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.

2. Anybody else who makes money - it is the result of luck

Combination of random luck backed up with a lot of hard work.

I think folks get the wrong idea that consistently profitable trading is easy. It has been my experience that trading is a lot of hard work and very long hours. To daytrade like I do requires intense focus and concentration, not to mention the need for near perfect discipline in following the trading plan 100% of the time.

When someone fails to succeed with their trading they tend to blame others, as the laundry list of reasons mmartinez associates with an unsatisfying personal experience. Until one can face their own shortcomings (and do something about them) the probability of success is remote at best.

It has been my experience there are a lot of good folks in the industry. Generous traders who are willing to share freely of their time and expertise right here on our little forum for example.

Thanks, PT. I think it is important for people struggling to become profitable to understand that some, with hard work and perseverance, do make it.

To me your story follows the pattern of what I'm saying. Win some, lose some. Break even (or down) after it's all said and done. It doesn't matter that you've been profitable since 1997, if you keep trading, you'll give it all back.

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Originally posted by CharterJoe

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Originally posted by mmartinez

To answer the original question, I've concluded that the answer is no. I've made the following observations:


m

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I consider myself a profitable, professional trader. I don't sell anything nor do I intend to do so. I am almost 26 years old. My dad is a futures and stock longer term trader. I was home schooled in through my high school years and my dad taught me econ 101 and trading starting in oct 98 He gave me a 10,000.00 account when I was almost 16, I paper traded and when I was profitable started day trading. Trading back then was simple just buy any brand new .com when it was down and wait a few hours. After the bubble burst so did the 900% we I made in a short time. I lost when we shifted from long term bull too bear.

Then I went down the road of hand drawn P&F charts with some what we called gann numbers which were basic fibo numbers and natural S/R numbers. After there were no .com hot moving stocks I started trading options on the well known stock names mostly puts. My trading options came in the big E-bear from 2000-2002 I did very well during this time and draw down was very small I was making at least a grand a week. Not near as much as the years before but making money. For some unknown reason to me I hit a long dry spell that lasted about 6 months. I was not making anything, and as a matter of fact was down about 2500 for the year. Everything I was doing resulted in a loss. This was 2002 I quit trading because I was almost out of savings and paniced so I went and got my trading account and started a construction business early 2003 I built 9 homes in about 24 months.

By 2004 I had heard of the Dow e-mini, for the first time and started trading them. I started doing well using a basic counter trend system using square of nine numbers and a couple indicators. I had been trading the dow for a year and doing alright. Nothing like before but I loved the emini I saw lots of promise. But it was very had to trade and run a business so in aug of 2005 while on vacation in Isle of Palms SC I just got finished watching CNBC and the dow was up like 300 points or something. I had decided to finish the project I was on and go back to trading. No matter what I was going to be a day trader again, I had given up to soon because of a bad day in a bad month. I wanted to do what I loved to do, and what I was good at. In Jan of 2006, 4 months later I started trading again full time.

I started losing again, about $150 a day. I threw all the charts away with all the indicators. Striped everything down I had. And was left only with RSI on a 30 min chart for options, MACD on a tick chart, and square of nine. I started scalping only taking a small amount off the ES and NQ's only I was trading too many markets. I came up with a system with those basic things, that system is here on this site in my posts. Nine months later in Oct 2006 It clicked, my system turned into a money machine and I started trading currency markets at night. in 11 days I had made back the 24k I had lost. And have profitable ever since. I have since dropped the night trading, and only trade RTH. I have only had one losing month since then and that was Feb 27 2007 I lost 12k in one trade. Due in part to just having my first child and building my first home which was built on trading profits alone.

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you know I think that's where people get mixed up. They wrongly assume hard work will remove randomness.

I don't blame other people for my trading failure. I don't blame anything. I say that it's impossible for anyone to not fail. There's no way to beat randomness.

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Originally posted by pt_emini

2. Anybody else who makes money - it is the result of luck

Combination of random luck backed up with a lot of hard work.

I think folks get the wrong idea that consistently profitable trading is easy. It has been my experience that trading is a lot of hard work and very long hours. To daytrade like I do requires intense focus and concentration, not to mention the need for near perfect discipline in following the trading plan 100% of the time.

