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Qualifying Prices with time!


I thought this was an interesting chart from last Thursday. You can see how they tried to break down from the hour lows quite a few times only to have a bit of a rally at the end of the day ( not shown on this chart)

This is a one minute chart and it shows how there where only four COMPLETE one minute bars that actually traded below the hour lows. The rest of them traded through the hour low price. So only 4 bars had highs and lows below the hour low. Not much time spent below that key price. I present this as it may help some qualify there support and resistance zones by using TIME. We can ask the question:

Is more time spent above our support zone as it gets tested? If the answer is yes then long may be the way to go. just an idea...

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Since I have not started drinking...I'm feeling generous.

On price and time..and I like 50%...How many pts did YM, ES and ER drop...to reach the 50 % level...well its below 50%?..many hundreds....collectively check it out probably close to 1,000 pts if not more ( YM + ES + ER) all in a span of close to 2 months....now see how easy it is.....

Since most can't get it..take hi and low over 52 weeks divide by 2 =50% rule..give a price. Drops happen much faster than going up in price.

Now it is going to happen the 50% drop when nobody knows...so you know price...time is the other variable..happens every year. Price was in the high area for so long...had not made the 50% drop after the FEb 07 drop ( that was the first 50% drop)....so I knew it was coming...when nobody knows....ask the guys ruvan knows..the audit team....they know..or maybe the risk officers after they lose billions....really folks...

Now you look at the chart to find a formation...monthly/weekly give you 1-2-3.. and then there are other formations...1-2-3 simple. That is how I knew all the indicies were going down..macro..this confirmed time with price...daytrading is micro.. so they will be some pop up...along with with dates( the 2 people that know time) and weekly price targets...the price oscillates but macro trend is down.

50% level is hit ( price and time) is first target.

Now for daytrading purposes....more micro level...you use high prices or low prices. There are high prices and low prices in time. Everday, I either go short or long...thats it..I know within the first bar..if a price is defeated...or not..what is going to happen. Because the price confirms the direction to me. There is also a time when above this is bullish and below this is bearish...which will deteremine if sideways or not. Now you really think I came across this but doing what ruvan looking at tiks and all....

Ruvan must really be spinning now...you really are a muffin man..FZ..get a drink ruvan. This is way over your head..go play with fleas...tiks.

Mkt will go up, down or sideways every day...however even if goes sideways...you are going to get 6 pts and most of the time 10....sideway days you will not likely get 20 pts...as price will reverse on the trend.

Its that simple.


Well, I need a drink.....and listen to Muffin Man..ode to ruvan.





oh Ruvan...I finished drinking.

And I remembered a prediction...only one I made..too busy making money in the day to post and this was before I came up with the defeat price bar method.

2 or 3 weeks ago..as the ES was coming down...I missed the low..but when it did make the low.....down at 1383/1385...i can't remember, well check my posts out...

I stated the price would go up 30 or 40 pts...guess what ruvan...it went up 30 and stopped at 40 pts...I think it was 1445 at 40 pts...I DID NOT NEED A TICK CHART......when I'm making so many pts who cares.

But its all there check my posts ruvan. But you did not...cuz you at the tick/flea level.

What prediction you ever made?? You probably get 30 pts in a year.




Here's a fun math fact. If someone made 30 points for the entire year in the ES they would make $1,500 per contract, and let's just ignore commissions and assume slippage was factored into the 30 points net, in our totally for fun example. The rate of return for the year, on average intraday margin (currently about $1,800, which although it is not a recommended amount to trade with per contract, is a useful figure to use in a fictitious example like this) would be just over 83%. 83% per year would be about three and a half times Michael Steinhardt's 28 year average, and well over twice Boone Pickens average, and he made billions. And among their peers, they are considered to be the best of the best. I thought this was real 'fun with math', and most people hate math, so I wanted to take this opportunity to have some fun with the subject.
quote:
Originally posted by jimkane

.... The rate of return for the year, on average intraday margin (currently about $1,800, which although it is not a recommended amount to trade with per contract, is a useful figure to use in a fictitious example like this) would be just over 83%.


