Let's talk about futures

[Laissez Faire]

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.

Haha. Your post made me laugh.

Paraphrasing Jesse Livermore, I think he had a quote to the effect of how successful trading is about buying low and selling high and how you'll spend the next 10 years of your life figuring out how to do just that. There's a lot of truth in that quote, I think.

But I think you misunderstood what I meant. I was just stating that a low frequency strategy where you're trading or rather attempting to trade one major swing per day, whether that's the move from the day low to high or some other major leg is a viable approach as opposed to scalping for ticks. Frankly, the OP needs to start doing his own studies if he has any interest in this.

Regarding what type of success that's possible or not - I'll say that I personally do not know and I'm still figuring out the bits and pieces myself. My approach is based on prediction. What I don't know for sure yet is to what detail and with what type of probability it's possible to predict. For instance, the structure of the last 2 or 3 days is more unique than most others, possibly making it easier to predict.

The richest man in Norway as per today actually made his fortune through the markets (trading mostly electricity, I think) and he made it in quite a short time period as well. In fact, he also went in HUGE and bought the low through a wide basket of stocks after the financial crisis and made a substantial return there as well. Not sure if he's been investigated or not.

There are certainly both individuals and institutions that's made a shit load of money through market operations, so I have no doubt that it's possible.

 

[wrbtrader]

...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.

The issue raised was very specific and simple.

Veteran profitable traders that's been at it as such usually trade more than one market and they eventually become more diversified to ensure their financial security...usually with the help of a financial planner. Thus, you're not required to diversify into other markets at this point in your career nor is such recommended for you.

At this point in your career...it makes sense to concentrate only on one market.

 

[wrbtrader]

...The richest man in Norway as per today actually made his fortune through the markets (trading mostly electricity, I think) and he made it in quite a short time period as well. In fact, he also went in HUGE and bought the low through a wide basket of stocks after the financial crisis and made a substantial return there as well. Not sure if he's been investigated or not.

There are certainly both individuals and institutions that's made a shit load of money through market operations, so I have no doubt that it's possible.

This is a different discussion and I do completely agree with you on this.

Yes, there are many individuals and financial firms that make a ton of money in a very short term...hours, days, weeks or months. Just not via buying the low and selling the high on a consistent basis.

Simply, if you're no longer talking about buying the low and selling the high consistently...technically. No debates about it.

 

[Laissez Faire]

I'll add some information about the guy I quoted as the richest man in Norway. In fact, he may not be the richest man in Norway measured by fortune (although he's pretty high up for sure), but he's been on the top of the income list for the last years.

He used to work for a firm as a power trader, but as the firm shut down, he went out on his own, allegedly with a starting capital of roughly $30.000.

From 2006 through present time he's had a total net income of 255 700 000 USD and his income has been consistent for the last years. He's an extremely private individual, but from what I gather, most of it is income from speculation in futures.

So, it seems like massive success is indeed possible, but as always, it's probably for the few.

 

[wartrace]

I'll admit I am a rookie and still learning a lot but I have a few questions...

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

What is ES ?


2. I trade the 6E (euro future) exclusively. The way I look at it is all markets have their own nuances; I am more comfortable with one. I trade order flow and believe me it is very different trading a very thin market such as CL vs very thick such as the bonds.

What is 6E and CL ? Is that a Euro bond ? I did a brief check online and wasn't sure. I have no idea what CL is.

Thanks.

6E is the Euro/Dollar futures.
CL is crude oil.
First stop for you should be http://www.cmegroup.com/ . Look at the product spec's under the "Trading" tab. They also have some good educational content you might enjoy.

 

[wrbtrader]

I'll add some information about the guy I quoted as the richest man in Norway. In fact, he may not be the richest man in Norway measured by fortune (although he's pretty high up for sure), but he's been on the top of the income list for the last years.

He used to work for a firm as a power trader, but as the firm shut down, he went out on his own, allegedly with a starting capital of roughly $30.000.

From 2006 through present time he's had a total net income of 255 700 000 USD and his income has been consistent for the last years. He's an extremely private individual, but from what I gather, most of it is income from speculation in futures.

So, it seems like massive success is indeed possible, but as always, it's probably for the few.

Laissez Faire,

These types of traders...private traders...they are well documented. I think its because of their former background as a professional trader of a financial firm. Thus, when they quit their jobs and trade on their own as a private trader, they are still connected to the network.

There are famous hedge fund managers out of Europe and Asia that decided to go out on their own for whatever reasons. They are highly successful and making millions per year as private traders.

Yet, don't be mistaken...they are not the lone wolf types including Einar Aas out of Norway although you'll read articles that say they trade their own money. They are very professional and business like. Their trading is like a business, they have employees and so on like a small business with several employees. In addition, because they're still connected to that professional network...they can easily and quickly raise 100s of millions of dollars from investors and go back into the fund business. Actually, some do after getting bored as a private trader for whatever reason.

I prefer to use the phrase about those types of traders as "private traders" because Ithey are on a completely different level than the typical retail trader. The typical retail trader does not treat their trading like a business whereas the typical private trader does treat their trading like a business.