When someone fails to succeed with their trading they tend to blame others, as the laundry list of reasons mmartinez associates with an unsatisfying personal experience. Until one can face their own shortcomings (and do something about them) the probability of success is remote at best.

It has been my experience there are a lot of good folks in the industry. Generous traders who are willing to share freely of their time and expertise right here on our little forum for example.

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But that's based on an assumption that the market is random, and the latest studies have refuted the early random walk studies, and shown the market is not random. My background is in mathematics, and there is nothing that could be shown to me that could ever convince me the market is random, not after what I have seen, and the studies I have done (don't confuse non-random action with the availability of easy money). But your mind is made up, and so there remains no need for any more discussion. You can move on to other pursuits, and we'll keep doing our work on trading, and everyone is happy. Good luck with whatever you pursue.

Well you know, ultimately each person has to make up their own mind based on their own experience. I'll just mention one other thing that should give pause to traders or people considering taking it up.

I know one of the Managing Directors at Goldman Sachs in New York. That is to say, my dad knew him way back and a few years ago I introduced myself to him. A couple years ago I told him of my intention to trade full time.

His response was don't do it, it's a waste of time because markets follow a random walk.

An interesting and smart piece of advice from a Wall Street executive, all the more so because of the person's honesty and lack of pretension.

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Originally posted by bakrob99

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Originally posted by jimkane

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PT, VO, Kool, you guys beg to differ on this? Since I 'sell products' I will refrain from posting my own thoughts. I know PT has some good numbers because we discussed this in this thread:

http://www.mypivots.com/forum/topic.asp?TOPIC_ID=2715

as well as some other traders numbers.

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Why bother? The guy obviously believes he's right and no one is going to convince him otherwise. It's a great road learning how to trde profitably and consistently. I am enjoying the experience more every day. And I am thankfully profitable 16 out of 20 trading days per month.
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Originally posted by mmartinez

To me your story follows the pattern of what I'm saying. Win some, lose some. Break even (or down) after it's all said and done. It doesn't matter that you've been profitable since 1997, if you keep trading, you'll give it all back.

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Originally posted by CharterJoe

quote:

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Originally posted by mmartinez

To answer the original question, I've concluded that the answer is no. I've made the following observations:


m

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I consider myself a profitable, professional trader. I don't sell anything nor do I intend to do so. I am almost 26 years old. My dad is a futures and stock longer term trader. I was home schooled in through my high school years and my dad taught me econ 101 and trading starting in oct 98 He gave me a 10,000.00 account when I was almost 16, I paper traded and when I was profitable started day trading. Trading back then was simple just buy any brand new .com when it was down and wait a few hours. After the bubble burst so did the 900% we I made in a short time. I lost when we shifted from long term bull too bear.

Then I went down the road of hand drawn P&F charts with some what we called gann numbers which were basic fibo numbers and natural S/R numbers. After there were no .com hot moving stocks I started trading options on the well known stock names mostly puts. My trading options came in the big E-bear from 2000-2002 I did very well during this time and draw down was very small I was making at least a grand a week. Not near as much as the years before but making money. For some unknown reason to me I hit a long dry spell that lasted about 6 months. I was not making anything, and as a matter of fact was down about 2500 for the year. Everything I was doing resulted in a loss. This was 2002 I quit trading because I was almost out of savings and paniced so I went and got my trading account and started a construction business early 2003 I built 9 homes in about 24 months.

By 2004 I had heard of the Dow e-mini, for the first time and started trading them. I started doing well using a basic counter trend system using square of nine numbers and a couple indicators. I had been trading the dow for a year and doing alright. Nothing like before but I loved the emini I saw lots of promise. But it was very had to trade and run a business so in aug of 2005 while on vacation in Isle of Palms SC I just got finished watching CNBC and the dow was up like 300 points or something. I had decided to finish the project I was on and go back to trading. No matter what I was going to be a day trader again, I had given up to soon because of a bad day in a bad month. I wanted to do what I loved to do, and what I was good at. In Jan of 2006, 4 months later I started trading again full time.

