Toughest trade in the world: S & P 500?
- Thread starter stockfrosty
- Start date
I don't agree. It depends on the model's used. For me Dow Jones (and so SP500) is the most easiest predictable market for example before even the employment news get out the 3 consecutives next session intraday tops were already "printed" in the market's model several days before (since March 30th ) : 10401.8 , 10416.5 , 10496 in theory (in real in worst case it was 4 points error and within 1 point for the two others).
http://www.elitetrader.com/vb/showthread.php?s=&threadid=30650&perpage=6&pagenumber=2
Other example Friday I said 10556 to watch out and what did he do 10558 at Top next Monday within 2/3 points error.
http://www.elitetrader.com/vb/showthread.php?s=&threadid=27723&perpage=6&pagenumber=5
http://www.elitetrader.com/vb/showthread.php?s=&threadid=30650&perpage=6&pagenumber=2
Other example Friday I said 10556 to watch out and what did he do 10558 at Top next Monday within 2/3 points error.
http://www.elitetrader.com/vb/showthread.php?s=&threadid=27723&perpage=6&pagenumber=5
I think the biggest mistake most beginning futures traders make is that they try to trade the ES or NQ without sufficient capital. This is largely, I think, a by-product of the $25k PDT rule...so small account traders have no recourse but to trade the futures rather than stocks. It is quite unfortunate, because that is one of the main reasons most undercapitalized ES traders lose...they simply don't have deep enough pockets to absorb the intraday market noise. They must stop themselves out of potentially good trades simply because they can't afford to play the game. Remember, one ES contract currently has a value of about $57k To a small trader, that's not small change, yet it is the smallest position an ES trader can take.
But getting back to the crux of the main discussion here...the S&P 500 ain't the only game in town. There are plenty of crazy Nasdaq stocks these days (think TASR, NVEC, RIMM, etc.) And for those who know how to trade options, there are spread positions that you can take that can actually stack the odds in your favor, such as the far out of the money index credit spreads. You won't make a lot per spread, but your odds of winning on any given trade, if you're good, are perhaps 90% or better. Capital allowing, you can write a lot of them and make monthly income fairly regularly.
Also, there are a lot of opportunies in commodity futures. Most people don't dare touch commodities because they are scared of them for some reason, but you can reduce risk by initiating calendar spreads and intermarket spreads.
But getting back to the crux of the main discussion here...the S&P 500 ain't the only game in town. There are plenty of crazy Nasdaq stocks these days (think TASR, NVEC, RIMM, etc.) And for those who know how to trade options, there are spread positions that you can take that can actually stack the odds in your favor, such as the far out of the money index credit spreads. You won't make a lot per spread, but your odds of winning on any given trade, if you're good, are perhaps 90% or better. Capital allowing, you can write a lot of them and make monthly income fairly regularly.
Also, there are a lot of opportunies in commodity futures. Most people don't dare touch commodities because they are scared of them for some reason, but you can reduce risk by initiating calendar spreads and intermarket spreads.
You know winning 90% of the time and losing all the other 10% is not really a good deal 
. As said Taleb
"My motto is that the markets follow the path that hurts the highest number of dynamic hedgers. It was exciting to read a mathematical proof of it by Grossman and Zhou in the latest Journal of Finance. We are having less success with the frenetic financial engineering efforts, with a lot of mathematical acrobatics, but a hollow ring. "
As for the hypothesis "IF YOU ARE GOOD" just reminds me that the tendancy of humans is to attribute to their talent when they are winning and to bad luck when they are losing, sometimes vice versa when they need to crush somebody they were jealous of former success like Victor Niderhoffer when he was "in bad luck" many people pretended that he was a bad trader and now that he came back oh finally he is very good.
. As said Taleb"My motto is that the markets follow the path that hurts the highest number of dynamic hedgers. It was exciting to read a mathematical proof of it by Grossman and Zhou in the latest Journal of Finance. We are having less success with the frenetic financial engineering efforts, with a lot of mathematical acrobatics, but a hollow ring. "
As for the hypothesis "IF YOU ARE GOOD" just reminds me that the tendancy of humans is to attribute to their talent when they are winning and to bad luck when they are losing, sometimes vice versa when they need to crush somebody they were jealous of former success like Victor Niderhoffer when he was "in bad luck" many people pretended that he was a bad trader and now that he came back oh finally he is very good
.So Stocky Frosty or anybody else what in your opinion is an easier market to trade? Forex? Commodities? what?
Hi stockfrosty,
I know a few traders that do trade the ES or NQ successfully...
I've never heard them mention they're using a leading indicator.
I know they are well capitalized.
Times and sales is not that important to them although it has some input in their exit strategy.
I believe they're very good at price and volume analysis and know themselves very well as traders to establish their risk levels.
I know they aren't trading breakouts.
I know they adapt well to changing market conditions...this is an assumption I have based on the observation they don't complain about tight ranges.
They seem to be bored traders...sitting back and waiting...they're not thrill seekers and don't need to be in the market every 10mins.
I know they trade size.
I know they're constantly looking for clues or hints as OldTrader suggested.
I know they are very good with trade management (all that stuff that happens after entry).
OldTrader nailed it...look at the Eminis as stocks over $100 dollars.
You'll do much better with that concept in mind.
The type of traders I know that are very susceptible for failure...undercapitalize, thrill seekers, lack discipline, lack confidence in their methodology, don't understand position size management, don't understand trade management, they are consistently blaming others (ISP vendor, data vendor, broker vendor, seminar vendor, book vendor and distractions at ET)...
The above is from not being told to me directly...its from what I've seen traders write to others about why they think they failed.
Also, from my observations here at EliteTrader.com, realtime chat rooms, personal trading pals and talking to a futures broker that's a close friend...
Daytraders doing ok in the Eminis seem to not be trying to catch 10 point moves now that were common place years ago...
They've adapted.
Thus, if you can get a 2 to 5 point move in the ES as a daytrader...consider it a good trade...
Don't start expecting some strong trend to appear to take it further unless your swingtrading...
It's only a roller coaster if your a thrill seeker.
The Eminis ain't easy and they keep the veteran traders on the their toes sort'uv speak.
NihabaAshi
Spot on! I too am an old Value Line trader. Rember when all of the Triple Witch used to all occur on the Friday close and the Dow would move 50-100 points in the last 30 minutes? Well, I used to fade that (then cover near the open Monday) with enough contracts that I had to fill out the survey form for "large position holders"... LOL. I was out of the position before the overnight mail even arrived... It was almost a no-brainer.
I think ESers are fishing in a dry hole until they can see the probability of making 8-10 points [minimum] on the trade with a risk of 2-5. What they really should be playing for is a swing of several days with the possibility of 30-50+ points. That's the bread and butter play [several times a year] that will make your success.
Andras Nagy....
You've worked on the floor?
Why no NFA record of it...???
