[QUESTION] For Those Of You Who Trade Index Futures...

[Tall Mike]

Hey ET Community,

Noobie here looking for some advice.

For those of you that day trade the indexes for a living, I wanted to pick your brain to hopefully generate some ideas for myself to start looking into and testing.

1. Why do you trade indexes over other asset classes?

2. How did you develop your strategy (strategies)?

3. Generally speaking, how would you define your edge?

4. What gives you the confidence to keep moving along when your trading isn't going well?

5. What are your thoughts on trying to learn from a prop firm as a beginner?

Thanks in advance!

 

[Sekiyo]

I don’t live off my trading but ...

1. Why do you trade indexes over other asset classes?

The level of transparency, liquidity and availability.

But it’s a tough market.
Competition, Efficiency (?)

2. How did you develop your strategy (strategies)?

By tinkering, reviewing and putting the hours.

3. Generally speaking, how would you define your edge?

Autocorrelations -> Momentum.
Volatility break out.
Order flow.
Level II.

Purely directional ...
No risk free setups yet.

4. What gives you the confidence to keep moving along when your trading isn't going well?

Not the confidence.
The urge to “Beat the market”.

5. What are your thoughts on trying to learn from a prop firm as a beginner?

If it’s a legit one with professionals.
But most likely it’s a scam and a waste.

...

These are great questions.

 

[formikatrading]

1. Why do you trade indexes over other asset classes?

Pretty much what Sekiyo said. And they also trade after hours so you have some additional flexibility there. I would rather take a smaller, leveraged position (with futures) than a bigger non-leveraged position -- just a preference thing. And there are tax advantages to trading futures vs. ETFs.

2. How did you develop your strategy (strategies)?

Again, just testing stuff out. I have a wide, varied knowledge of technical approaches but essentially trade with custom oscillator indicators.

3. Generally speaking, how would you define your edge?

Trading reversals and continuation patterns within defined time frames (daily, hourly, 15-minute) based on my technical indicators showing either changes in momentum or continuation of momentum.

4. What gives you the confidence to keep moving along when your trading isn't going well?

Great question!!! And this has taken me years and years. When I'm not trading well, it's me, not the market. I have a different view than a lot of people on this. When I lose money, it's me. It's not probabilities or chance -- it's me. I'm the problem. But I also have made it back enough times now to know that I can do it again. And I just started developing a strong trust in my strategy. Part of developing that trust was doing screen shots and marking them up of every time my strategy worked. And then I would send those screen shots to friends all the time. In a way, it's like "positive self-talk" -- just keeping reinforcing it.

AND, you have to track your trades / performance. There are many options out there. I use Trademetria and it was a gamechanger for me. I feel so much more accountable and focused as a result.

5. What are your thoughts on trying to learn from a prop firm as a beginner?

Never went this route. I'm sure it works for some and not for others. At the end of the day, this trading thing is a JOURNEY and each one of us has to find his/her own path.

Best wishes!

 

[Tall Mike]

If it’s a legit one with professionals.
But most likely it’s a scam and a waste.

What about the ones that are sponsors on this forum? I know that nobody is just going to hand you a strategy and you just start printing money, but I was looking to deveolpe some type of system around just trading the ES maybe only around the open and close since the bulk of trading is done then and the rest of the day is mostly quiet.

These are great questions.

Thank you, I tried not to waste a post on dumb questions like "I need a strategy that makes $100 per day, please help!" LOL

Not the confidence.
The urge to “Beat the market”.

I like that.

I don’t live off my trading but ...

If you don't mind me asking, what is the reason for this? Is it because this is very difficult to support yourself from a trading account?

Autocorrelations -> Momentum.
Volatility break out.
Order flow.
Level II.

If you are using order flow and level II, how would you "backtest" something like this? I would guess looking at historical data this way is totally different than a live market.

 

[Tall Mike]

1. Why do you trade indexes over other asset classes?

Pretty much what Sekiyo said. And they also trade after hours so you have some additional flexibility there. I would rather take a smaller, leveraged position (with futures) than a bigger non-leveraged position -- just a preference thing. And there are tax advantages to trading futures vs. ETFs.

