100,000% possible in ES futures?

bkbigfish

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This is a serious question, so please try to answer seriously. I'm looking for actual information, even secondhand, rather than speculation.

A little history, to show that I'm not a noob. I started day-trading ES futures, as everyone does, because of the enormous leverage. I started out thinking, "If I can just make 4 points a day, consistently, I will be a millionaire within a year."

Of course, that never happened. I traded a mechanical system that I bought off the Internet, and although it always looked 80-85% profitable on paper, in practice I lost at least 60-70% of the time.

It took my years to figure out how that was possible, during which time I was the textbook definition of insane (as in, I kept doing the same thing over and over, expecting a different result each time). But eventually, after losing consistently for 3 years, and more than $100,000, I realized how stupid I was, and I began from scratch, looking at every move, to see if there were commonalities, patterns - anything.

Fast forward to today, months and hundreds of hours of work later. I have developed a purely mechanical system (okay, there is some judgment, about things I can't properly quantify, such as support and resistance, but which are relatively easy to spot visually) for daytrading the ES that is 90% profitable - that is, it wins 9 times out of every 10 signals. You don't have to believe me - I barely believe it myself - but just assume this is true. The goal is 2 points, and the stop is 2 points. The downside is that there are very few clear, tradeable signals each day - perhaps 3-4 on most days, and sometimes 0-1, so it's mostly a lot of boredom, followed by brief flurries of action and stressing out.

I have traded this system successfully for the past 2 weeks, winning 11 and losing 3 trades (2 of which, incidentally, were mistakes). I trade with a $500 margin, so after 5 wins I gain another contract (if I trade with only the minimum, which I do). I have gone from a start of 2 contracts and $1,000 in equity to 6 contracts and $3,500 in equity, and on Monday I start with 7 contracts.

I don't know what the maximum position is for daytrading ES futures, but my broker states that their largest individual client trades 700 contracts at a time. Based on the liquidity of the trades I've taken, and backtesting the system, I believe that is possible with my system.

Now, here's my question. Starting from 2 contracts and $1,000, with only $500 margin per contract (that increases to $1,000 per contract after 50 contracts, and I think $2,000 per contract after 100 contracts), winning, say, 4 net trades of 2 points/$100 each per week, I calculate that I can compound my way up to 700 contracts and $1,000,000 in equity within a year.

But that would mean my equity grows from $1,000 to $1,000,000, a 1000X increase, or a 100,000% annual return. That seems ridiculous. The most I've ever heard of is Larry Williams, who is famous for making 10,000% in commodities in 1 year (I believe it was properly documented, part of a competition, and duplicated by his daughter - citing Wikipedia).

I know it's possible, in that it's mathematically provable, given the low margins. As far as I can tell, the liquidity is there. My broker assured me, with what I figured was a smirk in her voice, that if I can handle it, and I have the equity, I can trade up to 700 contracts with roughly (she wasn't specific about margins above 100 contracts) the margins indicated above. Let's assume, for argument' sake (I know no one out there believes me) that my system has a 90% win rate, and that I WILL win 4 net 2-point winners per week.

Has anyone ever done this before? Has anyone ever heard of anyone doing this? If this isn't possible, where is the flaw? What will I have to do differently as I increase my trade sizes? Is there an inevitable contract size after which I am psychologically guaranteed to go clinically insane, and blow up my account?

Any answer, again based on actual experience or overheard gossip, is much appreciated.
 
I have traded this system successfully for the past 2 weeks, winning 11 and losing 3 trades (2 of which, incidentally, were mistakes).

:clap:

mate if after however many years its been you are still thinking like this then just give up now, seriously
 
:clap:

mate if after however many years its been you are still thinking like this then just give up now, seriously

IMO the question is irrelevant if you've only traded this system successfully for two weeks. It would be more impressive if you'd said you'd been doing it for six months, but I suppose by then the question would have been answered.
 
Yes, this can be done.

Check out http://replay.web.archive.org/20050707013433/http://marketmonk.blogs.com/pmtc/

"Market Monk" had those results audited by PricewaterhouseCoopers in 2006, and showed them to some traders he was training. He is the real deal. He isn't the only trader to have achieved these returns.

The liquidity is there in the ES to do up to 100-150 lots in the premarket and 5-600 after the NYSE open at the inside market, effective spread 0.25.

What you need to account for is your losing trades, human error, flaws in your strategy, changes in market cycles which render what you are doing unprofitable, etc.

Emotions should not be an issue if you are prepared to see the first $1,000 and everything you gain after that as risk capital for a very aggressive strategy which will likely bust your account before making the first million. If you can keep your head...

Your broker will notice your results, and if you even get half way to where you want to be at the end of the year they may offer to hire you or will know someone who will. You may find yourself picked up by a large trading house where you will make 8 figures a year.

