Index trading systems

[szandor]

iam currently looking at two systems,i wont mention any names just incase iam percieved as a spammer lol,the first system trades the S&P500 and the russell,the second system trades only the dow.Now i have done a trial for the system that trades the dow and a difference that i noticed is that the system for the dow uses a much larger stop loss of 20+ points in most cases than the other which only uses about 2 points stop loss.I realise they are different markets and point $ values are different,but what are peoples opinions on whether they would think that the odds would be better with a larger/smaller stop loss?

 

[Trembling Hand]

szandor the DOW system hasn't a larger stop!!

DOW 20/12000 = 0.16%

S&P 2/1300 = 0.23%

But in any case hardly any diff. The YM (DOW futures) gives you smaller increments to mange your stops if anything.

 

[Trembling Hand]

In fact they are exactly the same as far as $'s go.

20 ticks of the YM(DOW) 20x$5 = $100

8 ticks of the ES(S&P) 8x$12.50 = $100

 

[howardbandy]

Hi Szandor --

I have two quick comments --

1. 20 points on the Dow regularly happens in less than a minute. Be prepared with a high quality real-time data feed and be sure the system vendor supplies the signals in time for you to act. Trading the Dow with a 20 point stop is a full-time job -- do not leave the monitor even for a quick lunch.

2. Stops hurt systems. The best exits come from signals. If you have an intraday system, you may get good results from timed exits or profit targets. If you have a long term trend following system, a trailing stop such as parabolic or chandelier will work. If your system relies on maximum loss stops, and they get hit a lot, the system is probably a money loser (except for the system vendor).

Thanks,
Howard

 

[szandor]

hi howard,

yes thats what i realised after doing the trial,the dow can move 20 points very quickly,however the vendor's signals seemed to be pretty good,but you do have to be quick to get in at the right price.
The other system iam looking at trades the S&P and the russell,i havnt had an opportunity to do a trial with them,but from what i understand they usually have a 2 point stop loss,so iam assuming it would move slower?
Ive studdied both groups live results,(TI and puretick) and TI seems to be more impressive.(ive taken into account the number of contracts used to achieve those results and the numbers of trades per contract and the number of points gained/lost).
At the end of the day iam trying to establish which system gives me a better probability of making money,and which system is better suited for a newbie.

 

[Rockhoundnz]

hi howard,

yes thats what i realised after doing the trial,the dow can move 20 points very quickly,however the vendor's signals seemed to be pretty good,but you do have to be quick to get in at the right price.
The other system iam looking at trades the S&P and the russell,i havnt had an opportunity to do a trial with them,but from what i understand they usually have a 2 point stop loss,so iam assuming it would move slower?
Ive studdied both groups live results,(TI and puretick) and TI seems to be more impressive.(ive taken into account the number of contracts used to achieve those results and the numbers of trades per contract and the number of points gained/lost).
At the end of the day iam trying to establish which system gives me a better probability of making money,and which system is better suited for a newbie.

Hi szandor,

A 2 point move on the S&P and and 20 point move on the Dow will move with approximately the same speed. I don't really agree with Howard's comment that stops hurt systems. That would only be true if the 'system' is wrong or more specifically if the trading rules you use are poor - stops are part of trading rules. Trading without catastrophic stops might work ok for experienced traders who are disciplined enough to use mental stops, but probably the single most useful piece of advice a newbie trader can take on board is to use stop losses without fail - that will at least lengthen the amount of time before they blow out their account and quit.

I'd like to know what your calculations were with the two trading records because I decided the opposite to you. I'd like to know if either I missed something in the records, or if perhaps you are calculating things differently - for instance I'm not sure exactly what you mean by "trades per contract" - that doesn't make sense - do you mean contracts per trade?.

I can understand that your perception of the calls in the room you trialled is that you have to be very quick on the entry, and sometimes that is true, but having been in that room for a while now it's obvious that is the perception of a lot of traders that come into the room for a 10 day trial. It takes time to learn the set-ups - more than the 10 day trial allows. Once you start to know the set-ups the entries become a lot easier because you start to 'beat the buzzer' as we say, and often outperform the track record. The track record is 'dumbed-down' to show the lower end of results - a lot of the more experienced traders in the room regularly outperform the track record.

All of that aside, it is still a difficult decision to decide which educator to go with. I think that you should really look beyond the track records of both rooms and how much money each room will make you by following their calls and more importantly ask these questions: which room will I learn more in, and which room can I afford to be with longer? While around 90% of all traders will fail, that statistic gets flipped once traders survive beyond about 3 years. In other words, if you can gain a few years of experience, chances are you will succeed. There are really only a few ways to achieve that:

1. Have loads of capital, and just put up with consistent (and frustrating) losses for the first few years until you gain enough experience to start succeeding.
2. Find a good mentor that can help you minimise your losses for the first part of your career so that you can get to the point where you can start making money.
3. Somehow be self-taught - which is nigh on impossible. I've not yet heard of a well known and (more importantly!) successful trader who did not have a mentor. Traders like Mark Fisher, Linda Raschke, Louis Borsellino (unequivocally the best trader in the world) and Mark Douglas (his book 'Trading in the Zone' is a must read!) all had mentors.

