The transition to Futures trading

[Caveroute]

Actually its the opposite. If you are going to trade you are going to be wasting a lot of time in front of a computer. It seems like a better approach to actually get paid for that time rather than wasting day after day, year after year waiting for the hot run.

If you do 10 trades a day it only takes you a month to find out if you can trade without any doubt. My bet is that 99% of people here who trade less than 2-4 times a day cannot say with 100% confidence that they can trade.

If I spend 8hrs in front of the screen and take one 4 tick win after 7hrs 55 minutes, is that any worse than taking 20 trades and walking away with 4 ticks, after 8 hrs ?

I'd prefer the latter.

I'd rather concentrate on the higher probability trades and increase my size rather than take more trades.

 

[Trembling Hand]

If I spend 8hrs in front of the screen and take one 4 tick win after 7hrs 55 minutes, is that any worse than taking 20 trades and walking away with 4 ticks, after 8 hrs ?

I'd prefer the latter.

I'd rather concentrate on the higher probability trades and increase my size rather than take more trades.

Nah the point is you are both likely to be taking "higher probability trades" because time frame has no influence on that. So you will still be around the same win rate but 19 trades behind. 95 trades behind come the end of the week for the same time in front of the screen. As a result the trader that has taken 100 trades is far far far more likely to be ahead due to positive expectancy than the guy that has taken just 5 trades and far more likely to have caught a few outliers in that week.

 

[ThingyMajiggy]

Nah the point is you are both likely to be taking "higher probability trades" because time frame has no influence on that. So you will still be around the same win rate but 19 trades behind. 95 trades behind come the end of the week for the same time in front of the screen. As a result the trader that has taken 100 trades is far far far more likely to be ahead due to positive expectancy than the guy that has taken just 5 trades and far more likely to have caught a few outliers in that week.

How do we find that many trades though? Especially when scalping doesn't work(as well as it once did, going by what you and other guys have said) and we're trying to catch the main move of the day, I have a job to find 10 trades a day to do, I would be just firing away to make sure I get to X amount of trades for the week, seems kind of pointless?

 

[Caveroute]

Nah the point is you are both likely to be taking "higher probability trades" because time frame has no influence on that. .

But it does, there are only so many high probability trades in a session.

 

[Trembling Hand]

How do we find that many trades though? Especially when scalping doesn't work(as well as it once did, going by what you and other guys have said) and we're trying to catch the main move of the day, I have a job to find 10 trades a day to do, I would be just firing away to make sure I get to X amount of trades for the week, seems kind of pointless?

Here is an exercise for everyone to prove how friggin pointless the "we're trying to catch the main move of the day". Right down 10 minutes before the open what the main move will be. Then half way into the day. If anyone can get 40% win rate I'll become a value investor.

Its easy to find lots of 10-30 point winning trades in stuff like the HSI, CL, Dax, YM, EURO,AUD etc. You can hit them day in day out no matter what the type of day is. And the odd one can turn out to be the "catch the main move of the day" type of trade.

 

[Trembling Hand]

But it does, there are only so many high probability trades in a session.

Oh really?? .... unless you can post some evidence. Maybe 100 days of trading with these so called " high probability trades" showing a high win rate and a high R:R you are under a spell sold by the youtube gurus trying to pimp nonsense.

 

[kid hustlr]

One more comment/question, maybe kid hustler can answer? about how much on average per round turn would a spreader make? I would guess it isn't much but that is what prop seem to be after these days and they are only in the business to make money trading

I'm not sure I quite understand the question and if I do understand the question then I think the answer is 'it varies'. It's hard for me to answer in detail because each prop shop and their traders have different deals when it comes to how much brokerage they pay and what form of rebate scheme they are on.

Obviously the ideal prop shop takes a very small clip on top of the brokerage you pay to the SFE and is also fair with regards to rebates. However I stress that this will vary and I stress that there are some shops out there which take advantage of their traders probably way more than they should.

that being said, same raw numbers for you:

- If I make half a tick on a spread trade in the curve (3s10s) then after brokerage my net win is circa $340
- If I lose half a tick on a spread trade in the curve (3s10s) then after brokerage my net loss is circa $560

If I havent answered your question then fire away again and I'll do my best but long story short brokerage/commisions in spread trading (especially in the front end of the curve) is a HUGE drag.

 

[Caveroute]

Oh really?? .... unless you can post some evidence. Maybe 100 days of trading with these so called " high probability trades" showing a high win rate and a high R:R you are under a spell sold by the youtube gurus trying to pimp nonsense.

Well all my internet pimps sing the same song, maybe it's a coincidence.

I didn't mention R:R - its actually not that great, but the probability makes up for it.

The ASF pimps sing so many different songs it's a cacophony.

 

[kid hustlr]

Slightly confused by the # of trades per day discussion as well. Perhaps I'm just tired

I echo what T/H is saying in that the best traders are the active ones. In my experience they are always looking, in and out in and out, constantly thinking and constantly moving with the themes of the mkt.

Statistically when comparing the above to a guy who takes 1 trades a day this is obviously true as well in that more trades leads to a better distribution of results = more accuracy yada yada yada

That being said T/H I don't think you are suggesting one needs to scalp? Some days one is just best buy and hold. I think you are making the point that the best traders have a number of profitable set ups and take on a huge number of trades because they just see it better and trade accordingly. This in turn gives a smoother equity curve in the long run when compared to joe blow who was bullish in an up trending market and has made a killing for the last 3 months buying on open and selling 4 hours later. Truth be told he has no clue whether he's profitable or not because well, there's no way to know yet.

