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; just had a re-review of your site, MDT. 100 pips NET a day, from the Dow, off 1-mins. Seriously? and ...

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Old Feb 2, 2009, 7:24pm   #29
 
trendie's Avatar
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just had a re-review of your site, MDT.

100 pips NET a day, from the Dow, off 1-mins. Seriously?
and each trade being about 30 pips?

how many trades per day?
is the stop-loss variable, or a fixed amount? if so, how much?
what average losing trade worth?

( I would have been lucky to make 45 pips off Dow today, from 7 trades. )
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Old Feb 2, 2009, 9:13pm   #30
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mechanicaldaytrader started this thread
Quote:
Originally Posted by trendie View Post
just had a re-review of your site, MDT.

100 pips NET a day, from the Dow, off 1-mins. Seriously?
and each trade being about 30 pips?

how many trades per day?
is the stop-loss variable, or a fixed amount? if so, how much?
what average losing trade worth?

( I would have been lucky to make 45 pips off Dow today, from 7 trades. )

There are 4 mechanical trades the One Minute Methodology uses
DRUP downtrend reversal up
DOWN the highest short position that occurs repetitively thru a downtrend (every DRUP & URUP features one DOWN between retracements down)
RDOWN reversal down (perpetuates the downtrend, from a lower point in the Downtrend)
URUP uptrend reversal up
UC continuation of reversal up (long entry > URUP occurs - also this is opposite logic of RDOWN)

"kindergarten" trades are textbook trades the subscriber can take the very first week of paper/live trading - very simple trading rules apply

today's trades;
#1] close out the short at the second downtrend reversal up (DRUP) from the opening short - 40 points

#2] the URUP was a timed reversal up, 60 pts exit at the #3 reversal down rule (subscribers only)
optional - ride the short down about 40 pts

#3] "kindergarten" (these are basic trades) long at 11:30 ET net almost 100 pts,

#4] "kindergarten" short from near dow cash 8000 (see my blog entry update - dow cash 8000 is to be treated as resistance, note the time of the blog entry update) here net 120 pts ; short exit at the kindergarten short covering signal

#5] URUP at reversal up rule #4 (subscribers only), net 120 points up, exit at reversal rule #1 (subscribers only)

#6] DOWN a few minutes later per DayRaider 1.1 (DR's custom stochastic says SELL BABY! reversal rule #1 critieria previously met) -- this is a trading range short 55 points, exit at 1600 ET MOC.

net points today (you trade even # of contracts, 1st half of contracts are out at 2nd time DayRaider hits "100" , 2nd half of contracts at end of trend if it occurs)

2nd half of contracts should net around 520 mini dow points for the entire day today...total movement of the Mini Dow today was near 700 points from open to close - One Minute Methodology nailed more 80% of all movement.

Stops are around 10 ticks on the shorts, a few less ticks on the longs - experienced subscribers enter at limit orders, newbies enter at markets and have 50% bigger stops typically, cuz they tend to hesitate .

Trade entry methodology can be backtested ad finitum and paper tested realtime once subscriber has paid his subscription. It takes about 48 hours to get all the platforms and stuff set up and the initial training of how to move around the software..



Stuart

POSTSCRIPT: today was a slam easy day of trading...

MARKET OPEN QUIZ: what are the ONLY two possible outcomes for a Gap Down Open?

Last edited by mechanicaldaytrader; Feb 2, 2009 at 11:51pm. Reason: final trading comments, postscript
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Old Feb 2, 2009, 11:44pm   #31
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mechanicaldaytrader started this thread I reread your post Trendie, and added some comments about the charting used:

I don't use the Dow Cash 1 min exclusively BTW...I have a futures chart that nails the cycles in the futures market, when the two charts agree, the subscriber pulls the trade...uptrend, downtrend, trading range are instantly analyzed in the futures chart, whereas in the Dow it's not that critical....there are a couple "games" that are played in the futures contract that need to be weeded out by DayRaider also; there are "auto sell" and "auto buy" numbers generated in DayRaider that give ideal limit orders on future retracements....if the market lines up and the methodology is humming on the 1 min, you take the trade..

Stuart
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Old Feb 3, 2009, 10:15am   #32
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Hi Stuart,
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? 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.? 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...'
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!
Tim.
P.S. Your quiz: what are the ONLY two possible outcomes for a Gap Down Open?
1. The gap is filled.
2. The gap is not filled.
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Old Feb 3, 2009, 11:28am   #33
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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, 11:40am   #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, 11:21am   #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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