Does Anyone make money on indices?

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JonnyT,
No you DON'T have to give up your job to trade US stocks. You can come home from work and trade from about 7pm until about 8.30.
And you don't have to give up evening family life either; you can just trade a couple of nights a week if you choose to.
Number 4 is the most important and I know from my own personal experience and others I've coached that reaching the goal of giving up the day job and its pressures and trading from home and being with your family more is what makes life so much sweeter.
The time with your kids is precious, they grow up very fast.
If you want to talk more, you know where I am.
Richard
 
Quote : U can make money from anything as long as u have the self-belief.


well said grubs, this site sometimes lacks good insight like this

Jay
 
Johnny T - yr quote above:


I'm also considering buying a system and running it through TradeStation 7.1 There are several commercial systems that have returned 150%+ per annum over long periods without money management. i.e. single contract etc etc.

UNQUOTE

Simply to ask a question for discussion and desperately not wanting to sound negative for the sake of it especially since I know nothing about these systems BUT -

If these types of return were possible on a consistent basis why are they not used by pension fund and other money managers - all my savings/investment accounts have either lost money or remained static for the past 3 years. . . . . . I know there are lengthy rules governing which instruments fund managers can use but the gulf between what they are achieving and what they could be achieving if what you say is true is incredible . . .

Am I missing something. . . . . ??

BTW I am half way thru Linda Bradford Raschke's book Street Smarts.. .. it's a very encouraging read although I'm assured by many that many of the techniques are now defunct.

She does mention the ''advantage of the small trader'' which stems from being nimble, flexibile, having no rule book or industry regulations and being able to make rapid decisions without higher authority consent etc
 
I think that Pension funds are not allowed to Short Sell stocks so their only option is buying. Bear in mind if they did want to Sell Short they would want to do so in such large quantities so who would be prepared buy all that stock so they can short it ?

So in JonnyT's case I think it is possible as a position trader to make money in the way he has said.


Paul
 
<i>If these types of return were possible on a consistent basis why are they not used by pension fund and other money managers - all my savings/investment accounts have either lost money or remained static for the past 3 years. . . . . . I know there are lengthy rules governing which instruments fund managers can use but the gulf between what they are achieving and what they could be achieving if what you say is true is incredible . . .</i>

A large part of the problem is the rules that limit what they do.

The biggest thing though is probably just the size they have to trade in. Making £200k a year would delight most traders but would barely show up on the p&l for a fund manager. Once you start getting into the kind of size that they need to do:

1) You simply lose some options as there may not be the liquidity.

2) You start moving the market, particularly when you want to off-load.

Take for example the trades MrCharts talks about on the US trading thread, he's dealing in 10,000 share lots for a few minutes which get filled straight away. By the time a pension fund had got hold of enough shares to make the trade worthwhile MrCharts would probably be exiting or else the fund would have had to pay a big enough premium to get the size that the trade wouldn't work anyway.

Finally you then get the psychology of fund managers who keep their cushy jobs with big salaries and bonuses for doing the same as everyone else is doing. If they do something different they either:

1) Do well and get a bit more of a bonus; or

2) Crash and burn and lose their jobs.

Personally given that bad luck will probably eventually make you crash and burn over a relevant time period I'd go for the market average position if I was in their boots.

wysi
 
Hi Jonny - I agree that these results do look genuine. I suppose my background predisposes me to believe that any opportunity for ''super-normal'' profits or ROI will quickly be explored and exploited thus removing the factors propping up the advantage. This, in basic finance/business theory at least, would be the case if an efficient market existed. This should also be the case whether the source of such returns were trading or in fact using any other business opportunity which were free from obstacles to entry. Returns would be in direct proportion to risk taken.

However no market is truly efficient - this ideal can only be approached to a greater or lesser degree. In this case maybe the independent trader with a comparatively (to banks and funds etc) tiny account can hop in and out and earn a superior return.

My main question isn't whether or not such returns are possible but rather, if they are possible, why can't the custodians of collective funds tap into such a rich vein and halt the pensions crisis in it's tracks?

The part of me less like Rimmer from Red Dwarf does not ask for reasons why but instead asks how I too can get a slice of the action. . . .

Best of luck with your trading!
 
Hi fastnet,

In this case size is important. Too big and you cannot get a fill.