 

[Wysiwyg]

But it does, there are only so many high probability trades in a session.

I spend much time validating my mechanical systems and watching market movement. I use DTN IQFeed for back testing and actual testing FX markets. In one 24 hour period I have the following trades. Varies a little but proportionately similar. $5/pip

Timeframe

1 hour = 1 trade (1 win $60)
30 mins. = 0 trades
15 mins = 0 trades
5 mins = 2 trades (2 wins $73)
1 min = 8 trades (5 wins, 3 losses $144)

Interesting hey.

 

[Trembling Hand]

Well all my internet pimps sing the same song, maybe it's a coincidence.

What is the logic behind this so called sweet spot that makes your trades more "high probability" than Joe Jobber trading on a 1 min chart or Sammy Swinger trading on an hourly or daily? Are you saying that your setups have a intrinsic market truth that is not available in other time frames?

That being said T/H I don't think you are suggesting one needs to scalp? Some days one is just best buy and hold. I think you are making the point that the best traders have a number of profitable set ups and take on a huge number of trades because they just see it better and trade accordingly. This in turn gives a smoother equity curve in the long run when compared to joe blow who was bullish in an up trending market and has made a killing for the last 3 months buying on open and selling 4 hours later. Truth be told he has no clue whether he's profitable or not because well, there's no way to know yet.

Correct. I doubt anyone scalps nor could anyone outside of big prop traders who are getting rebates make it work. But markets are freeing up lately. There is still lots of bots out there but the lock ups have faded away. The waves are back in all time frames. If you can trade one time well you might make it. If you can recognise what is the optimal time frame each day or over the next hour and trade it well then you will be swinging 20-50 lots in no time and life will start looking very rosy.

Timeframe

1 hour = 1 trade (1 win $60)
30 mins. = 0 trades
15 mins = 0 trades
5 mins = 2 trades (2 wins $73)
1 min = 8 trades (5 wins, 3 losses $144)

Interesting hey.

Yeah it is. It is also logical.

 

[Caveroute]

What is the logic behind this so called sweet spot that makes your trades more "high probability" than Joe Jobber trading on a 1 min chart or Sammy Swinger trading on an hourly or daily? Are you saying that your setups have a intrinsic market truth that is not available in other time frames?

Any timeframe you want.

Usually 2nd entries, with trend, at the right location with the right signal bar.

Or 2nd entries, top/bottom of a range with the right signal bar.

That's all. They are very common, you get 20+ per session - regular as clockwork.

If I dropped down to the 5 tick chart I would get even more.....

 

[Trembling Hand]

Any timeframe you want.

Usually 2nd entries, with trend, at the right location with the right signal bar.

That's all. They are very common, you get 20+ per session.

You have lost me. I'm not sure what you mean.

 

[CanOz]

Fark and here i was thinking it was me!

But markets are freeing up lately. There is still lots of bots out there but the lock ups have faded away. The waves are back in all time frames. If you can trade one time well you might make it. If you can recognise what is the optimal time frame each day or over the next hour and trade it well then you will be swinging 20-50 lots in no time and life will start looking very rosy.

 

[Caveroute]

You have lost me. I'm not sure what you mean.

What didn't you get - the 20+ was sarcasm, it's more like 2-6 per session.

 

[Caveroute]

Here is an exercise for everyone to prove how friggin pointless the "we're trying to catch the main move of the day". Right down 10 minutes before the open what the main move will be. Then half way into the day. If anyone can get 40% win rate I'll become a value investor.

Its easy to find lots of 10-30 point winning trades in stuff like the HSI, CL, Dax, YM, EURO,AUD etc. You can hit them day in day out no matter what the type of day is. And the odd one can turn out to be the "catch the main move of the day" type of trade.

Totally agree.

But it's not so 'easy', you never know how it will pan out and sometimes your just lucky, or it goes to where you think it might.

The shorter the horizon the higher the probability your target will be met, all things being equal.

 

[CanOz]

You have lost me. I'm not sure what you mean.

C'mon TH...you must be out of touch...

Its PAT...Price Action Technique trading...Ala Al Brooks etc...

Just using a chart, no indicators, not even volume.

 

[kid hustlr]

http://uk.reuters.com/article/2014/03/18/ftse-futures-idUKL6N0MF47L20140318

OH REALLY

 

[havaiana]

....
If I havent answered your question then fire away again and I'll do my best but long story short brokerage/commisions in spread trading (especially in the front end of the curve) is a HUGE drag.

More than answered my question, thanks. Just trying to point out about a lot of prop having traders using methods with very low average tick profit per round turn (in comparison to what retail traders are aiming for) because there are other more important factors.

I personally don't believe it's possible long term to consistently achieve the amount of ticks per round turn some people here seem to be aiming for (trading chart patterns). But then again, Pav is achieving well above what I thought was possible and I hope I am wrong and he continues to do so. I have also never traded UK/Euro index futures during euro sessions (or even looked at them much, maybe I should) and am a long way from a great trader myself so wtf would I know anyway.

 

[Trembling Hand]

Totally agree.

But it's not so 'easy', you never know how it will pan out and sometimes your just lucky, or it goes to where you think it might.

The shorter the horizon the higher the probability your target will be met, all things being equal.

Now I really have no idea what point you are trying to make. First you said there was only a few "high probability" trades per day. Now you are saying the shorter the time frame the "the higher the probability your target will be met". By that logic you agree with me and not with your first point. That is, a ten point target trade is now MORE "high probability" than your two trades a day aiming for more points.