Let's talk about futures

[Laissez Faire]

@Handle123,

Seeing how you're obviously doing huge volume in the ES. In your experience, how many lots is it possible to execute as a day trader without running into trouble so to speak? Obviously, liquidity isn't constant, either with regards to time or price levels, but generally speaking.

I've heard it said earlier that the ES can swallow 50 lots like it's nothing most of the time. Is that true? How about 100? I've only done a maximum of 10 lots myself at this point and never had any trouble getting filled, either with limit orders or stop orders (usually getting a very good fill).

 

[Q3D]

1. Do most ES traders only trade index futures? Any other commodities/contracts?

I trade ES exclusively. Mastering one single market is the way to go, IMO.

2. Are you trading the same instrument(s) everyday? (I don't see this being viable, but just curious)

Yes. See above.

3. Can I do well trading 1-2 times per day? (I hate scalping)

Of course. You can buy the day low and sell the day high or vice versa. That's one trade per day. Will you be able to do that consistently? That's a different question.

I used to think Paul Tudor Jones had mastered S&Ps and currencies over 30 years ago, news of his recent large losses came as quite a surprise due to his master-status. Specializing or focusing on one market is possible, mastering a market is impossible.

Markets are constantly evolving and in a state of flux and traders are in a constant state of entropy. A wise and a master trader once said "No trader ever steps in the same market twice, for it's not the same market and they are not the same trader."

 

[Laissez Faire]

I don't really care what you think or used to think, but feel free to spread yourself thin over many markets and learn nothing. If markets are constantly evolving and in a state of flux, it certainly only adds to the rationale behind focusing on one single market and learning that market and how it shifts very well.

 

[Q3D]

I don't really care what you think or used to think, but feel free to spread yourself thin over many markets and learn nothing. If markets are constantly evolving and in a state of flux, it certainly only adds to the rationale behind focusing on one single market and learning that market and how it shifts very well.

I agree focusing and specializing on markets is very important, mastering them is impossible and is a term usually used by trading marketers out to deceive their trading victims. Ignore Paul Tudor Jones failures and others at your own peril. History suggests that when a trader thinks they have mastered a market they are statistically due for a prolonged or fast and large drawdown.

 

[Laissez Faire]

I don't know anything about Paul Tudor Jones. What was his loss relative to all his prior wins?

History suggests that when a trader thinks they have mastered a market they are statistically due for a prolonged or fast and large drawdown.

What's your data source for this claim?

Regardless, I find it to be true for myself when I was a discretionary trader. 'Thinking' you've mastered a market due to a short term winning streak is different than 'knowing' based on long and hard studies of the market.

 

[Q3D]

I don't know anything about Paul Tudor Jones. What was his loss relative to all his prior wins?



What's your data source for this claim?

Regardless, I find it to be true for myself when I was a discretionary trader. 'Thinking' you've mastered a market due to a short term winning streak is different than 'knowing' based on long and hard studies of the market.

My data source is wisdom from various sources such as Reminiscences of a Stock Operator and personal experience, not some database of trader's P&Ls.

Long and hard studies of the market are only remotely correlated with future price behavior, less so now than ever before with technology's exponential increase in efficiency. I don't think you'd see so many veteran traders become trading marketers if those years of practice and focus produced market mastery, i.e. a mastered market turned into an ATM cash cow, which is the dream sold by trading marketers to their victims.

 

[wrbtrader]

1. Do most ES traders only trade index futures? Any other commodities/contracts?

I trade ES exclusively. Mastering one single market is the way to go, IMO.

2. Are you trading the same instrument(s) everyday? (I don't see this being viable, but just curious)

Yes. See above.

3. Can I do well trading 1-2 times per day? (I hate scalping)

Of course. You can buy the day low and sell the day high or vice versa. That's one trade per day. Will you be able to do that consistently? That's a different question.

The word mastering is just semantics. Not worth debating about.

Thus, the only thing that matters is if the trader is consistently profitable and then how the trader responds when a drawdown appears. I've seen several futures traders in different trading instruments be consistently profitable for many consecutive months (usually less than a year) and then completely unravel in their first drawdown and they never recover...

Its like they went into shock or something and then fell apart.

Also, its not possible to consistently buy the low and sell the high or vice versa. Thus, if such a question was asked...the answer is NO. It cannot be consistently performed. Also, the thread starter was talking about "himself". Unless you specifically know this guy and have consistently watch him trade in person...its impossible to know if he "can do well" trading 1 - 2 times per day considering its a fact that most traders are losing.

In addition, traders that are profitable in trading different markets...they don't spread themselves over "many" markets. Instead, they just trade "several" different markets. Some prefer to trade "several" markets that are correlated while others prefer to trade "several" markets that are not correlated.