I started losing again, about $150 a day. I threw all the charts away with all the indicators. Striped everything down I had. And was left only with RSI on a 30 min chart for options, MACD on a tick chart, and square of nine. I started scalping only taking a small amount off the ES and NQ's only I was trading too many markets. I came up with a system with those basic things, that system is here on this site in my posts. Nine months later in Oct 2006 It clicked, my system turned into a money machine and I started trading currency markets at night. in 11 days I had made back the 24k I had lost. And have profitable ever since. I have since dropped the night trading, and only trade RTH. I have only had one losing month since then and that was Feb 27 2007 I lost 12k in one trade. Due in part to just having my first child and building my first home which was built on trading profits alone.

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I have not won some, loss some. I never even implied that. I started strong very strong (granted some by luck of the great bull, but have manged to hold on to it for 10 years of constant trading) quit in the first real test of my career I was still in the green 300-400k at that time. And am still slamming the markets daily, of course I lose on some days. The difference between then and now, is now I have strategies in the morning, afternoon, end of day, longer term 2-5 day accounts with multiple systems, and options strategies. I am diversified now. And I don't trade over 15 contracts and even those times are only a couple a month mostly 3-8 and I cut back win losing. The trick is not to have all your eggs in one basket. Have multiple accounts, take the profits out, save for kids collage ect ect.

If the markets are random then how does the ES top/bottom in the first 30 min of trading 33% of the time? If the markets are random as you say it should be only 7.69% thus proving the markets are not random, that they are more likely to top/bottom in the morning. I think your premise is false, thus your conclusion is false as well. People do/have/will beat the average, always have always will.

quote:

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Originally posted by mmartinez


I know one of the Managing Directors at Goldman Sachs in New York. That is to say, my dad knew him way back and a few years ago I introduced myself to him. A couple years ago I told him of my intention to trade full time.

His response was don't do it, it's a waste of time because markets follow a random walk.

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with all respect...

If I say all tall people are 6 foot even and no taller then the statement would be false because there are people 6'1, 6'2. Just because a hedge fund trader states his opinion does not make it fact. 90% of traders fail we all know this, but did you know that 93% of all contractors and restaurants also fail? So it seems to me it would be safer for people to day trade rather than to cook or build. The risk of ruin is true in all forms of business but isn't an absolute.

Hopefully, this will be my last post on this, but who knows. I don't want to spin my wheels. Perhaps some of the readers out there will benefit from my comments.

Another issue I have here is that I feel there are just too many false assumptions being made. For example, there is a big confusion between 'random' and 'expected value'. In my opinion, expected value is the only thing that really counts. Not win/loss ratio, not reward/risk, but the combination of both, 'expected value'. If the expected value is positive, then the endeavor is 'net postive outcome', i.e. it is profitable, and if it is negative, it is 'net negative outcome', and loses money. This has absolutely nothing to do with whether the endeavor is random or not. That is totally irrelevant to whether it makes money over the long run, or not.

Let's look at an example. I think everyone will agree that flipping a 'fair coin' (one not weighted to flip more of one side than the other) is 100% random. So, can I make money from a coin flipping game? Absolutely. Consistently, over time, without any statistical worry of 'giving it back'? Absolutely. Before you get ready to say you want to take the other side of that bet (you'll lose), think about it. You don't even know the game yet.

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.

You see, there is no relationship between expected value, and if it is positive or negative, and whether the game is random or not. Randomness is completely irrelevant. So, the way to make money as a trader is not to worry about trying to take advantage of non-randomness, it is to find if there are any circumstances, like this coin flip game, that have net positive outcomes over time. My belief is that there are.

Anyone can argue all they want whether the market is random or not, and while they are spending their energy on that, I'm spending mine looking for 'net positive outcome' setups, even if the market is 100% random. Randomness is completely irrelevant. There are an infinite number of games that can be constructed that can be net positive outcome and be 100% random. Add into this that the market may not be random (I strongly believe that it is not), and it gets less difficult to find net positive outcome circumstances, but it surely isn't mathematically necessary whatsoever. Whether my belief that the market is non-random, and whether it actually is or isn't random, has zero to do with whether there are net postive outcome setups to be found out there, just like the 100% random but profitable coin flip game.

Good post Jim.

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