2. How did you develop your strategy (strategies)?

Again, just testing stuff out. I have a wide, varied knowledge of technical approaches but essentially trade with custom oscillator indicators.

3. Generally speaking, how would you define your edge?

Trading reversals and continuation patterns within defined time frames (daily, hourly, 15-minute) based on my technical indicators showing either changes in momentum or continuation of momentum.

4. What gives you the confidence to keep moving along when your trading isn't going well?

Great question!!! And this has taken me years and years. When I'm not trading well, it's me, not the market. I have a different view than a lot of people on this. When I lose money, it's me. It's not probabilities or chance -- it's me. I'm the problem. But I also have made it back enough times now to know that I can do it again. And I just started developing a strong trust in my strategy. Part of developing that trust was doing screen shots and marking them up of every time my strategy worked. And then I would send those screen shots to friends all the time. In a way, it's like "positive self-talk" -- just keeping reinforcing it.

AND, you have to track your trades / performance. There are many options out there. I use Trademetria and it was a gamechanger for me. I feel so much more accountable and focused as a result.

5. What are your thoughts on trying to learn from a prop firm as a beginner?

Never went this route. I'm sure it works for some and not for others. At the end of the day, this trading thing is a JOURNEY and each one of us has to find his/her own path.

Best wishes!

Thanks for the reply, this is definitely very helpful.

As of now, I've done enough research on my own to develop the understanding that markets basically just trend and consolidate (regardless of the timeframe, market, etc.) but I am having trouble now applying this to the technical indicators and backtesting. My problem is that I keep jumping around looking at different timeframes (1m chart, 5m chart) trying to cherry-pick the data. What's ironic is that I know the timeframe isn't really that important but I feel like I am stuck here.

Also, trading for a living is something that I wanted to pursue since I was a senior in high school but I couldn't really pursue it due to financial limitations.

I was informed by my company that our team is going to be laid off next month and now the circumstances are a bit different in that now I have enough capital to trade, as well as having enough income built up for the next 6-12 months to support myself. Something inside my is telling me now is the time to try this again and give it a shot but I haven't actually traded (only have the textbook knowledge) but I still feel like I am setting myself up for failure because I know this path is long and hard. That's why I thought maybe a trading firm could be the route to go.

I would appreciate any thoughts you might have on this, kind of not the topic I asked in the post but figured id drop it anyways lol.

Thanks!

 

[BeautifulStranger]

Reply is inline below:

"Tall Mike, post: 5137160, member: 520279"]Hey ET Community,

Noobie here looking for some advice.

For those of you that day trade the indexes for a living, I wanted to pick your brain to hopefully generate some ideas for myself to start looking into and testing.
I don’t trade for a living, but my intraday trading is profitable.

1. Why do you trade indexes over other asset classes?
High average daily range versus bid/offer spread.

2. How did you develop your strategy (strategies)?
Signal processing methodology and back testing.

3. Generally speaking, how would you define your edge?
Stat arb; conditional probability.

4. What gives you the confidence to keep moving along when your trading isn't going well?
Backtesting statistics and ability to sit out of the market when I’m not trading well.

5. What are your thoughts on trying to learn from a prop firm as a beginner?
Don’t ever pay for a prop firm’s training. Period. Read books and trade micro contracts until profitable, disciplined, and confident.

Thanks in advance!
You are welcome in advance!

 

[formikatrading]

Tall Mike:

Sorry to hear about the upcoming layoff but it sounds like it's an opportunity for you to do something different.

Others may disagree, but I do think the time frame IS important. It's important in terms of whether your strategy works and whether the time frame fits your personality and how you want to trade. This may also impact whether a prop firm (or even which prop firm) is the way to go. I remember talking with someone at a prop firm several years ago and the way they traded didn't appeal to me at all. For others, it may be a good fit.

Feel free to send me a private message if you want to talk in more detail.

Thanks for the reply, this is definitely very helpful.