It really depends on the type of strategies they're using and their experience levels.

Diversification is key to long term survival as a trader. To some, that may be trading and investing in the markets. To others, it may mean trading in financial markets but investing in something else like real estate. Usually, a trader that has long term success...they get into other things to ensure there's consistent income if one thing fails...something else is doing well.

This is not an exclusive issue involving trading. Its an issue involving the markets as a whole. Successful people tend to eventually diversify and they hire financial planners to help them do such so that they do not put all their eggs in one basket.

That's why people like Tudor have other sources of income involving the markets and sources of income outside the market. The guy is a hedge fund manager and has some very smart people (some of the best) working for him although recently there's a problem at his firm and some key employees heading out the door on their own and investors have recently withdraw from his fund more than 1 billion dollars.

Not sure why he's part of this discussion.

 

[Laissez Faire]

My data source is wisdom from various sources such as Reminiscences of a Stock Operator and personal experience, not some database of trader's P&Ls.

Long and hard studies of the market are only remotely correlated with future price behavior, less so now than ever before with technology's exponential increase in efficiency. I don't think you'd see so many veteran traders become trading marketers if those years of practice and focus produced market mastery, i.e. a mastered market turned into an ATM cash cow, which is the dream sold by trading marketers to their victims.

You're only rationalizing your own and others failures to make yourself feel better. Success and in particular long term success (as opposed to a lucky trade or a winning streak) has always been for the few in this business.

The ES have been excellent so far this year. Wide daily ranges with multiple swings each day. Some days more than others, but still overall great opportunities for a day trader. Yesterday was a much more narrow range than recent days, but it was in fact expected. And the day still had nice swings to exploit. In fact, I called out the latter half of the day in the ES journal.

Broadly speaking, the market isn't likely to do anything else in the future that it hasn't done already, since price patterns repeat themselves and thus can be exploited if you learn to do so. What you have every day is the Open, the High, the Low and the Close with swings and price movement in between. Volatility expands and volatility contracts. There are cycles of price action. This is a fact and not up for discussion. What you do with this information is entirely up to you of course.

I just don't see the relevance of this advance in technology you're speaking of and I don't see that the markets are any less tradeable or predictable than they have been in some distant past.

 

[Laissez Faire]

Also, its not possible to consistently buy the low and sell the high or vice versa. Thus, if such a question was asked...the answer is NO. It cannot be consistently performed. Also, the thread starter was talking about "himself". Unless you specifically know this guy and have consistently watch him trade in person...its impossible to know if he "can do well" trading 1 - 2 times per day considering its a fact that most traders are losing.

Maybe not. My point was that it's very well possible, technically speaking, to be succeeding with a low frequency strategy trading the ES.

Regarding trading several markets, I'm only speaking from my own perspective as a day trader and I feel that I have more than enough on my plate by mastering and focusing on one market. Seeing how this particular market (ES) is offering ample opportunities on a daily basis, I don't see why I would diversify at this point in my career, UNLESS, I was exploiting a specific type of strategy or price behavior, which I'm not.

But of course, I'm very well aware that there are traders who trade several markets. Maybe I'll do so myself one day.

 

[wrbtrader]

Laissez Faire...

Maybe I made a mistake but I thought recently you stated you'll soon begin trading again. Now your saying "technically speaking" its possible.

No retail trader has been able to do such and no financial institution has been able to do such...buy the low and sell the high on a consistent basis. It has never happen in the history of the markets.

Is it possible to do it sometimes...yes.

Anybody that did such "consistently" will become a millionaire via a small account in a very small time frame and then they will fall under the scrutiny of the SEC because the SEC knows that statistically such is not possible. Simply, the SEC deals with reality and not what's technically possible.

The same is true for any financial institution doing such. Buying the low and selling the high on a consistent basis will catch the eye of the SEC because "statistically"...its not possible unless you're doing something illegal.

To keep this in perspective. If a trader comes along and is able to consistently buy the low and sell the high of any market...that trader will soon surpass Bill Gates as the wealthiest man alive on this planet. Seriously, you used the phrase "technically possible". Get out your calculator and do the math to determine your income level after doing such in the Emini ES futures for a mere 5 years while knowing statistically most consistently profitable traders will be increasing their position size every few months of consistent profits.

The first year along of doing such...they'll be wire taping your home, investigating your bank accounts and so many other things. Then if they couldn't find anything illegal that you're doing...they'll fabricate something and still arrest you...freeze your accounts...drag you through the court system and then say they made a mistake.

So yeah, technically its possible.