This is where individuals have the advantage. Imagine a pension fund with £100s millions to invest. You simply cannot put millions on the table without the market being moved against you. Imagine trying to sell a profitable position.

Have a look at funds. The ones that head the performance tables are usually small. Joe Mug Punter then jumps aboard, they then have too much money and have to dilute the trading mechanism with the enevitable result that performance slumps.

JonnyT
 
bonsai said:
JB
I specialise in ftse trading.

my question is how can people not make money trading the index ?
Click to expand...

Tongue in cheek ?

Surprised that nobody has commented
 
Re Pension funds.

Pension funds and most regulated retail funds in the UK have very strict rules. Not only can they not short stocks, they aren't even allowed to significantly alter their weightings.

For instance, if you are invested in a UK equity growth fund, then the fund will be invested 100% in Uk equities apart from cash from new inflows. Even if the fund manager was expecting a market crash in Uk equities, he/she would be unable to switch from equities to cash (not just because of size implications but down to the investment parameters which must be adhered to).
They wouldn't even be able (probably) to sell the growth stocks and switch to defensive stocks as it is a "growth" fund and must invest in growth stocks. The only line of defence is to hope that they are in stocks that fall less than their competitors. I don't think they are even allowed to hedge by buying put options etc to protect against downside risk to any great degree.

All the fund manager is interested in is trying to beat the benchmark/ competitors performance. If that means losing 20% instead of 22%, that is considered a success!!
 
Nice little number eh? Don't worry about making money, just lose less than the next clown, then all change jobs. Trouble is, it's our money.
 
There are plenty of people who fail to make more than they lose on index trading. How many people on ADVFN for example do you see starting out trading, chose the DOW as the first index to trade? Too many and they dont last long. It takes time and effort but once you learn how to do it it does get easier. I think too many people see the DOW as a golden goose. Anyone trading the DOW will have had a bad experience at some point. If they havent then its still to happen. Part of the learning curve.

Bonsai it cant all have been plain sailing. I dont know a single person who has not been stung at some point and been set back. They have almost all come out of it and are doing well now.

Kevin.
 
kevin
couldnt agree more with you about the Dow.
especially for people who do not seem to have a system of their own.
Probably the worst thing they can do is trade the dow before learning to trade ftse. imo
and after the ftse, they should trade the dax.

plain sailing, no
nice analogy though. Do you have a boat ?
You would think it would be a disaster to overturn her ?
But that is actually part of learning to sail !
In fact I think sailing instructors these days make you overturn so
you learn what to do when it happens.

Those incidents happen all the time. That's what happens in
trading. But they are not disasters if you can trust yourself to do
the right thing.

And that's what trading is all about , imo
 
Re pension funds. If you transfer to some SIPPs, you can trade in Options. So you can hedge etc.
Only limitation is your margin. You can't pay more in to meet a margin call.
Instead your position is automatically closed.

The worst threat to pensions is the possibility of banks collapsing due to too much bad debt. Nothing we can do about that except start taking drawdown or lump sum + a wage, try to get as much out as poss. before it evaporates.
Glenn
 
Hi Glenn,

Theoretically banks cannot access your Pension cash or shares as they do not have the ability to cash in the assets without someone commiting fraud. You are therefor not really vonerable to a corporate disaster but you might be to individuals.

If you choose a decent provider they will have suitable insurance for such possibilities.

JonnyT
 
JonnyT
In the 'normal' world of the past, I agree.
But I am talking about the collapse of the fiat money system - an extreme prospect. I didn't really make this clear.
In such a case, governments have been known to raid pension funds, let alone banks.
Insurance works for the odd mishap, but not when the pack of cards collapses.
Glenn
 
I only asked? Hey Sid - this is a healthy debatable question - Not an advert (dont need that) I just like Trade2win users, they - give healthy debate - thats good! - for everyone !
 
John,

If you like T2W users so much, why dont you give them something they can use, like trading setups, or how you managed your last weekly share trade?

What is this thread not an advert for John?
 
I know that money can be made trading the index future but using a Spreadbetting company it is difficult. Most of those I know who have done it have used companies like Interactive Brokers where commissions are small and access to the market is instant. I have found that using a Spreadbetting Company is best for longer term trading and usually better for trading

Felix
 
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