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New to futures, trying the "improbable"


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New to futures, trying the "improbable"

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  #21 (permalink)
 Dionysus 
Monterey, CA
 
Experience: Intermediate
Platform: Ninjatrader
Trading: CL
Posts: 80 since Jan 2014
Thanks Given: 28
Thanks Received: 99


PatrickBateman View Post
Aquarian, you are correct in that we are ok with adding money. I appreciate your diplomatic way of responding. You had some good info. I like the idea of putting away 50% if we have a huge win. We traded again today (setup with new broker) and had a very small win. If I let it roll, it would have been a very large win. However, I made this decision because I need to build the account up, and therefore have adjusted my risk tolerance. I have made this similar trade many times and usually am on the winning side, but again, after losing so much, I need to be overly risk averse until our equity is high enough to bear more risk.

Good point on the ETF. I specifically like CL and other futures (trading softs now also) because of the leverage... thank you for another possibility, however!




Hello Dion,

Our process involved a lot of losing... through a study of WHY we were losing (mostly entering into a market that was sideways and essentially gambling on the direction it would go to) I discovered a way to make profits *MOST* of the time. It involves leaving a bit of money on the table (It won't generate the highest returns possible on any given day) but I'd say can capture 50-60% of price action on any given day in the market.

Paper trading: We made paper trades for about 2 weeks before going live. We planned on trading longer on paper, but we noticed some fundamentals that prompted us to enter on black friday and we made a bit of money on that day. I truly believe in trial by fire, and since we are trading with expendable income, I learn far more in the actual market than in demo situation, and will not lose my house by doing so.


Two weeks. . . aiieee! A bit scary, but you make a very valid point. . although I'd never *recommend* it, and I think it'd be irresponsible to recommend to anyone, I know that I personally took the same route you're mentioning, in that I started trading live money far earlier than may have been prudent/conservative, but I did so purposefully and knowingly, because I know how I'm wired. . . if there isn't live money at stake, its incredibly difficult to get myself as engaged/interested, and to learn at the most efficient pace possible.

These can be expensive lessons, so again I'd never recommend it. . but I have no doubt my knowledge base expanded much more quickly/efficiently than it'd have if I hadn't had some 'skin in the game', if only a bit, in those early stages.

Just be careful, initially, and remember that small data pools of a few weeks or a few months have almost zero predictive value of the future, speaking broadly.

One of the first large-scale tests we performed was determining how often an extremely strong performance over the previous 3 months leads to positive performance over the next few months, how often strong performance over the previous 6 months leads to positive performance over next few months, how often strong performance over the previous 9 months leads to positive performance over next few months. . . etc etc, every increment up to 10 years. There was a linear increase, the more data was included in the 'in sample' portion, the stronger the out-sample performance proved to be, and virtually zero difference from average/random when the in-sample data pool was just a few months, if this makes sense.

This is just a broad-level and generalistic 'rule', there are exceptions.

Good luck, interested to hear how it fares

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  #22 (permalink)
 
MNSTrading's Avatar
 MNSTrading 
Grand Rapids, Michigan
 
Experience: None
Trading: Commodities and Russell
Posts: 158 since Nov 2015
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IMO the 2% rule only applies if you know what you are doing. I would take the advice of those who suggest etf or trade micros at $1 a tick. I have been at this eight years (two in futures) and still struggle in markets that do not suit my trading style as a trend trader. Do you know what your style is and what markets it works in?

Was it the money that threw you off or was it choppy markets. When i first started i thought price just bounced off of bollinger bands like a rubber ball. Sometimes it does. Sometimes it doesn't. All of this takes a long time. Settle in.


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