Last thing you'd want is your adsense account blocked because of this :)||Do some more research. You can't post more details like the click-through rates, etc. It is perfectly fine to share your total earning dollar amounts.|
|As a 14 year old, AdSense is also my main source of income. I'm pretty sure they don't want us to disclose how much we make, but it's great that someone my age can make money on the internet. I get it through YouTube, personally, but it still pays with AdSense.||Nice man! Its great to see kids doing something productive! Don't let it get to your head though. Stay in school. Enjoy your young age.|
|I don't mean to be a party pooper, but 3 friends of mine were making $20-30k/mo on adsense per month, one day Google changed their rules and they are now ruined. Just be prepared, don't count on this success for life, and save money.||Thanks, but Adsense only accounts for about 20% of my income. I'm also not doing anything sketchy or against the rules, so I'm not too worried about it.|
|Looks good man. I was making $2k a month up until 2 months ago when my adsense got banned. Some guys who I had a bad business deal with decided to sit there for hours and click my ads over and over. This turned into google thinking that I was cheating the system and banning me :(||Sucks! Try signing up again under a different EIN.|
|How do you build sites with user generated content. Perhaps give us an example, real or made up. The tools you liked are good for proving and tweaking, but making something that generates its own content seems difficult, and key to the process.||Reddit.com....|
|I'm currently making ~$400 in a small niche where I have the #1 position. Any advice on scaling (general advice) in an attempt to get rich like a playyaaaaaaaaa.||Rank #1 for more keywords! Go broader.|
|Congrats srnc! I'm very pleased for you. I wish I was pulling in that kind of revenue. I have a site that does about $10 a day with a .23 click rate. If I could get that up to 5% I'd (theoretically) be doing $200 a day. But I've tried everything and it's just not an Adsense type of site I guess..||The only advice I have is to move your adsense unit around, try different sizes and different colors.|
|Man, I have tried everything, including compete site redesign. This is a site I developed myself, so changing look and feel isn't easy.... I just don't think it's an Adsense site....||Might not be. Try some CPA offers or affiliate promotions?|
|I think you broke Google's Terms of Service by telling us all this.||Nope. Look more closely. You can't share some of the finer details... clicks, impressions, CTR, CPM, etc.|
|In before the next dot-com bubble bursts.||Hurry! Why do you think I'm selling everything?|
|there was spam, now there is googleadsense, and a labyrinthine expanse of well-indexed garbage websites that clutter the google results. Using google now is like wading through a septic tank filled with liquid waste and floating shit so that parasites like 'srnc' can have their little payday.||Not at all true. My main site is an authority site because it has been providing quality content to visitors for years.|
|'Quality content' produced by others, for you to exploit and parasitize.||Someone is a little jealous!|
|Is reddit exploiting and parasitizing the content you create for them?|
|Sorry mate, you've already described your modus operandi in how you acquire these websites and set them up as cashcows/google clutter. There is no real contribution that you make, or any added value to be found in your net activities. You're basically the equivalent of a spam-sheister.||Again, jealousy/ignorance coming through. You have no idea what I do and are just upset that I make more than you do.|
|Money for nothin' and chicks for free.||False on both counts.|
|Nice try, google ad. = . =||I can't imagine that Google is trying to spam Reddit...|
|I make you zero money by blocking ads. Ask me how! Oh fuck you, just use adblock plus.||Thanks. Glad that not many people have that. However my affiliate links which make the bulk of my money are never blocked by your addon! Muhuhahahaha.|
|Commenting to come back later cause im stuck at work, and want to learn how to make 5 grand a month doing this shit.||Cool. Be sure to read through this thread. Already answered a LOT of questions.|
|Keep working at it. Join us at the 4-5 figure daily profit club. It's pretty damn nice. Think more affiliate related stuff for expansion.||Thanks man! I want to hit 1M/year soon.|
|Could you go into more detail concerning the SEO work. This seems like the most important and time consuming aspect of making a website get the traffic it needs.||I just do basic SEO stuff with my main site. Keywords in the title, fresh content linked to from the home page, etc.|
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