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Does anyone really make money trading futures?


Does anyone really make money trading futures?

I am just wondering.

I know I don't. I have tried all the indicators and the chat room gurus, and none of them make money.

I have a suspicion that a lot of the chat rooms for emini trading are just for hobbyists and market enthusiasts and not for serious traders trying to make a business out of trading.

For any new traders out there please be very cautious of paying anyone to mentor you or signing up for training or a chat room. From what I have seen the only people making money in these deals is the mentor, the chat room owner or the author of the training manual.

I would love to hear from you if you are a successful trader making 20% off your account or better over the past year. I know only 5 to 10 percent of traders are supposed to be successful, but I am beginning to think that zero percent of traders are successful over the long haul. Certainly anyone can have a streak of luck and rack up a few good months where they dramatically increase their account size, but these people are normally big risk takers and eventually they blow out their accounts by taking the exact same risks that help double their accounts in the first place.

Thanks in advance for any response.
Jim - I always appreciate your insight, thank you for taking time to write that up for everyone's benefit.

In one small sense I do agree with the randomness theory: At the time I enter a new trade, I have an expectation for a favorable outcome, but being a mere human I acknowledge the fact that I cannot predict if the next order that follows mine will be a buy order or sell order. Nor, can I predict what the next 10 or 100 orders that follow mine will be. This is why I always use a protective stop loss order.

With that said, here are my March ES trading results which we can run through Jim's coin toss algorithm:
Average win / loss ratio = 2.8
Largest win = $ 745 per contract
Largest loss = - $ 155 per contract

Hey, PT.

As far as the randomness, I was really trying to point out that there can be net profitable scenarios from totally random situations, so beginners shouldn't get too caught up in needing to verify the market is non-random before they believe money can be made from it. Instead, they should devote their energy to finding out if there are any net positive outcome scenarios they can get involved in. But yes, in any given series, one can know the overall probability, but never the individual outcome.

I would be happy to calculate the expected value for your series there, but to do that I need the average win and loss per contract. I can get the winning percent from your win/loss ratio (it's 73.68%).

BTW, congrats on staying with that big winner. It sure is fun to stick with them. In that way, our styles are a lot alike, I think. I like to ride 'em.
PT,

I just got to thinking maybe I misinterpreted what you said above by average win/loss ratio. You meant the size of the win to the size of the loss I think, not the ratio of number of winners to losers. So, what I need is the actual size of the average winner and average loser, and also the winning percentage, since I don't have that after all. If you can put that together I can do the calcualtion.
Jim this is very misleading. In the markets, anything where you win $2 - lose $1 is the result of arbitrage, and as soon as people notice this, they pounce on it. Very quickly the market gets back in balance and the arbitrage doesn't exist anymore.

The only people in a position to notice arbitrage are market makers. Regular traders like you and me are never in a position to know that it exists much less take advantage of it.

quote:
Originally posted by jimkane



We flip a coin, if I pick the correct flip, which I will do, over time, 50% of the time, I win $2. If I don't pick the correct flip, I lose $1. The 'expected value' for this game is 50 cents. Over time, enough to smooth out the random runs and such, I will make 50 cents per flip, no chance over an infinite run of giving back any of that 50 cents per flip profit. This is mathematically and statistically unchallengeable. Yet the game is 100% random. Hmmm, 100% random, and yet profitable over time and no chance in an infinite number of flips of losing that profit? Yes.


how many round trip trades are these March figures based on?

quote:
Originally posted by pt_emini

Jim - I always appreciate your insight, thank you for taking time to write that up for everyone's benefit.

In one small sense I do agree with the randomness theory: At the time I enter a new trade, I have an expectation for a favorable outcome, but being a mere human I acknowledge the fact that I cannot predict if the next order that follows mine will be a buy order or sell order. Nor, can I predict what the next 10 or 100 orders that follow mine will be. This is why I always use a protective stop loss order.