I think because of that difference, its the reason why its tough to find decent statistics about the typical retail trader whereas there are accurate statistics about the typical private trader.

This is why I often make it clear if I'm talking about private traders or retail traders. Its like comparing apples to oranges because the resources being used, available to each along with the experience level is completely different.

 

[Handle123]

100 percent automation....Do you mean that the program makes trades based on certain parameters you have given it? To be traded independently without intervention?

Are you afraid that the program might get 'stuck' at a critical moment or make trades outside of the boundaries you set going caddywonkers? Or does it just search for potential trades and alert you to them ? Is this a program you purchased and modified or did you create it from scratch yourself (with the assistance of programmers) ?


Thanks

I have a staff I hired five years ago of basically laid off scientists, taught them to day trade my systems and trade my 401k on 2-3 shifts and take turns on first program charting, separate back testing and optimizing program and finally platform that is very programmable. Amazing the stuff they have come up to doing for me. So I have developed some 35 different systems through the years and they are now programming them so nothing on humans part has to do anything, It is a long process as my requirements to be tracked before real funds are used most likely longer than others then I have it do one lot for a year before I let program start trading much heavier. But it not like set it and forget it, staff monitors the 13 programs 20 hours a day that they have done so far, my Longer term Commodities, Spread trading and Options programs are monitored by 3 gals at different office and they also do all my accounting. And I am continually am developing ideas for more systems, but no longer in day trading, but longer term Commodities and my new love-Options on stocks, futures and ETFs

I am not afraid of anything, your program is only as good as those who made it, programs have been incredible as some are very complex, my programs were designed in units, like the money management unit took 1.5 years to program and on my laptop ends up being a little icon in which I can drag in/out of any program as to depending whether I want it in back testing or I can turn off parts of it. There are a couple in part development where they are alerting the trader of something and only cause it not completed. Each program does have it's own Desktop, it's own 28 inch monitor on wall which flashes and makes a different beep when there are enter/exit, the border has a color showing whether if has exiting trade or searching. As soon as I go to the room or pull up on my laptop I can see immediately which programs are in trades. Eventually I want all walls covered with monitors and very little manual trading, not cause they don't do well manually trading because they do well, but humans miss trades, they do have to go to restrooms or eat, get ill and take vacations, machine don't.

All I know, I don't have the ability to have done what they have done so far, but it works very good and when a program malfunctions, they are phone call away. Had a few problems in beginning but it is easier to talk to a programmer when he also trades many more hours now than I do. So I have them for next ten years as we did new contract, all is happy.

 

[Handle123]

@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).

Well, depends, 3.25 hour lunch time, price sometimes sideways and a 50 if near end of volume for that level could get you two price levels. I am sneaky and I have trading platform that is sneakier, but basically it adds amount of volume that has passed through for so much time and adds volume on the asks/bids available before it allow me to hit bids/ask so they are limit orders but you never see them on the Dome as orders are never left in the Dome. So let's say there is 500 on a price level and I am doing 450 lots, platform won't let me get filled even though there is more than enough for that price level as platform sees something that I can't, and all based on risk, either platform thinks not enough for me to exit without slippage, so it knows I want to do 450 and it will keep trying to work my amount given the parameters it has and automatically is trying to do the same of averaging down add-ons. Once I am in, platform takes over the trade for monitoring rest of the trade. Since I am doing up to 40 trades in 60 minutes, I keep very busy talking to myself and quickly checking couple other markets on higher timeframes, whether 2, 3, 5 timeframes.

But first hour, much of it do 100 easy. Try not doing stop orders, always seems on most 3rd party platforms there is a freeze when price hits stops and sent to globex, just watch the Dome and often times you watch long enough, you can see you can get in 1-2 ticks better and sometimes even price retraces so much, you don't take sure loser, I ave 1.5 trades of this each week.

 

[Handle123]

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.

I agree with everything you mention. I got into real estate before trading, buying at least one rental house since age 18, now 41 years later, I have many owned outright, have expanded into more commercial housing apartments and assisted living complexes, nothing better than having others pay for it. And why I see stock/ETF options to be so incredible, time decay letting others pay for it and I am sitting back staring at the clouds. After awhile you start small businesses and again you looking for consistency so you can expand into other neighborhoods, consistency.

But it is all part of diversification, and same with day trading more than one instrument, they will all become like the T-Bills and Pork Bellies have become, delisted. Ok, you trade one minute bars, watch something else at higher timeframe with less rules for money management. Watch 6E or Gold, small risk with potential of sizeable gains. But you will learn that once you get good trading ES, it does not transfer over quickly to any other market as ES chops a great deal more. More volume means let's screw retail much more and why there is so much more chop and I love it.

 

[DallasCowboysFan]

ES, 6E and CL are the ticker symbols of respectively the e-mini S&P 500, EUR/USD futures and Crude Oil futures. All traded at CME.

Thanks, every time I learn sometime new and get it under my belt, something new comes around I don't know anything about.