Good luck with what you are trying to achieve, and don't let the money change you. It is just a score at the end of the day.
 
I have traded this system successfully for the past 2 weeks, winning 11 and losing 3 trades (2 of which, incidentally, were mistakes). I trade with a $500 margin, so after 5 wins I gain another contract (if I trade with only the minimum, which I do). I have gone from a start of 2 contracts and $1,000 in equity to 6 contracts and $3,500 in equity, and on Monday I start with 7 contracts.

I would beware in thinking that after 14 trades you're onto a winner..., i'd allow a good 200+ and varying market conditions, then think about becoming a millionaire...
 
:clap:

mate if after however many years its been you are still thinking like this then just give up now, seriously

I agree.

14 trades?? Statistically speaking, a complete non-entity. The amount of pain you've been through and you still think you can make millions from that sample size...honestly just give up and put your trading venture down to experience and move on.
 
I believe it is definitely possible and I'm sure it has happened to people in the past. However, I would perhaps gather some more sample data first. I'm in a similar situation to you, in that I've recently found a winning system (hopefully), and looking back at my success ratio my first 10 trades gave a 90% win rate, but as time went on and more trades collected, this win rate went down to 65-70%. So yea, get some more data before you start flipping through the luxury yacht catalogue :p
 
I agree.

14 trades?? Statistically speaking, a complete non-entity. The amount of pain you've been through and you still think you can make millions from that sample size...honestly just give up and put your trading venture down to experience and move on.

Wow this seems to be the most popular answer that T2W has to offer, 10/10 for enthusiasm guys (n)

bigfish seems like you are excited about the plans that you have.. great, and i sincerely hope that it works out well for you, but as an onlooker i'd recommend not to get carried away just yet, or at least until its tested for longer, in reality you could flip a coin and and even out of sheer chance get tails 11 out of 14 times, but if you were to flip that coin 1000 times its unlikely you'd hit those stats continually. If your system does work then pats on the back, you will be the most successful trader in the world, do i think you will be the most successful trader in the world? No because you wouldn't be asking the questions, you'd just bad a few mil.

To answer the question, yes its possible but then again anything is... good luck and keep us posted (y)
 
Why do you think that 3-4 trades a day is not many? This is NOT very few signals, this is as good as it gets unless you are scalping ticks. With your targets, you are not scalping ticks. 1 trade a day is absolutely fine.

If you can make 3-4 trades on most days and have a win rate of 90% with a 1:1 R:R, you are certainly one of the best traders on the planet.

In my humble opinion 20 points a month is a good living. 40 points is an excellent living. With your results, you'll be buying Heffners place when he finally expires - fully stocked too.
 
Wow this seems to be the most popular answer that T2W has to offer, 10/10 for enthusiasm guys (n)

bigfish seems like you are excited about the plans that you have.. great, and i sincerely hope that it works out well for you, but as an onlooker i'd recommend not to get carried away just yet, or at least until its tested for longer, in reality you could flip a coin and and even out of sheer chance get tails 11 out of 14 times, but if you were to flip that coin 1000 times its unlikely you'd hit those stats continually. If your system does work then pats on the back, you will be the most successful trader in the world, do i think you will be the most successful trader in the world? No because you wouldn't be asking the questions, you'd just bad a few mil.

To answer the question, yes its possible but then again anything is... good luck and keep us posted (y)

Enthusiasm is dangerous and has no place in trading imo.
What JRP was driving at is his "enthusiasm" is masking the areas that need attention.
Mainly the pre occupation with win rate - having to be right and poor risk control.
I also agree, 14 trades is statistically absolutely nothing.
Unless he can address the real problems mentioned above, he should give up TBH.
 
Walking on the moon is possible, we know because it has been done by someone in the past. Are you going to do it, most likely not. By the way when Larry Williams was claiming those great results on one account he was also running other accounts at a large loss, I think he was prosecuted for it in the end.

Ps 3 losers in 11 trades isn't a 90% win rate.
 
Well provided it is a genuine edge and you can scale it up successfully then it all looks promising.

Unfortunately, given that you have already made 2 mistakes in 11 trades dropping your win rate from 91% down to 73% and you are risking insignificant sums of money I would not count on scaling it up and making millions any time soon.

Realistically, if you can't stick to the plan with less than $1000 on the line in a trade, how are you going to do it with $100,000 at risk in a trade?

Concentrate on sticking to the plan, improving as a trader and above all making steady money, rather than setting fantasy targets of making millions.
 
Well provided it is a genuine edge and you can scale it up successfully then it all looks promising.

Unfortunately, given that you have already made 2 mistakes in 11 trades dropping your win rate from 91% down to 73% and you are risking insignificant sums of money I would not count on scaling it up and making millions any time soon.

Realistically, if you can't stick to the plan with less than $1000 on the line in a trade, how are you going to do it with $100,000 at risk in a trade?

