Futures vs Equity Trading

Quote from limitupmike2:

stops are what keep this rusty wheel of a mrket greased... please keep using those stops.. losers use stops
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"Losers use stops" is a gross generalization subject to misinterpretation.

In reality, losers use a particular type of stop known as a "margin call".

If you place a stop at the point price invalidates your trade, it's highly unlikely you'll be a loser.
 
Quote from NJ1000:

Also if I made the switch I would be going to a small firm that is truly prop so I wouldnt be putting up any money I would undergo a training program for a few months before I went live then I would soley be trading the firm's money with no personal risk to me.. So if it didnt work out I can only switch back..
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Sounds like a pretty sweet deal. It sounds like they will expect you to follow their strategy or approach, which makes many of these comments a bit redundant. That said, I think Nodoji makes many good points in his comments.

I would say the best way to learn to trade the futures is to do extensive backtesting. That forces you to define a strategy and you can see the impact of stops, profit-taking, going with the trend, etc. Many people say backtesting is useless, but that is nonsense. If you can't make money on historical data, how can you expect to do so in RT? Personally, I wouldn't trade a system, but I would use backtesting to develop tradeable setups and to develop money management rules.

I know there will be plenty of disagreement, but I do not believe a non-automated trader in the ES should be taking more than three or four trades a day and plenty of days, not that many. I think ultra low margin will blow out most traders. I wouldn't want to trade more than one car for every $10k in account equity, but a newbie should use half that, maybe less. Blowing out is easier than you think. I know that the big money is made on multiday swings. I think you have to be careful about your average profit to commission ratio. It is very tempting to take a one point profit on the ES, but you are probably giving away 10% as commish. That's not a recipe for long term success.
 
NoDoji: "Because price would then reverse not long after that point, I had the thought that
likely kills more traders than any other: "If only I didn't have that stop and had added to the
position with size there..." " — 'rogue trading'

i've only traded one stock once back in 1979 based on listening to the ceo explain his
forthcoming meeting to sign a new client, made about 300% in a couple of weeks, so i've
never traded stocks, and got into futures at a time when i was unemployed and answered
an ad asking for sales people for a futures broker, tho i did once interview once with a stock
broker - rejected but an interesting interview

imo one could use the same methods - perhaps i should say i'd use the same methods i
use to trade futures/fx to trade stocks, tho i dare say there'd be more consideration given
to stock portfolio management, so i don't think trading technique needs to vary much except
if one's changing from 'b-a-h' to 'scalp/intraday' trading
what imo makes futures trading more reliable is there's far less fundamental risk, i mean
by that futures prices aren't affected by takeovers, illness/death of key person, Lehman
type scenarios, ponzis or other wrongful doings, etc, in other words completely unknown
unknowable factors dramatically affecting price, so there's less to be concerned about

i concentrate on the euro - eurusd/6E so it's primarily Price action and my trading method
is based solely on the TA methods i've developed over the years, equally applicable to ES
there are some fundamentals that 'cause' changes to futures prices, mostly news releases
over the short term but during the past few years, particularly as the result of hedge funds
i suspect, the amount of pure speculation has increased trading volume and impacted some
futures as seen in their record price rise, ethanol based Corn price rise, Crude Oil and Gold
for instance
during the rally since March many stocks have doubled even trebled their price but the profit
potential of doubling one's trading margin trading futures exists on a weekly basis, which is
something that can't be done week in week out trading individual stocks, and is what makes
futures trading so attractive to some - many

rather than Stops my trades are either correct or i take an abitrary loss, but isn't there a
thread about Reverse trading ? RTs ? did Jack have anything to say about RTs ?

AAAintheBeltway: "I would say the best way to learn to trade the futures is to do extensive
backtesting." i wouldn't disagree with backtesting as one of Several different methods to
learn to trade; NT demos from Amp, Mirus etc use realtime data and one can observe and
note one's bad trading behaviour rather than profitability using demos, but nothing prepares
the individual for their emotional/psychological reaction to Loss like real money trading
to some extent one has i believe got to go through a period/amount of desensitization that
might be similar to a fear of spiders desensitization, trading isn't only about profit, money
management, amount of trading margin, it's also very much about Loss
 
Quote from FutsTrader111:

Suggestions:

1) Avoid overleveraging. If you fail to follow this rule and position size beyond your mental capacity, you will have your head handed to you very quickly.

2) Know exactly how much you will devote to the account. Make sure it is money you can afford to lose. Take 20% of it and blow it all to get it out of your system. You will make mistakes. You will be frustrated. The instrument itself moves seemingly in random fashion. There are points in the stream that you can pull profits from. But realize, when you are starting out, you are either going to be lucky in not knowing what you are doing, or more likely to lose your stake. The latter is very common so be aware of it. It will be your price of education.

3) Add the other 80% in only after you have proven to yourself you can consistently pull money out the instrument. This may take at least a year for you to "get it". If you can remain flat or eek out a profit on the second year, you are progressing in the right direction.

4) Continuously look for edges to exploit. Focus on price action and what it is telling you. They are there but you have to put in a lot of screen time to see it. Do not think that you can walk up to your computer and use it as a virtual slot machine. You MUST treat this as a business if you are going to survive. If you are going to dabble, my strong suggestion is you are in it for the wrong reason.

5) Learn to play both sides of the instrument. Never have a strong bias heading into the trade.

6) If you find yourself trying to predict, you are lost. You must know and have done your homework.

7) Know everyday when economic reports are coming out (usually in the morning). Never be in a position before the release. They can be volatile. A 10 point ES move in 15 minutes can sting if you are leaning the wrong way.

8) Avoid overtrading and becoming addicted. Decide on the hours you will trade. Its a 24 hour instrument making it that much more easy to gamble. Keeping positions open has its risks. Trading in the overnight session is not recommended. Too little movement and more susceptive to get your stops hit. Avoid it.

9) Get proper sleep, eat right, and excercise. You will have to battle with your best everyday.

10) Know how to determine and measure volatility. This is very important for obvious reasons.

11) Sit down and write a set of trading rules. Be true to yourself and stick to them religiously. I can't emphasize this enough. In trading futures, there is little margin for error.
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This is Great Advice. We work with traders on either side and some that play both asset classes. In that light, I can agree that traders who manage their risk, and know there limits, are consistently more successful. Happy trading and I wish you all health and wealth in the new year! :D
 
Last post of 2009 :)

I have a few limited words about backtesting. First, i never did any because i started to trade before computers.

Second, backtesting itself seems to be a flawed way to "ASSUME" you can make money in a game of chance. The exercise itself proves you are not learning how to lose money. We all know what to do in order to make money in trading. What needs to be learned is how NOT to lose money.

Third, backtesting will assume you got that fill at the beginning of the big trend move. In reality, the mkt probably gapped past your assumed fill price and left you sitting alone at the train station. We all have seen reports come out in ES and BOOM, the mkt is 5 or more handles away from you before you can blink. OUCH!!!!

Backtesting assumes you got out on the losers with rock solid discipline...........fat chance on that one. But will agree, backtesting can help some traders in the beginning if they were realistic about results, admitingly that is a stretch because the backtester is looking for something that yet is far, far away from their reach in real life. Curve fitting is best left alone to admiring shapley women.


Happy New year and best of trading in 2010 to all. :D

PS: leverage and anology with speed of a car is a stupid statement. There is NO leverage in a trade at all as price is from 1021.00 to 1025.00. That is either a profit or a loss. :D :cool:
 
Quote from TraderZones:

Nodoji is years away from providing you any helpful input.

Seriously.
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I not sure i'd agree with that. In fact the more I think about it, i don't agree.
 
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