How Do DayTraders Make Money in the Futures Market?

This is a discussion on How Do DayTraders Make Money in the Futures Market? within the First Steps forums, part of the Reception category; Good questions Tim...let me break it down from my perspective.. Part of the 'confusion' that I refered to in an ...

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Old Feb 3, 2009, 12:28pm   #33
Joined Aug 2008
mechanicaldaytrader started this thread Good questions Tim...let me break it down from my perspective..

Part of the 'confusion' that I refered to in an earlier post is that I'm unclear about the weighting of the mechanical part of your approach Vs the discretionary element? Perhaps you could outline what DayRaider1.1 is?

I trade cycles in the futures market. There are three elements to cycles, one time, the other price. The third component to trading is knowing WHO YOU ARE TRADING AGAINST - That being "institutions". The institutions have computer programs. The computer programs trade a varying portfolio of mechanical systems. Each system trades a set period of time/price cycles. At certain points within these "time/price cycles" the net/net of the mechanicals is a "reversal" or a "trend", at least from a daytrading perspective. (yes, I can trade 'counter-trend' and still make money).

When the Mechanicals reverse upward the market ends the "oversold condition" and the market exhibits one of two "speeds" in reversing upward. I teach the 4 different ways the oversold condition can end (all technical trading rules) and the two speeds that the market can "leave" the oversold condition, for example.

DayRaider does the "math", all the user has to do is recognize one of the 4 reversal rules is in play + the mechanical rule in the Dow Cash (for kindergarten trades) - DayRaider will have already generated a "auto buy" number in the market previously, the trader puts a limit order in near that number and is either filled or not filled. Newbies tend to hesitate (they don't believe the dang thing is that accurate! lol) so they may chase the market a little by finally entering at the market above the "auto buy" price.

The opposite logic for shorts, with a couple tweaks of course. (Prices fall differently than they rise in the markets I've studied)

Does it generate specific buy / sell signals, or is it some sort of bespoke indicator that then requires some discretionary interpretation on the part of the trader etc.?

Pretty much answered that above. There are 6 'Dow Behaviors' that ONLY occur in the Dow..and it takes a couple weeks of study and backtesting to understand and take advantage of them. They are hard and fast numbers and times, with about 10% discretion of an 'exact' number.

Looking at your comments, there appears to be inconsistencies, e.g. "The Mini Dow is doing 300-400 points a day, so 100 points a day is a snap" followed by, "...I want 90% of the uptrend or downtrend when it occurs (usually there are 2 daytrading trends per day)." Like anyone, I like the sound of +100 points per day, but I'm confused about how that's achieved. Also, to be honest, I'm mindful of the old addage 'if it sounds too good to be true...'

Watch this video link, ("First Streaming Video") it basically outlines what a P & L of the MiniDow can look like:

The Mechanical Day Trader: DayRaider 1.1 Demonstration Videos

Daytrading is a business of numbers; The Dow is a rubber band, it can only stretch so far (trend) then it comes back (retracement) - speaking of the Dow in a daytrading environment only here.

What is the average daily range of the Mini Dow (a "set" of numbers)? How many points comprise retracements within this set of numbers (each retracement is a subset)? How many points does the Dow typically move, as a maximum from the farthest point yesterday to the farthest point away today (a superset of numbers)?

My "Yesterday's Trade" methodology explains this and actually tells the subscriber which direction the Mechanical Trading Systems are pointed at the first tick of the Dow open.

So the subscriber can trade WITH the Overnight Mechanical Systems until the Mechanicals reach their objective (sometimes the market "opens" at an objective). Once the Mechanicals reach their overnight objective (in the current Session 1 of the Dow) the subscriber then measures if the market has ended it's Oversold or Overbought condition (pretty nondiscretionary - all hard math there) and exits their existing position (if they took it) and enters a reversal using one of the 4 reversal rules (which tell the trader what support/resistance # to use).

I'm happy to concede that I may well have misunderstood or misinterpreted what you're saying. But, to me, it's a muddled message, with pop videos and a dash of politics thrown in for good measure!

