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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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Originally posted by jimkane

Time to go back to my own forum, obviously I'm way out of my league here...


My post was not meant to be derogatory in any sense. I was trying to further the conversation... but I have noticed you compare Fund Managers overall rate of return to the day trade and I don;t think they are comparable.

Now if you add in the cost of trading, feeds , software, office, overhead etc for an entire year and compare that to the overall profit that a trader makes you might be getting closer to a more reasonable comparison.

After all, the hedge fund managers return are net of all that.

In fact - another way to look at it is YOU HAVE TO MAKE EXTRAORDINARY RETURNS as a day trader in ordder to cover your expenses and still have a profit at the end of the year.

Jim - stick around. I like your posts.

What makes you think there are so many out there???

Even so it wouldn't be strange to me to find people who have a passion for their work around message boards...We've discussed this before how there are many different motivators for posting on boards....I think you are off base if you think people with lots of cash don't visit the internet/boards.

You have tons of free material on your sight so I assume you obviously enjoy writing, trading and educating. The point being is that you probably have more than just "money/vending" as a motivator...

If you made 10 times what you currently make would you give up writing??? Probably seems like a passion and a good one for you!!!

So someone who trades and makes money may come to the boards for THEIR own reasons....

But what do I really know? I'm broke and I post here often....LOL!!

Originally posted by jimkane

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...

Thanks for the input, guys. Yes, I agree that daytraders and fund managers are totally different things, I was just trying to point out that if a daytrader made triple the return of the best hedge fund guys that could be used against him/her as a big put down (go read the post that motivated me to do the math fact), and by no one disagreeing it was tantamount to saying that was an acceptable comment. I just found it funny that in this forum tripling the rate of return of the best hedge guys makes you a loser, or a winner no one would defend. Got me to thinking how high the standards are in here, as far as what makes one a 'great' daytrader.

As far as expenses, I agree they can be quite substantial compared to profit for us mere mortals. But when you look at my hypothetical 10 lot trader making almost a mil a year, the few thousand for expenses is negligible. Even my other silly example of making the 83%, if done on an account of say $100,000, would net results where the expenses would be very small, proportion-wise. I was thinking there must be so many because I am reading many posts of making six or eight or ten points per day and hearing this is the norm for that trader. No one steps up and says that rate of return is incredible (pt emini, one of our top guys in here, said it was a typical day, unless I misunderstood what he meant by that, which I'm starting to suspect I did?, I'm still waiting on a reply on that), so I assume most find it typical also. I find it incomprehensible, so I spoke up.

As far as writing, I agree many millionaires would still write, but my past experience with people who weren't millionaires and then became millionaires was that they buy big houses, or islands if they make lots of millions, and then they go off to other lifestyles. I didn't see any stay in suburbia and still mow their own lawns on the weekend. So, although I figured a few may still post, I assumed most wouldn't. Maybe I'm wrong on that.

I write on the website for a few reasons. The main one is that I used to be a math teacher and I love to teach. A classroom full of kids, teaching what someone else told me to teach, was not my venue, so I found one more to my liking. The second, and very powerful reason, is that my methodology is very non-mainstream, and I have few, if any colleagues. I have all these ideas and no one to talk about them with at a high level. I decided to 'create' colleagues for myself by showing the work to others and mentoring a select few so that I would have some people who could understand my ideas.

It's not that my ideas are too much for the average person to understand, it's that unless you have all the background and done the hard work you won't understand the concepts, maybe like taking calculus before you have algebra and trigonometry. So far I have trained a small, select group of people, most who still stay in contact with me and we share ideas. It's no fun to spend 27,000 hours (the approximate number of hours I have spent behind the screen doing this) in your home office by yourself, in my opinion. Finally, I like to try to help out and provide some good information like I wish I had when I started out, and the website and this forum give me a chance to make a contribution.
Originally posted by jimkane

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...

well one must account for the corresponding -$300 per contract losing days which brings the long term equity curve back to a slightly more realistic average rate of ascent (or descent as the case may be)... the concept of "reversion to the mean" as it were... I just happened to mention yesterday since it was a positive return as related to your earlier math equation... experience tells us that extrapolating one day's performance into the future is rather meaningless in actual reality...

also one must keep in mind the goal of trading the index futures market, which in my specific case is cash flow (preferably into my bank account...
). This translates into the extraction of trading profits out of the futures trading account and into a more traditional (non-leveraged) long term investment accounts. I view futures trading as an income stream. Thus mathematically it is not possible to achieve 17,000% return since I am not compounding initial profits into future profits, as profits are being removed from the account.

in my initial posting on this topic I mentioned the $500 day trading margin because it is being advertised by brokers in order to attract new clients... or at least keep existing clients from jumping ship to gain some margin advantage... In the real world, I advise folks that may be inclined to consider my council that for new traders something along the lines of working capital of $5,000 to $10,000 per contract has stood the test of time in the E-Mini's...(another one of those less popular ideas in some minds). I personally am averaging something closer to $2,000 of margin per contract at the current moment based primarily on the current market volatility and velocity of money flowing through my account... My allocation of risk (# of contracts per position) varies throughout the trading day because it is related to my current performance, my margin can drift as high as $12,000 per contract (when things are not going well and I quickly reduce position size in response) and as low as $1,000 per contract (when everything is going really well and I increase my position size)... the old starve the losers and reward the winners strategy
Thanks for the reply pt. I did misunderstand. When you said this was typical, you must have meant your ratios of winners, scratches, etc., and I took it to mean net profit per day of $355 per contract was your overall average per day. That's what led me to many of my conclusions.

I prefer the $10K margin per mini contract, and I agree, most think that is just plain nuts. But if you are leveraged at 35 to 1 (approximately $2K on a Russell or ES mini, for example), or more, say 70 to 1 in your extreme range example, and there is any market shock event your account will not survive, you may owe money, and may be out of trading permanently. I look for the lower leverage, and perhaps quite a bit lower returns, in exchange for a more steady long-term career and a lot less event risk.

As far as that 17,000+% return, that is without any compounding, taking all profits out as soon as they are won, and only trading the same amount every day. It doesn't matter if it is 1 contract or 100, the rate of return is that 17,750% per contract. ($355/$500 = 71% per day * 250 trading days = 17,750% per year). Now that's an income stream! So you can see why if I thought you did that, on average, every day, it was beyond my level of comprehension.
Originally posted by BruceM

If you made 10 times what you currently make would you give up writing??? Probably seems like a passion and a good one for you!!!

I know that you were talking to Jim and my answer is slightly off topic but to continue your chain of thought here... Stephen King, financially, doesn't need to write anymore...
No, that's a good point, and most top actors sure don't need any more 25 million dollar pictures. So they must love it.
Just to help me understand your perspective on this topic, what do you consider to be a reasonable average profit per contract per day ?

I can't answer that directly, mostly because not only will it vary widely for each individual situation, but also because one of my firm policies is to never say anything that could ever be construed as a claim, even under the most imaginative circumstances. Sorry if this sounds evasive. I'd start with my two realistic expectations articles, and try to figure out your own answer from that.

I posted the links on another thread:

But here they are again:

Realistic Expectations

Realistic Expectations, Part II

Jim - fair enough, thanks for your reply.