Swing Trading the E-Minis

Originally posted by OldTrader


The idea that 2-3 points daily
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By the way, when I say "points", what I'm referring to is "per contract". My belief is that you should start with one, not multiple contracts until your learning curve goes up.

I'd look at your account monthly....at least that's what I do. As the month progresses and assuming you're profitable, increasing your number of contracts can make sense...since it's on "their" money.

If you're not making money stay with the minimum number....you're doing something wrong.

OldTrader
 
Originally posted by OldTrader


The idea that 2-3 points daily makes you legendary is something I've read here....but I don't happen to agree with it. I think that bar is awfully low.

Another standard is Linda Raschke (sp?). I read an interview in which she stated that her goal was to make the range every day. So if the range is 20 points then that's what she wants to make. Keep in mind as you stated already that the distance travelled throughout the day far exceeds the range.

I think where the guys come from that state that 2-3 points make you "legendary" is this: In the course of a month that means you made lets say $2K. If you had $10K in your account, this is a 20% return, which is clearly a superior return on a monthly basis.

But keep in mind that most people trading futures use leverage. Even $10K is leverage....it's only about 20% +/- of the total value of the contract....therefore the returns aren't comparable to those that you're used to seeing.

Personally I believe that if you're going to stare at a monitor all day long then you should be earning enough to compensate you....just like a lawyer, doctor ect. On top of that, you take large risks, and employ leverage. I believe you should be aiming for numbers like Linda Raschke to compensate for the time, effort and risk.

Now understand that this woman is talented and experienced. Whether you can duplicate her efforts right now is doubtful. But if you're looking at what kind of bar to set for yourself, why not set her bar? If you don't make it perhaps you'll still be over the 2-3 points.

And understand this: there is nothing about this business that's easy. Certainly it is not so easy that you can put up a 30 minute chart with a moving average on it and trade your way to wealth. I'm quite doubtful about this. Trading takes brains and boldness....there is no holy grail. And markets change over time.

I think it's worth noting that Linda as far as I know does not have a "system"....she uses strategies, she's technically oriented...but a mechanical system? I don't think so.

I suspect others will disagree with my comments.....

OldTrader
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The only thing "easy" about this is losing money :D
 
Originally posted by J_Commisso
OldTrader,

Out of curiousity; What kind of avg daily point gain does Linda put up???

PEACE and good trading,
Commisso
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Can't really tell you. I thought that perhaps that I had read that in her interview with Jack Schwager in New Market Wizards. But when I took a quick look I couldn't find it. Maybe I read it elsewhere. In here interview with Schwager though she says her average gain is $450, average loss $200. That's probably on the bigger contract since the books was published in 1992. It may be too that her numbers have changed since them since the market has changed since then. She claims to be right 70% of the time.

Keep in mind that I don't audit her or even know her.....so whether any of her claims are true I couldn't say. I read a transript of her chatroom once though and a comment was made by someone else that he had never seen her have a losing day. You can attend her chatroom session on a trial basis I here...that would probably tell you alot more.

OldTrader
 
I trialed her chatroom a few months ago. Just didn't seem to do a whole lot of trading in the S&P's. Maybe one or two scalp trades a day back when there was a whole lot more volatility. She must be good though since she had quite a few people in her room.

Has anyone else had any experience with her room? I think it is $300 a month.
 
Originally posted by dozu888
bull crap!

if you system can average 15% of the daily range, it's already VERY good.
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Are you saying that 2-3 points is as good as it gets? Or just that 2-3 points is good for a "system"?

OldTrader
 
Originally posted by J_Commisso


I know this was not directed toward me, but since you started the thread I take it you are seeking advice so I will chime in;

Things are seldom so black and white in this game. Fact is both statements can be true...

To talk of 2-3pts a day w/out the otherside of the coin -----> RISK, is meaningless at best...

Risk and reward are almost always proportionate and you need both #'s to size your positions and determin the worthiness of a strategy...

A system producing 2pts a day with a historical max DD of only 30pts will be MUCH more profitable over the long run than one yeilding 5.5 pts with a historical max DD of 130pts (depending of course that you are trying to maintain an overall account % DD in the same range with both)...

Position Sizing / Risk Management is one of the biggest keys to this game, but sadly most traders minds are stuck on the upside potential only :( They simply neglect to see the "big picture"...

PEACE and goodtrading,
Commisso
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Thanks Old Trader and Commisso for your very constructive help. FWIW, the swing system I discussed has been traded and backtested over the past 5+ years. It has produced 500+ points each year with a max DD over that time of 90 points.
 
Originally posted by OldTrader


The idea that 2-3 points daily makes you legendary is something I've read here....but I don't happen to agree with it. I think that bar is awfully low.

Another standard is Linda Raschke (sp?). I read an interview in which she stated that her goal was to make the range every day. So if the range is 20 points then that's what she wants to make. Keep in mind as you stated already that the distance travelled throughout the day far exceeds the range.

I think where the guys come from that state that 2-3 points make you "legendary" is this: In the course of a month that means you made lets say $2K. If you had $10K in your account, this is a 20% return, which is clearly a superior return on a monthly basis.

But keep in mind that most people trading futures use leverage. Even $10K is leverage....it's only about 20% +/- of the total value of the contract....therefore the returns aren't comparable to those that you're used to seeing.

Personally I believe that if you're going to stare at a monitor all day long then you should be earning enough to compensate you....just like a lawyer, doctor ect. On top of that, you take large risks, and employ leverage. I believe you should be aiming for numbers like Linda Raschke to compensate for the time, effort and risk.

Now understand that this woman is talented and experienced. Whether you can duplicate her efforts right now is doubtful. But if you're looking at what kind of bar to set for yourself, why not set her bar? If you don't make it perhaps you'll still be over the 2-3 points.

And understand this: there is nothing about this business that's easy. Certainly it is not so easy that you can put up a 30 minute chart with a moving average on it and trade your way to wealth. I'm quite doubtful about this. Trading takes brains and boldness....there is no holy grail. And markets change over time.

I think it's worth noting that Linda as far as I know does not have a "system"....she uses strategies, she's technically oriented...but a mechanical system? I don't think so.

I suspect others will disagree with my comments.....

OldTrader
More...

Linda Raschke's dog trades better than I do. At least he hasn't lost any money in the markets!
 
right, very much confusion here. Daytraders rule of thumb is usually about 5k in account per contract. So 1 or 2 points a day turns that 5 k into 1/5 mil about every year.

Swing traders are more like 20 to 25k per contract, so they would need about 4 pts a day to meet the same goal.

I blew up an S&P account trading a ma crossover. It blew up in Aug of 87. Another couple of months and it would have hit the 50 pt down day in Oct.

MA systems always make money over time, it's just you never know how much you need in trading capital before they make money. And when it comes to outlasting a trader, those systems can be very tenacious.

But almost all trend systems that I know of are some variation of a crossover.
 
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