With that said, here are my March ES trading results which we can run through Jim's coin toss algorithm:
Average win / loss ratio = 2.8
Largest win = $ 745 per contract
Largest loss = - $ 155 per contract



quote:
Originally posted by mmartinez

Jim this is very misleading. In the markets, anything where you win $2 - lose $1 is the result of arbitrage ...



What are you saying? That Money Management has nothing to do with it? Please explain to me with the 1000s (or tens of thousands) of traders doing different things, how they all can be subject to arbitrage at the same time? Your statement makes no sense whatsoever.
Jim is saying that it doesn't matter if asset prices are random because you can find trading situations where your expected value is positive.

I'm saying that a positive expected value occurs only in arbitrage situations. In other words, where the prices are temporarily out of sync. The normal trading public never knows about these situations. You have to be at the source of the pricing to be aware of it.

quote:
Originally posted by bakrob99

quote:
Originally posted by mmartinez

Jim this is very misleading. In the markets, anything where you win $2 - lose $1 is the result of arbitrage ...



What are you saying? That Money Management has nothing to do with it? Please explain to me with the 1000s (or tens of thousands) of traders doing different things, how they all can be subject to arbitrage at the same time? Your statement makes no sense whatsoever.

quote:
Originally posted by mmartinez


I'm saying that a positive expected value occurs only in arbitrage situations.


This statement I disagree with.

For example: Gap Fill Traders have a positive expectancy over time if they play with a set of rules and adhere to them. Is this likely to disappear becuase of arbitrage. No. Never.

2. Fading Tests of Highs and Lows on narrow range day. Certainly a profitable strategy again if played according to a set of rules which are clearly defining all the aspects needed to determine day type etc.

3. 30 or 60 minute Ranges: High and Lows - going with or fading depending upon day type definition.

4. Trend days: Happens 20% of the time. Easy to define with market internals and opening outside of Value acceptance. Get in early. Add to position. Exit at close. Absolutely profitable stragey well in excess oof RR2:1. Not even hard to define. Just harder to have the discipline to avoid taking early profits.

5. Time Of Day Trades: Open, Afternoon you name it ... many time of days show consistently similar behaviour day after day, week after week.

6 to 100+ There are 100's of ways of being consistently profitable.

You would have to have you head in the sand not to see this.
quote:
Originally posted by mmartinez

Jim this is very misleading. In the markets, anything where you win $2 - lose $1 is the result of arbitrage, and as soon as people notice this, they pounce on it. Very quickly the market gets back in balance and the arbitrage doesn't exist anymore.

The only people in a position to notice arbitrage are market makers. Regular traders like you and me are never in a position to know that it exists much less take advantage of it.



There's nothing more I can say here than I disagree 100%. As a trend trader, I look in the 3-5 to 1 reward/risk area, and for some trend trades it can be as high as 10 to 1 or even higher. These trades have nothing to do with arbitrage at all. I have studied the charts in developing my particular variation of trading going back over 100 years (and with a limited selection quite a bit further back). The same setups have been present since then, through the development of computerized trading, with program trading getting up to about 80% of all volume, and nothing has changed in the setups or how they play out that I can see. I can show a setup that plays out almost daily that set up the 1987 crash, that can be found in 1929, and all the years in between, that played out over and over this week. It has always been there, and there is no reason to think it won't always be there. And if it isn't one day (which I doubt, because human nature drives it, and humans write all the programs), then so be it, but as long as it is there, I will attempt to use it.
quote:
Originally posted by mmartinez

...I'm saying that a positive expected value occurs only in arbitrage situations...
What is your evidence of this statement? I don't see how you can say that. Yes, a postive expected value can be obtained from some arbitrage situations, but it can also be obtained in a slew of other ways. A statement like that would need some solid evidence, and not simply the statement from a Wall Street brokerage firm that it is so. What is the solid evidence that all opportunities must be from arbitrage?
Originally posted by Bennie_aguilar

Futures trading provide a great earning opportunity but it requires great speculative skill to predict future moves. Experience matters in Future trading.

I too agree. It is like a two sided blade. Need to handle with care.