As of now, I've done enough research on my own to develop the understanding that markets basically just trend and consolidate (regardless of the timeframe, market, etc.) but I am having trouble now applying this to the technical indicators and backtesting. My problem is that I keep jumping around looking at different timeframes (1m chart, 5m chart) trying to cherry-pick the data. What's ironic is that I know the timeframe isn't really that important but I feel like I am stuck here.

Also, trading for a living is something that I wanted to pursue since I was a senior in high school but I couldn't really pursue it due to financial limitations.

I was informed by my company that our team is going to be laid off next month and now the circumstances are a bit different in that now I have enough capital to trade, as well as having enough income built up for the next 6-12 months to support myself. Something inside my is telling me now is the time to try this again and give it a shot but I haven't actually traded (only have the textbook knowledge) but I still feel like I am setting myself up for failure because I know this path is long and hard. That's why I thought maybe a trading firm could be the route to go.

I would appreciate any thoughts you might have on this, kind of not the topic I asked in the post but figured id drop it anyways lol.

Thanks!

 

[CannonTrading_Ilan]

Hey ET Community,

Noobie here looking for some advice.

For those of you that day trade the indexes for a living, I wanted to pick your brain to hopefully generate some ideas for myself to start looking into and testing.

Very few do this for a living. Very SMALL % of traders can actually make it to that point....

1. Why do you trade indexes over other asset classes?

Liquidity, volume

2. How did you develop your strategy (strategies)?

I have a few different strategies I like, counter trend, trend following, break out and one that is based on volatility.

3. Generally speaking, how would you define your edge?

I am a broker, not a trader however I observed many traders.

read this one: https://www.cannontrading.com/tools/survivor-day-trader

4. What gives you the confidence to keep moving along when your trading isn't going well?

Homework, backtesting, stepping down to micros

5. What are your thoughts on trying to learn from a prop firm as a beginner?

Do your homework, make sure they are legit and not just trying to charge you a monthly fee

Thanks in advance!

Feel free to reach out.

 

[murray t turtle]

Hey ET Community,

Noobie here looking for some advice.

For those of you that day trade the indexes for a living, I wanted to pick your brain to hopefully generate some ideas for myself to start looking into and testing.

1. Why do you trade indexes over other asset classes?

2. How did you develop your strategy (strategies)?

3. Generally speaking, how would you define your edge?

4. What gives you the confidence to keep moving along when your trading isn't going well?

5. What are your thoughts on trying to learn from a prop firm as a beginner?

Thanks in advance!

%%
Yes/been there;
but I do better with tech etfs/dividends etfs.
Not a fun as futs/ so it depends on what your goals are...……………………………………………………………………………………………. As for losing money for a week or month, that's ok with 20years /+ profit/business.Back to my etf trends/investments/trades/investments...…………………………………………..

 

[lc3]

Reply is inline below:

"Tall Mike, post: 5137160, member: 520279"]Hey ET Community,

Noobie here looking for some advice.

For those of you that day trade the indexes for a living, I wanted to pick your brain to hopefully generate some ideas for myself to start looking into and testing.
I don’t trade for a living, but my intraday trading is profitable.

1. Why do you trade indexes over other asset classes?
High average daily range versus bid/offer spread.

2. How did you develop your strategy (strategies)?
Signal processing methodology and back testing.

3. Generally speaking, how would you define your edge?
Stat arb; conditional probability.

4. What gives you the confidence to keep moving along when your trading isn't going well?
Backtesting statistics and ability to sit out of the market when I’m not trading well.

5. What are your thoughts on trying to learn from a prop firm as a beginner?
Don’t ever pay for a prop firm’s training. Period. Read books and trade micro contracts until profitable, disciplined, and confident.

Thanks in advance!
You are welcome in advance!

Hi BeautifulStranger,

Thank you for the insights!

Could you please kindly share some literature or books that would be a good start for beginners? I have a stat/computer science background.

When doing intraday backtesting what platform do you use? I implemented one by myself but I feel it would be better to use commercial platforms than reinventing the wheels.

Thank you!