I love to tweak people...and I don't need the dinero, it all goes to taxes!....I trace it all back to my childhood when I could never figure out how to defend myself from my Big Brother who could beat me up or humiliate me at will. haha

I want 90% of the uptrend or downtrend when it occurs (usually there are 2 daytrading trends per day)."

I want to enter slightly above S2 of an uptend and exit somewhere between R1 to R3 at the end of an uptrend. It is very realistic to get 85% to 90% of a trend. Do the math. (of course you have to know what the h?ll S2 and R2 are, don't ya? I teach that).

I made a heckuva lot of money in the 90's back when the Nasdaq was fun to trade; when I switched markets and started trading the S&P I would sit back with my Tradestation 4.0 or 2000i and figure out why I did not get all the money I saw I could have gotten from a trade. It took years, but I can explain 5 hours out of 6 1/2 hours of the Dow market most every day. Trading Ranges are sometimes frustrating but the Dow doesn't stay in them very long, cuz futures traders don't make a lot of money in TR's. The low hanging fruit is trends and there are several of them a day. (definition of trend = 2 or more consecutive trade entries in the same direction after the oversold or overbought condition has ended).

Daytrading is a business...I seek to extract as much as possible using a low risk methodology that can explain 80% or more of all the reversals that occur in Session 1 (and the 8:30 announcement during the Globex premarket).

Thanks for the questions, Tim, they're good; all stuff I've explained 1 on 1 with people but it's nice to be able to put it writing.

Regards,

Stuart
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Old Feb 3, 2009, 12:40pm   #34
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mechanicaldaytrader started this thread Regarding the two outcomes of the Gap Down - I was referring to "how to trade" them...
My answers as follows using One Minute Methodology lingo:

a) You sell the DOWN mechanical trade that follows the first or second DRUP to ride the downtrend (may or may not be a kindergarten trade)

b) You buy the second DRUP and/or the resulting URUP (of the second DRUP) to ride the uptrend (both kindergarten trades)
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Old Feb 4, 2009, 12:21pm   #35
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I confess to being new to Spread Betting, and have made some losses. I came here to see if there is any way to make money from this business.

I read this thread with interest, and wonder that if this system is so good, why if you are making a fortune yourself - you are bothering to sell the system to others?

I think that the big money in day trading is selling something to the unfortunate losers!!
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Old Feb 4, 2009, 1:32pm   #36
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Hi V_T,
Welcome to T2W.
It's a question that's often asked - and rightly so - of vendors in this game. However, my experience (considerable - when it comes to this specific topic) is that for the most part, they have plausible and very well polished answers which vary little from one vendor to the next. At the end of the day, you're either open to the idea that someone else has something that might benefit you that's worth paying for, or you're a stubborn mule that refuses to pay for such services as a matter of principle, regardless of how well recommended they may be. I don't bother asking the question any more as I already know that I'm in the former category. All that matters to me is whether the product / service 'fits' with me, my style and my trading objectives. Then it's just a question of money which is tricky because, as Stuart has already pointed out, it's reasonable that something that's 'guaranteed' to produce a profit costs a lot of money - you get what you pay for etc. In your particular case, if you decide you want to pay for some training, given that you're completely new to trading, I wouldn't have thought that this is the best place to start. I dare say Stuart will disagree!

Tim.
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Old Feb 4, 2009, 9:10pm   #37
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Hi timsk,

I suspected that a response such as yours might be forthcoming - thanks anyway.

I might add that I am not a sceptic to any 'paid for solution', as this would be just blatantly stupid, I just want to know if there is any future for me in this trade. Maybe there are free trials of trading software that I may try. Then, obviously pay for if I wish to keep using it. I know a lot of software these days has a free trial element to it.

I beleive that if they are not forthcoming with a free trial, then they are not selling a genuine product.

Any offers - anyone?
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Old Feb 5, 2009, 10:38am   #38
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Quote:
Originally Posted by mechanicaldaytrader View Post
. . .That must REALLY seem like a lot of money to Tim!
It's more than I earned last year!

Thanks for your earlier extended response Stuart, although I'm starting to get a little worried about your relationship with your older brother. I'm doing a counselling course next month, at the end of which I'll be wanting to practice my new found skills. Knowing how enthusiastic many Americans are about psychotherapy and related skills, perhaps we can come to a mutually beneficial arrangement: counselling in return for DayRaider 2.0? Now isn't that just the best offer you've had in a long, long, time?