Jim

Aren't you really comparing apples to bananas with this analysis? For one thing, you should consider the value of the ES contract for the denominator rather than the margin required to trade it. Doing this would reduce your % gain to something less than 10%. The analogy in stocks is comparing buying a share of a company for $100 and having it go to $110 (which is what most of the hedge funds are doing based on their size and liquidity) and comparing it to the person who bought an $100 call option say for a strike price of $10 and having it go up to $20 for a 100% gain)

Secondly, I consider trading Emini futures a way of producing income rather than investing. So my margin capital is more like my inventory and I need to turn it over and generate multiple turns per year like a retailer. A retailer turns say 5-6 times per year ... but they don't think of it as a 500-600% gain investment.

Finally , if someone develops a trade setup and strategy which delivers an edge (when traded according to its rules), I believe the standard percentage growth comparisons are meaningless.
bakrob99, I think Jim is accurate. Compare it to buying a house. Say you buy a $500,000 house and put down $100,000 and get an interest only mortgage which costs $2,000/month. A year later you sell the house for $624,000. What is your return on capital? Is it 100/500 (20%) or 100/100 (100%)? How much money did you have at the start of the year? ($100,000) How much money do you have at the end of the year? ($200,000). So your return on (your) capital is 100%. aka Leverage. The return on the asset is 20% but you didn't own the whole asset, you only owned 20% of it. However you realized the return on 100% of the asset.

The futures market is the same. Although you expose yourself with your margin to the full value of the underlying index multiplied by the value per point your capital is a fraction of that and so the return on (your) capital is much greater than the return on the underlying index.
quote:
Originally posted by day trading

bakrob99, I think Jim is accurate. Compare it to buying a house. Say you buy a $500,000 house and put down $100,000 and get an interest only mortgage which costs $2,000/month. A year later you sell the house for $624,000. What is your return on capital? Is it 100/500 (20%) or 100/100 (100%)? How much money did you have at the start of the year? ($100,000) How much money do you have at the end of the year? ($200,000). So your return on (your) capital is 100%. aka Leverage. The return on the asset is 20% but you didn't own the whole asset, you only owned 20% of it. However you realized the return on 100% of the asset.

The futures market is the same. Although you expose yourself with your margin to the full value of the underlying index multiplied by the value per point your capital is a fraction of that and so the return on (your) capital is much greater than the return on the underlying index.



Tell that to the guys who are getting out of their houses right now in the US for values less than their mortgage. You're still responsible for the whole asset.
just for grins... if my day margin is $500 per contract (which it is), and I net $355 profit per contract in one day (which I did yesterday), what is my return on investment ?
Well, I was simply looking at return on investment, and yes, the potential risk is greater because you are leveraged. But my point was, apparently, completely lost. A point was made that one member probably only gets 30 points per year, and I didn't take the comment to be a compliment. And I just ran some numbers, and for fun, saw that if this member did net those 30 points they would be getting a rate of return 2-3 times what the best of the best hedge fund managers have gotten, and yet that is looked down on as showing that trader is an incredibly poor trader.

Triple the return on capital invested (used) as one of the best hedge fund managers (consistently, over the long haul) and that's incredibly poor? I guess I am in the wrong forum. I know pt emini was jesting, but the answer to his question is about a 17,750% annualized return, without any compounding. I guess maybe people in here are getting the multi ten thousand percent per year returns, and I'm thinking the hedge fund guys are great. Time to go back to my own forum, obviously I'm way out of my league here...
When viewed in terms of performance, yesterday was actually a pretty average day for me, specifically out of 9 trades I had 2 losing trades stopped out in full, 4 break-even trades, and 3 winning trades one of which accounted for most of the net profit i mentioned. That is my typical day, as I tell folks who inquire i typically am right about 30% of the time...not real exciting... Upon hearing this dismal news most traders quickly lose interest.

Given my lackluster performance day in and day out, I am left to only imagine what my percentage return would be on my $500 per contract if I could trade like most other folks, posting up say a more acceptable 90% win rate...

In the real world however, I actually tend to be a lot more concerned with controlling risk... specifically keeping losses small and well managed, and even more specifically not allowing a small loss to become a large loss. That is my main goal in trading, as I have learned the occasional winner tends to take care of itself.
pt emini,

I find that as a trend trader, the range of 30%-50% is 'normal', and you're right, that turns many people off. But if yesterday was fairly average for you, then you really are making over 17,000% return on your capital a year? I guess I am just not able to comprehend that so many daytraders are making about a million a year trading 10 contracts on $5,000 margin. We really have that many multimillionaire 10 contract traders out there, and they still have time/desire to post to forums? I guess I am totally in the dark...
Jim - fair enough, thanks for your reply.