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.

Fives: I think that if traders start saying (in this thread) that they are being profitable every day then it will turn into the "prove it or you're a charlatan" type of thread of which we've seen plenty. We already know the result of that.

I think that this thread is being extremely useful in its educational value. I think that the reality of being a profitable trader lies in years of education and experience. Most people cannot afford those years of learning and paper trading and so attempt to short cut it and end up in the 90%.

Pick any service that you have a need for. Say you need a plumber, carpenter, doctor, fund manager, lawyer, skipper (for your yacht), or teacher (for your kid). One of the factors that you will look at is how many years of experience they have in that field. Other factors will be how they excel in their field compared to their peers.

Fives you bring up another very good point, which is that there must a fit, between the Trader and the Style of trading.

Many traders see others having success with a style and yet they are not able to.
Your psychology, risk tolerance etc.. all come into play in determining if a style is right for you.

I know JP is a fine trader I have seen him trade. I too use Market Profile but trade a vastly different way than JP does.
And I know I could not trade his way.

My personality requires that I take more trades in a day and hold them for shorter periods of time. This is what works for me.

There is no question that it takes time to discover your "Trading Personality" and then find the style that fits best with it.

So the question is, will a trader still be around financialy, after trying a few styles that may not be right for him.

I think traders need to do more research, and ask the right questions before taking on a style

Such as how many trades per day, do you ever hold overnight positions, how long is the average trade held, what type of stops are used, do you scale in our out of positions etc.....

And next, paper or sim trade that style for a while to see how it feels.

I know that even on a sim trade I copuld not hold a trade all day, just not my style

Greg

There are 4 things needed to make money trading. The hardest is the mental game and that cant be taught. The other 3 can be. The reason people fail is that the system or method they try to trade doesnt provide the 3 needed parts.
The first is understanding the relationship between trend and time very few vendors understand this or teach it well if at all.
The second is a method for determining areas of potential action. Some call this S and R but support is just an area where there is potential for the market to change direction. MP,Fibs,Median lines etc can give you these areas along with previous high, low close etc. I use 3 different methods and look for the areas of confluence myself.
The last is a way to interpert what action is happening when the area is hit and what actioon if any you need to take. This is how you actually enter of exit the trade,set your stops etc. Many people complain that they get into trades to early or get stopped out etc. The reason is that they do not have a way to read what is happening at the S and R areas when they are entered. Just because you hit support doesnt mean you go long. You must be able to read what the market is doing as it enters the area and how it is responding to the area.

I base this on the fact that I have been trading 21 contracts on the e-mini for several years usually only trade 3 hours a day and avg $267 per contract per day. I was also on the floor at the cbot and the cme in the late 80s.

hunterone,

Well, my hat's off to you, you are one heck of a trader. If my math is right, at $267 a day per contract, with the mini margin available at many places of $300, you are making 89% return per day. At the more common $500 margin it's still over 53% per day. At exchange margin of around $1575 that's about 17% per day, and for those that are much more conservative and use $10,000 per traded contract it's 2.67% per day. Even at the latter much more conservative margin return is still approximately 667% return per year without any compounding. That's some incredible trading, and I congratulate you heartily. My mind can't even begin to wrap around the 22,250% annual return that would be on the minimum margin.

Now, this is just a mathematical example of returns, of course, because we all know one would need to have way more in an account than just the intraday minimum these firms offer, but it shows the amazing return here, even if just a mathematical and not practical example. I'd love to get myself in this rate of return ballpark, but unfortunately I'm afraid I'm forever confined to waiting in a long line that goes around the block, and that line is just for a ticket to the ballpark, and with my binoculars I can see a big sign saying 'sold out indefinitely'. I have my sights sets much lower.

You know, when I crunch out what you just said above, 21 contracts, $267 average per day per contract, you are making $1.4 million a year working three hours a day? OK, now I'm beyond saying congratulations, great trading, and on to that line from Wayne's World where they run into Aerosmith and say 'We're not worthy, we're not worthy...' Wow, double congrats. Nice work.

Jim I believe you are being sarcastic however I dont see why you would be surprised. If your trading methods teach the 3 point3 I outlined then even a beginner should be pulling 2 to 3 pts per day per contract on avg. On last friday for exampme how could anyone not pull 15 pts out of the market. There were several clear trades that ran like crazy. Even with my method of profit taking I couldnt pull my first profit on some trades without 2 pts per contract not counting the trailing contracts.

You teach fibs as part of your course as I understand it. This morning the short from 51 was a perfect fib short. You knew that was a fib retacement area weeks ago how could anyoine that uses fibs not short there and get a few points. The trade was yelling at you. You had another clear no brainer Fib short from 46.75 you had 3 longs after that from the 44 area. How could anyone that is a trader not get some of these. All these trades were expected before those areas were reached. As I said I use Fibs as part of my process. I dont use median lines although one of my chat room buddies does and we often have the same trade areas. You teach Fibs and median lines so you should have the same trades as well.
If I am wrong and you being sincere than I apologize if I am a bit rude.

hunterone,

I'm sorry if you thought I was sarcastic, because I was 100% sincere. With top CTA's making in the 20% per year range on average, when I see someone making say 667% a year (if you were using the $10,000 margin you mentioned in one of your previous posts), I am very impressed. I honestly can't even think in rate of return terms that high, not day after day, year after year. I've read the Market Wizards books, and their rates of return are usually in line with the CTA's. A consistent 20-30% would get one in that book.