Tim.
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Old Feb 5, 2009, 11:35am   #39
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Hi V_T,
I'm thinking of writing an article for the K'Lab as there is so much confusion about vendors. Your short post raises a lot of pertinent issues . . .
Quote:
Originally Posted by Venture Travel View Post
. . .I might add that I am not a sceptic to any 'paid for solution', as this would be just blatantly stupid . . .
The two attitudes that I refered to in my reply to your first post are equally valid. In spite of what you might think, there are many people here on T2W who believe with a passion that any 'paid for solution' is indeed 'blatantly stupid'. They will argue that trading cannot be taught (beyond the known mechanics of the industry) and that all good traders are much like good musicians or artists. That is to say, while they may be influenced by their contemporaries and predecessors, they manage to fashion something that's unique to them. This leaves the people that try and copy them. The best that can be said of any such artist is that their work is 'in the school of' (Titian - or whoever). To my knowledge, no artist has ever equalled - let alone bettered - another artist by copying them. If we apply this to Stuart and his offering, the critics will say that he may well have a great product / strategy that's hugely profitable for him, but there's no way it'll be hugely profitable for you or me. Furthermore, because it is largely mechanical, even if it does work now, it's highly unlikely to work next month or next year because the markets are dynamic and forever changing. Lastly, subscribers to such services aren't 'real' traders and don't understand the markets. If they did, they wouldn't need the products / services of the vendor. When the system fails, or the vendor goes out of business, the subscribers are left floundering, unsure what to do next. Naturally, Stuart will argue that this will never happen! On this last point, prospective customers have to make up their own minds.

Quote:
Originally Posted by Venture Travel View Post
I just want to know if there is any future for me in this trade.
IMO, your best way of answering that question is to immerse yourself in this forum for a week. If, at the end of it, you wonder where the time has gone and why all the food in the fridge has gone off and the post remains unopened, then you have your answer. Jumping into any course in the early days isn't the answer.

Quote:
Originally Posted by Venture Travel View Post
Maybe there are free trials of trading software that I may try. Then, obviously pay for if I wish to keep using it. I know a lot of software these days has a free trial element to it.
Indeed there are. The problem you face is that actually there's loads and loads of them out there and, until you have some idea as to what to look for and what to avoid (that's well over 90% of them) you're going to be pisssing in the wind. You'll probably try one or two - they won't work - and then you'll conclude that trading isn't for you. I did this, only I wasn't smart enough to go for the free trial; I got out my credit card on the first day. I soon abandoned the system that I'd payed for, but stuck with learning to trade because I wanted to recoup the money I'd foolishly paid out.

Quote:
Originally Posted by Venture Travel View Post
I beleive that if they are not forthcoming with a free trial, then they are not selling a genuine product.
Most vendors offer some kind of a free trial or a guarantee. In Stuart's case, it's clear that some training is required in the use of his software as well as instruction about the strategy as a whole. He can't offer a free trial as he would waste countless hours with people who wouldn't then become subscribers. It simply wouldn't work as a business model; hence his guarantee.

If nothing else, I hope that this post offers some insight that trading is a large and complex field, there are many issues to address if you're going to be successful at it. It looks so beguilingly simple: you buy, you sell; you win or you lose. The old adage sums it up perfectly: 'trading is simple but it isn't easy'. Ain't that the truth.
Tim.
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Last edited by timsk; Feb 5, 2009 at 11:40am.
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Old Feb 5, 2009, 12:09pm   #40
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Hi Tim,

Your post is very interesting. I realise that I am right in thinking that the majority of the money to be made in day trading is by the vendors of 'solutions'. I get the feeling that professional traders are in the minority, and they possess a talent for technical/market analysis that other less talented people cannot learn. Like any talent - you either have it, or you don't.

Having only been day trading using spread betting for a week, I have learnt a lot, and find that using forex is easier than other instruments, as it adhears to patterns and trends more than any other (I could be wrong). I have had some success at predicting movements, using analysis of support, and resistance, but not enough to warrant thinking this is a great business.

It would be nice to hear from traders who do make money.
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