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.
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.
If the random walk theory doesn't hold water, then how come modern derivatives pricing still uses it? How come quantitative finance continues to be a huge thing. Investment banks devote a large amount of resources towards their quant departments and paying lots of money to the people who work in them? For those of you interested in learning more about quantitative finance, pick up any of Paul Wilmott's books.
Well, if modern derivatives pricing 'works' why did LTCM melt down and almost take the entire world with it? And why is the world now in this huge mess because of endless derivatives melting down? These meltdowns happened because the derivatives models are poor, based on many false and outmoded assumptions. Why people would keep using them is anybody's guess. Same as why people do all sorts of crazy, irrational things every day. Who knows why, but they sure do. One look around and that is crystal clear.
quote:
Originally posted by mmartinez
If the random walk theory doesn't hold water, then how come modern derivatives pricing still uses it?
ROTFLOL not the best timing martinez, don't know if you have noticed but lack of competent management over the derivative market almost drove us back a few centuries....
Martinez,
If the markets are random as you say do you think there is a way to trade and make a living for +40 years? You know even games like blackjack where the house has 52%odds and you have 48% are beatable using good money management. Given good MM you could profit off any coin toss, blackjack, or off of profitable trading system.
How can a random market make a high/low more often in the first hour than any other time of the day?
If the markets are random as you say do you think there is a way to trade and make a living for +40 years? You know even games like blackjack where the house has 52%odds and you have 48% are beatable using good money management. Given good MM you could profit off any coin toss, blackjack, or off of profitable trading system.
How can a random market make a high/low more often in the first hour than any other time of the day?
The problem with this discussion, Joe, is this. And I'm not trying to say anything bad about anyone, or anything of the sort. I only want to point out something that has to do with the concepts of discussion. Whenever any of us have broached a point like that to mmartinez, he answers citing more academic references that support random walk and efficient market theory. What I would like to see, and I'm sure you would to, since you asked the question, is the exact point being brought up refuted. It is a mathematical certainty that the high/low in the first hour is statistically non-random. Any statistician will verify this for anyone, and there are surely enough data points for statistical validity, by a long shot. Now, refute that point. That's all I want to hear. Mathematically refute that.
Here's the thing mathematically. Any first year math student will verify this. A million supporting examples does not prove a theory, but one counterexample unequivocally refutes it. It's a basic tenet of logic and mathematics, and no one disputes this. So, you provided a counterexample for the random walk theory. The burden of proof, to refute the counterexample, is now on the random walkers. It does no good in any way, shape, or form, mathematically, to cite endless 'proof' of the theory, because any theory is nullified by one counterexample. That counterexample, as you have provided, stands until refuted. The random walk theory now stands as refuted until the counterexample is overturned.
So, I would like mmartinez to do the legwork, talk to his top of the line statistician and mathematician buddies, and provide the refutation that the market doesn't put in a high/low statistically more in the first hour than it would if the market were random, or show why the number of data points is not statistically enough (let's see, about 250 days a year, how many years do we want to go back, how many different markets around the world, or better yet, individual stocks, since in a random world there is zero correlation between stock price movements, and we can get a million data points with almost no effort).
The bottom line is, I don't think we will see that argument in here. The only thing that would be valid, but we won't see it. And if we do, and it is valid, I'll be the first to step up and say I didn't think we would see it, and we did.
And BTW, since there would be zero correlation between stocks in a random market, how come on big up or down days the advance/decline ratio is 10 to 1 or even 20 to 1? Why would most stocks go up or down on the same day? Go ahead and calculate out how many times in a given period everything should move together that much in a random environment, and then see how many times it actually does and you've got another counterexample. As traders we could easily come up with hundreds more, I'm sure. But you'll never see those counterexamples refuted mathematically...
Here's the thing mathematically. Any first year math student will verify this. A million supporting examples does not prove a theory, but one counterexample unequivocally refutes it. It's a basic tenet of logic and mathematics, and no one disputes this. So, you provided a counterexample for the random walk theory. The burden of proof, to refute the counterexample, is now on the random walkers. It does no good in any way, shape, or form, mathematically, to cite endless 'proof' of the theory, because any theory is nullified by one counterexample. That counterexample, as you have provided, stands until refuted. The random walk theory now stands as refuted until the counterexample is overturned.
