ZGHorner's Beginner Futures Journal
- Thread starter zghorner
- Start date
yes Larry Williams. Its an easy read and worth it IMO...Its 100% about analyzing the COT data and using in conjunction with open interest to time major moves in the market.
I realize I don't have a legitimate edge and am not going to be trading until I at least have something that is worthy of refinement. I went live thinking that since I have finally corrected my discipline, emotional, and capital preservation issues That I will be able to win over time with a "system" of hand back tested moving average sets and discretionary ability. Incorrect. one of the most important formulas I have found up to this point...which also happens to be one of the more simple ones...is trade expectancy = (win$ x win%) - (loss$ x loss%). The numbers don't lie, I will lose money if I continue down the same path.
The good news is I havn't really lost any money this round due to keeping tight stops and coming to the above realization rather quickly. The great news is that for the first time Since I started in 2019 I can see a clear path to progress...which essentially is tackling the difficult material that I have more or less avoided up to this point. The past week I have been researching 14+ hours a day and feel like I am treading water with my nose barely above the line. As much as this sucks I realize this is exactly what is necessary for growth...and what separates the 95% from the 5%.
Moving Forward
- I would like to narrow my focus to one product for now. I understand the pitfalls of being a one trick pony but I think succeeding in one specific area is a good idea to start. Narrow my focus.
- I have a bunch of pretty basic ideas to test: standard deviation stops & time stops, time frames, mean reversion, linear regression, position reversal, entry retracement %, etc...
- Learn more about spreads (this is what crushed me in options and I hate the thought of it in futures...but oh well). for example...value relationships is just something I barely even know where to get started with and drains my soul even thinking about because I am so ignorant on the subject.
This stuff should keep me busy for a little while. Pretty excited to get to work.
thanks to @easymon1 for calling me out on my bullshit.
The good news is I havn't really lost any money this round due to keeping tight stops and coming to the above realization rather quickly. The great news is that for the first time Since I started in 2019 I can see a clear path to progress...which essentially is tackling the difficult material that I have more or less avoided up to this point. The past week I have been researching 14+ hours a day and feel like I am treading water with my nose barely above the line. As much as this sucks I realize this is exactly what is necessary for growth...and what separates the 95% from the 5%.
Moving Forward
- I would like to narrow my focus to one product for now. I understand the pitfalls of being a one trick pony but I think succeeding in one specific area is a good idea to start. Narrow my focus.
- I have a bunch of pretty basic ideas to test: standard deviation stops & time stops, time frames, mean reversion, linear regression, position reversal, entry retracement %, etc...
- Learn more about spreads (this is what crushed me in options and I hate the thought of it in futures...but oh well). for example...value relationships is just something I barely even know where to get started with and drains my soul even thinking about because I am so ignorant on the subject.
This stuff should keep me busy for a little while. Pretty excited to get to work.
thanks to @easymon1 for calling me out on my bullshit.
Is there even one case of technical analysis that isn't really snake oil?
There are just too many really successful trraders that use TA to brush it off as snake oil IMO...the market wizards books are full of them.
What I have recently learned is that you aren't trading the patterns (typically spouted by TA guys like H&S, support/resistance etc...) what you are actually trading is the underlying buying and selling imbalances that sometimes create patterns. This is why price action is so important as you develop a feel for these imbalances and the reasons/emotions behind them. At this point you can start developing some ideas to test and essentially you get an edge in the markets based solely on probabilities. Example...if you back test retracements in a trending market and find that they move 50% before resuming the trend...75% of the time then when the retracements hit 50% you should position yourself with the prevailing trend. But because markets are in a sense random you had better have backup plans. Where do you put your SL and why? Do you have a time stop in case it begins trading in a channel? Profit target and why? Etc...
What happens is you trade a handful of setups over and over and over again getting better all the time...faster reactions, better choices due to experience, etc...this is why someone giving away their edge is really not a huge benefit to anyone who didn't put the work into developing it...they put the odds slightly in your favor yes and that would be helpful to anyone...but the real magic is developing the skill to trade around it.
As far as indicators are concerned...most of them dont tell you anything that the price hasnt. Some are more useful than others but the key is time spent really learning how to use them beyond an investopedia video. I am currently seeing some usefulness of Keltner channels and beginning to experiment with MACD using Linda Raschke's 3/10/16 settings.
Since taking a break from this journal I have shortened my time frame significantly to intraday-swing, working on developing price action ability...I have been consistently profitable so far but have a long way to go. Working hard on it most of the day, everyday.
I used to hope there was a Holy Grail indicator. Now I basically don't have any indicator very useful. I use a line that tells me what 50% of the price is. I use Donchian Channels to replicate Bill Williams fractals, but that's not really that useful. I've got Volume, but that's not really that useful. Even fundamental analysis is not really all that useful sometimes. And if you can't successfully trade stocks that don't have an expiration date, futures sounds like a fast track to ruin. I sell puts like in Lee Lowell's book. Enough skill required that I can call me a trader and I'm finally making consistent profit.
I come from trading long options on equities (poorly, lots of lessons learned)...expiration on futures is nothing comparatively. Contracts are so much more simple in futures than options...you can just roll over near expiration with virtually no loses. I will reexplore options in the future as convexity is too powerful to ignore, but for now I am loving everything about futures.
Really. And how did you come to this conclusion?
before I answer your questions, keep in mind that I do accept that I just traded options poorly, and am basically a sour douchebag about it. Long options trading is gambling or hedging, and i wasn't hedging shit. Spreads are a requirement IMO.
Contracts are so much more simple in futures than options: The greeks make options so much more complicated to trade IMO. With futures you don't constantly have theta working against your long position, and you don't have IV crushing you to death every time you enter on momentum...oh what's that? you bought calls and the underlying moved in your direction? only slower than prior to your entry...aaaand your position is red from IV crush, nice lol. Obviously entry and exit timing are foundational when trading anything...but with options, IMO, you just have to be better.
Oh what's that, so you're smart and decided to sell options instead to put the odds in your favor? Mr. big time casino are you? have an 80% win rate do you? BOOM! underlying gaps hard against you overnight (since options are restricted to RTH only...unlike beautiful futures), you wake up only to see that your account is blown instantly and now you have to talk your wife into starting an onlyfans to fund your next trading adventure.
you can just roll over near expiration with virtually no loses Again, I get that there is a spread between months in futures...but rolling them close to expiration is nothing like options. Theta curve just kills you getting under that 45 DTE mark. You can buy longer dated options and just roll well before they reach that point without such a dramatic difference...but...right now CL oct contract price is $92.97, November $92.29...$0.68=>0.7% difference. Sept ES $4042.72, Dec $4060...17.28=>0.4% difference.
options...SPY $404 calls Sept 16 are $9.42, Dec 16 404 are $22.31...$12.89=>137% difference.
You pay a LOT for time with options.
If you want to trade options...it will have to be day trading/intraday, to avoid or minimize all those time decays and premium variables negatively affecting, eating away at, your performance.
Options are traditionally meant to be protective insurance, a hedge, against your long investments so you can't get too hurt, nor gain either. But if someone has good, great, expert timing with options....they can certainly make a killing.
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