Yes, there are days with big runners, and part of trend trading will be catching those. But what I find from a practical standpoint is that there will be many, many days and trades that will catch the stop, chop one up, simply not play out, etc., etc., and that will take away a lot, and for many people, more than all, of those fantastic runners. You apparently don't have those issues, or they are so minimal for you that you can still have such a fantastic net average. That's why I am so impressed.

I think you don't realize that to do what you are doing, consistently, literally puts you in a small handful of traders worldwide. You are not giving yourself enough credit, and making it sound easier than it is for the rest of us. I would love to watch you trade, as I'm sure I could learn a lot. Thanks for posting, because you give us all a lot to think about.

hunterone,

I just reread your post above, and you mentioned a chat room you hang out in. Can you post which one that is, or send me a message, and let me know? That would actually give me a chance to watch you trade (although not as informative as watching in person), and that would be very useful to me. Thanks.

Thanks Jim, I think I have read to many forums where people just cut into others. I dont post anywhere much because I am by nature a bit paranoid. Of course its not paranoid if everyone is out to get you.

I will check with the other guys in the chat group. There are small rules to follow. We never talk about money or how many lots someone trades and no small talk. There are just a few of us. We each use different methods and some are better traders than others. We do call trades we see setting up but I dont think everyone takes them all. I never trade unless I have it with my method for example but it alerts us to possible trades. It helps on the slow days.

It might be better though if you know of a chat room I can go into to call the trades as they occur or we can use skype. I usually have my trades a bit before I actually take them so calling them shoudlnt interfer to much.

I do get into trades early and get stopped out like everyone else but I have managed to minimize it. Also I dont cherry pick trades. I take trades even though it looks like a loser if it matches my rules. Sometime like this last trade this afternoon from the short at 49.75 I get lucky. I got the trade signal from the 49.25 match. My stop on this trade was 51.25 and I was filled at 48.75. Not a good trade. I usually dont trade if my stop has to be over 2 pts. In this case it went against me before it turned my way. That is one way I limit my losers. I determine my possible trades before the trade areas are reached that way I know also where my stop has to be. If an area is reached and I start to get an entry signal I take the trade before the entry signal completes if the stop is reasonable. If I determine the stop needs to be over 2 pts I skip the trade or wait for the entry signal to complete. This gives me a better stop.

Also I should add how I take profit. I trade in units of 3. After I get filled I immediatly put in a limit order at 1 point profit for 14 contracts letting 7 run. I then manage the 7 via change in the trailing stop. If I get an exit signal I close the position no matter where the 7 are. If I am in a rtend like last Friday and my trail doesn't get hit and I get a retracement that gives another entry I enter with 15 entering limit order 1 pt for 10 letting the 5 trail with the first 7. Next would be 9 sell 6 at 1 point let the 3 trail etc.

I feel that daytrading is fit for those who can hold a position for atleast 20 min before exiting. Those that scalp are not going to make it as one loss if enough to turn the tables for the whole day. So pack a heavy punch next time to choose to press one of the two options.

I consistently profit from futures/futures options, but it took me a long time to figure out the best way for me to do so.

While a set of trading rules is very important, I have found that it is just as, maybe even MORE important, to develop "trading callouses" from getting your butt handed to you repeatedly along the way.

Here's the thing: Any set of rules will only work until they don't. It is normal human psychology that there will come a time (again and again) where you deviate from the rules because A) you have had a string of losses, B) you have had a string of wins and now you have a loss and can't believe you're really supposed to "lose this one," C) you get greedy, D) you get scared for whatever reason, or E) any one of a thousand other things that will cause you to screw up.

I had ups and downs for many years until I thought I had it figured out and had a couple of years of really solid profits. I had my own private island picked out :) (not really, but I did have a condo in mind O/N an island). Then came the financial crisis of 2008 and I learned that while I had a generally good strategy, because times were good I had not developed an appropriate risk control system.

Hundreds of thousands of dollars later... (and that didn't take long at all!) I learned the hard way that my strategy was woefully inadequate when the unexpected happened. It took me a while to brush myself off, but eventually I did.

Since sometime in 2009 my cumulative returns are somewhere around 450%. Over the past 9 years I've found that proper risk control continues to be where I tend to fall short, so I've had some choppiness during this time. About two years ago I tightened things up some more to try to make for a smoother equity curve... this mean that, theoretically, my losing months should NOT be as large as in the past, but my winning months will also not be as large as they were in the past.

That's okay though -- even my cumulative success over the past 9-10 years, when averaged out by month, comes to < 2% a month. I suspect that 2% a month, long term, is about where I'll stay, but the ride should just be smoother along the way.

A return like that may or may not be enough for a particular person--it is for me--but keep in mind if you want to shoot for the stars there's a really good chance you're going to eventually crash land back on earth. It really does come down to being adequately capitalized and having a reasonable return be "enough" for you. By all means, trade even with a small account, because you need that experience to get to the point where you'll know what you're doing when you have the larger account. Just don't expect to turn a tiny account into a massive one along the way or you will probably be disappointed.

-PDG