Concentrate on sticking to the plan, improving as a trader and above all making steady money, rather than setting fantasy targets of making millions.

What's your definition of steady money? Risking 10% of your account? I thought you would be encouraging this!
 
The downside is that there are very few clear, tradeable signals each day - perhaps 3-4 on most days, and sometimes 0-1, so it's mostly a lot of boredom, followed by brief flurries of action and stressing out.

3-4 signals a day is plenty, all you need.
2 a week is plenty if it progresses you and you avoid losers.
think in terms of £per pip not pips per day.

Boredom in trading success is good learn to love it
or you'll crave excitement and that leads to overtrading and losses

If you are stressing out at the moment you probably aren't comfortable with
the system and the inherent risks, so how will you feel when you have big money at risk?
 
Thanks for the replies. I feared I was going to get flamed, which is why I tried to make it clear that, as far as I could tell, this current winning streak of mine isn't beginner's luck or blind optimism. In fact, I'm taking it one day at a time, because there have been many, many winning streaks that blew up on me (though never quite this long).

The Market Monk has impressive results, and thanks for the link, but he trades really different from me. He's in a trade all day, reversing much of the time, taking just a few ticks at a time. Ideally, I take just 1 trade a day, 8 ticks to a win (or, more rarely, 8 ticks to a loss), and never exit or reverse. But it's good to know it's been done, at least in a form, before.

11 trades IS too little a data sample, I agree - except for three things. One, ALL of the wins were exactly flagged by the system, and two of the losses were invalid when I took them (and I knew this, but you know how it is, you talk yourself into it sometimes, and in my defense, I was just beginning with the new system).

Two, I skipped more than a dozen other valid, winning signals, in the same period, and overall (since I quit early when I win, there are usually more signals afterward) probably 20 total winners I didn't take.

Third, of course there's the backtesting, which I used to go through 3-4 months of data, admittedly less than I could have done, in which the system was 90% profitable. I mentioned earlier that the system purchased off the Internet was 80-85% profitable, but I could never make it work - that's because I was, consciously or unconsciously, ignoring the losers, and just picking out the winners. This backtesting, in contrast, was meticulous, and I only did 3-4 months because it took so LONG, since it was so meticulous - yet it worked, with no "fudging" or rationalizations. By the way, I can't stress enough how important completely honest and painstaking backtesting is for a purely mechanical system - had I done this years ago, I would've reached this point, well, years ago. Or quit, and found an honest job!

I know that I am taking huge risks with this system, in that each loss is 20% of my equity - $100 per contract lost, using $500 equity - but I DO look at it like I'm "playing with the casino's money." And let's face it, the ONLY reason I got into futures in the first place was to make big gains, fast - I was doing fine eking out a few percent a month daytrading equities. If I didn't believe, at the outset, or even today, that incredible gains were possible with futures, I would've quit (or not even started) long ago. It's just that, now that I'm finally doing it, after years of seriously tens of thousands of dollars in losses, I can actually stop and wonder if what I'm doing is really happening. If it's ever been done before.

As for the stressing out, it doesn't prevent me from taking trades, or, fortunately, force me to make mistakes. I'm just characterizing the feeling of sitting around an hour or more (sometimes an entire day) with no trade on, then a signal completes, I'm in with 1 or 5 contracts, and I'm suddenly in a state of suspended animation, where nothing I do (except figuring out it was a mistake, and getting out) will influence the outcome, either I go up 20% or lose 20% of my entire account.

And it gets easier. Ironically, it was much harder to move up contracts from 2 to 3, or 3 to 4, because the % change was much greater than it is at 6 or 7 contracts. So there's hope for everyone out there struggling with 1 contract, like I did, for years.

Again, thanks for the considered replies, I appreciate that (almost) no one dismissed me out of hand. Note that I'm not bragging or trying to sell anyone anything, I was just asking an honest, if somewhat existential, question. I'll post my continuing results. (though if I stop posting, you can all assume the worst has happened, that it was a fluke, and that I'm crawled back into my cave with my dreams dashed, clinging to my last contract)
 
In my opinion - we all fnck up trades.

At least 1 time a week I reverse a trade instead of closing it. So - your 2 bad trades are permissible.
 
I'll post my continuing results. (though if I stop posting, you can all assume the worst has happened, that it was a fluke, and that I'm crawled back into my cave with my dreams dashed, clinging to my last contract)

good luck!
if the worst does happen, you'll get respect for telling us, unlike the masses who disappear never to be heard from again...

I would advise risking 2% per trade rather than 20% say for the first 50 trades, to prove to yourself, then risk 4% etc if you really want to go higher...
 
In his book 'Bar by Bar' Al Brooks says all you need is 1 point a day on the S&P @ 100 contracts to make 7 figures. So, he thinks its possible.

Good Luck
 
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