For me, option 2 was the obvious choice. And when it came to deciding between the two rooms it was Puretick that allowed me to be in the room learning for the longest - for the cost of TI (which I think gives you about 3 months room access - someone please correct me if that's wrong) I can stay in the Puretick room for 18 months - that's long enough to start to head down the road to success and not failure. It is a shame that TI don't offer a trial - $7000 is a lot of cash to spend for something you might not like. Anyway, the crux really is that focussing on the learning process is far more important for your career as a trader (if that's what you want) than worrying about the intricacies of any system. There is NO holy grail system out there - there are merely lots of systems that can work well if the trader trading them has learnt enough about trading - and that takes time.

 

[szandor]

hi rockhoundz,what i meant by trades per contract is basically how many trades were made to achive those results per day(the more trades that are done obviously the higher the expenses).The way i came to the conclusion that TI had better results,TI's trackrecord shows the number of points won/lost per trade on the S&P and the russell so its pretty easy to work out how much money u would make on 1 contract if u followed every trade call(i based my calculations on the S&P only).With puretick from what i understand the results are based on 6 contracts(correct me if iam wrong rockhoundz),so based on the number of contracts,and the number of trades per contract used to obtain the results and i looked at an average of one month results for both,it to seems that TI have the better results.
I agree with you that the results arent everything,and without having a trial access to TI's live trading room it does make it hard to invest the 7 grand without knowing exaclty what its like,iam just wondering if their system has a slightly better probabilty of making money,thats the 7 grand question i suppose lol

 

[Rockhoundnz]

hi rockhoundz,what i meant by trades per contract is basically how many trades were made to achive those results per day(the more trades that are done obviously the higher the expenses).The way i came to the conclusion that TI had better results,TI's trackrecord shows the number of points won/lost per trade on the S&P and the russell so its pretty easy to work out how much money u would make on 1 contract if u followed every trade call(i based my calculations on the S&P only).With puretick from what i understand the results are based on 6 contracts(correct me if iam wrong rockhoundz),so based on the number of contracts,and the number of trades per contract used to obtain the results and i looked at an average of one month results for both,it to seems that TI have the better results.
I agree with you that the results arent everything,and without having a trial access to TI's live trading room it does make it hard to invest the 7 grand without knowing exaclty what its like,iam just wondering if their system has a slightly better probabilty of making money,thats the 7 grand question i suppose lol

The thing with the Puretick track record is that firstly it's kind of a worst-case scenario, so I wouldn't look at it as the be-all and end-all. PLUS you can't really just divide the results into a "per-contract" result. You can't make a living trading one contract. You need multiple contracts so you can manage your profit taking and hold some contracts that get home-runs. If I was you, I'd talk to someone who has done the TI course and has been doing it for several months - that's your best bet for getting a feel for whether the 7K is worth it. Again, the important question is this: If you spend 7K on the TI course can you still afford to pay to be with them for 18 months or more - the minimum time it takes to get good in this business?

 

[MRC & Co]

2. Find a good mentor that can help you minimise your losses for the first part of your career so that you can get to the point where you can start making money.
3. Somehow be self-taught - which is nigh on impossible. I've not yet heard of a well known and (more importantly!) successful trader who did not have a mentor. Traders like Mark Fisher, Linda Raschke, Louis Borsellino (unequivocally the best trader in the world) and Mark Douglas (his book 'Trading in the Zone' is a must read!) all had mentors.

Trouble is, it's hard to find a successful mentor.

Was your mentor a live trading room? I always pictured something much more personal.

 

[Rockhoundnz]

Trouble is, it's hard to find a successful mentor.

Was your mentor a live trading room? I always pictured something much more personal.

Yeah, Alex is the head trader in the Puretick trading room. He does actually offer one-on-one mentoring, but most people start off with the trading room for 6 months to a year before considering the one-on-one stuff - which looks more closely at tape-reading. The trading room isn't personal, but you do learn a lot by asking questions and hearing the answers to questions from other traders in the room.

 

[zengin]

Have any of you guys seen
http://www.callthefutures.com

They also work on the same line as Puretick and TI ( I think)

I am just in the process of trying to work out whether if they will be any good, I think they are more like Puretick because they dont sell any training or programs whatsoever just their a fee for their trading room.

If any one has more info please let me know.
Thanks

 

[Rockhoundnz]

Have any of you guys seen
http://www.callthefutures.com

They also work on the same line as Puretick and TI ( I think)

I am just in the process of trying to work out whether if they will be any good, I think they are more like Puretick because they dont sell any training or programs whatsoever just their a fee for their trading room.

If any one has more info please let me know.
Thanks

They look a bit similar to Puretick, but one BIG difference I noticed on their website is that they don't allow any questions during trading hours which Puretick definitely do - I find that very weird, it's kind of the whole reason for doing it - learning, unless you just want to take someone elses calls for the rest of your trading career.

 

[Uoweme]

http://cmtraders.com.au/ AKA ET Capital / Eurtrade Capital

http://cmtraders.com.au/ I was contacted by these guys to find out they were itrademarkets.net a gold coast scam company....scam