So, I would like mmartinez to do the legwork, talk to his top of the line statistician and mathematician buddies, and provide the refutation that the market doesn't put in a high/low statistically more in the first hour than it would if the market were random, or show why the number of data points is not statistically enough (let's see, about 250 days a year, how many years do we want to go back, how many different markets around the world, or better yet, individual stocks, since in a random world there is zero correlation between stock price movements, and we can get a million data points with almost no effort).
The bottom line is, I don't think we will see that argument in here. The only thing that would be valid, but we won't see it. And if we do, and it is valid, I'll be the first to step up and say I didn't think we would see it, and we did.
And BTW, since there would be zero correlation between stocks in a random market, how come on big up or down days the advance/decline ratio is 10 to 1 or even 20 to 1? Why would most stocks go up or down on the same day? Go ahead and calculate out how many times in a given period everything should move together that much in a random environment, and then see how many times it actually does and you've got another counterexample. As traders we could easily come up with hundreds more, I'm sure. But you'll never see those counterexamples refuted mathematically...
quote:
Originally posted by jimkane
Well, if modern derivatives pricing 'works' why did LTCM melt down and almost take the entire world with it? And why is the world now in this huge mess because of endless derivatives melting down? These meltdowns happened because the derivatives models are poor, based on many false and outmoded assumptions. Why people would keep using them is anybody's guess. Same as why people do all sorts of crazy, irrational things every day. Who knows why, but they sure do. One look around and that is crystal clear.
Jim, thank you for starting my day with a smile
The quant's are modern day alchemists. Generally they start with a set of assumptions, which at the time are logical and rational. Over time the successful assumptions will prove to be valid and this will naturally develop into a group of quant's gravitating to the same assumptions that are working as logic would obviously indicate at that time. Now, whether that assumption is based on random walk, or quantum physics is actually not relevant or important, even though at the time it seems like its the central secret sauce that makes it all work. What is actually making it work is the gravitational effect (flow of capital) into the new brilliant leading edge idea. Once everyone gets comfortably seated on the same side of the cruise ship it tips over and sinks to the bottom of the Atlantic. Safety in numbers.
Here we have an interesting theme. Derivatives pricing "works" in the sense that it is sufficiently accurate (read: more accurate than other models) to create and market products that can be sold. This says nothing about the morality or ethics of selling derivatives ( in fact, there's probably very little of those.) Selling derivatives is a lot like anything else: put together a product, shine it up real good, dump it on someone else, take your profit and let them worry about it.
Financial market meltdowns occur regardless of whether derivatives exist or not. This is a fact of history.
Financial market meltdowns occur regardless of whether derivatives exist or not. This is a fact of history.
quote:
Originally posted by jimkane
Well, if modern derivatives pricing 'works' why did LTCM melt down and almost take the entire world with it? And why is the world now in this huge mess because of endless derivatives melting down? These meltdowns happened because the derivatives models are poor, based on many false and outmoded assumptions. Why people would keep using them is anybody's guess. Same as why people do all sorts of crazy, irrational things every day. Who knows why, but they sure do. One look around and that is crystal clear.
quote:
Originally posted by CharterJoe
quote:
Originally posted by mmartinez
If the random walk theory doesn't hold water, then how come modern derivatives pricing still uses it?
ROTFLOL not the best timing martinez, don't know if you have noticed but lack of competent management over the derivative market almost drove us back a few centuries....
The lack of management and the derivatives were the bystanders, not the problem itself. (I was going to type "innocent bystanders" but innocent is hardly the right word.) The problem itself is the unweildy animal called economy of which markets are a part ...
This is slightly off topic but did you know I can (and you can too!!) randomly select a point on a chart and using a certain rule make money from this...?!
True
Best
John
True
Best
John
My response has two parts:
1. How many round trip trades did you do during that 40+years?
2. It is guaranteed that once in a great while, someone will walk to the craps table (or whatever) at a casino, start playing and not lose. It doesn't mean that you advise the public that it would be a good idea for them to start gambling.
1. How many round trip trades did you do during that 40+years?
2. It is guaranteed that once in a great while, someone will walk to the craps table (or whatever) at a casino, start playing and not lose. It doesn't mean that you advise the public that it would be a good idea for them to start gambling.
quote:
Originally posted by CharterJoe
Martinez,
If the markets are random as you say do you think there is a way to trade and make a living for +40 years? You know even games like blackjack where the house has 52%odds and you have 48% are beatable using good money management. Given good MM you could profit off any coin toss, blackjack, or off of profitable trading system.
How can a random market make a high/low more often in the first hour than any other time of the day?
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
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
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