And quite honestly that's exactly the way it usually plays out, and that's why I like for my clients to SIM/paper trade the system for several months before they consider risking live capital. Typically (but not always) a client will start out taking many trades, and as he gains experience with the system some trade entry selectivity and discrimination become enforced. But as you mentioned, at first I want clients to take as many paper trades as they can find, because as an academic exercise it provides plenty to talk about during our webinars. No two trade set-ups are exactly the same, and some clients will require patience and persistence with respect to faithfully trading within the rules and confines of a 'system'. I have tried as much as I can over the years to simplify (less considered variables) the system design and to engineer out as much discretion as I could out of the system, because blowing up clients is bad for business.
Wow, congrats on that. I'm surprised there are 150 with two nickels to rub together, let alone enough money to pay for training.
I wanted to post this piece here from an oil rig count discussion in the energy section - specifically, my thoughts about using fundamental data without supporting price confirmation. " As a speculator (important caveat) I would not recommend to "time" the market - and to me, "timing" the market means to take a position based upon anticipation without supporting price action. In other words, the market timer believes himself to be smarter than the collective wisdom of the remainder of the market. ( It has cost me plenty to get my ego shredded to this point of humility ) There is no way that I have the commercial production information that Valero or Royal Dutch Shell or XXX has. Do I believe that the present state of forward curve contango in the crude market is everlasting ? No way. There will most certainly come a point in time where the forward curve regresses back to a backwardation state. But to me personally, and my recommendation to clients is; it makes no sense to time that now without supporting price action and almost assuredly sit with it and twist in the wind. Many clients don't have the anxiety and emotional reserves or quite frankly the capital reserves to sit with a non-performing trade for what could possibly be (and who really knows) an extended period of time. Even if there might be, from a historical perspective, limited downside in terms of further contango in the forward curve. So, for me personally, it boils down to this - a good "timer" might be able to take, let's say, 150 tics out of a trade. For me and for what I teach clients is that it makes more sense to use our model and our rules set to take less of the trading range than "perfect timing" knowing that we have some juice going along for the ride. I trade and teach other intramarket forward curves the same way. This is just my way, and it works fine for myself and the vast majority of my clients based upon feedback. Having said that, I'm sure that there are many other successful ways to trade the forward curve - and even to 'read the tea leaves' in terms of economics and fundamental supply and demand. I personally made a choice several years ago to diversify my trading into as many electronically available markets as possible, and for me that meant using a price-based trading model and rules set. I feel comfortable with that because of, and not in spite of, already having traded energy commercially and for a fund. Again, this is just my own approach. There are many other good ones. Another significant driver to my approach is the reality that I cannot blow up clients nor can I assume that my clients have access to and can correctly interpret different fundamental data flows across a myriad of markets. Do fundamentals move forward curves ? Oh hell yes. Are forward curve moves reflected in price ? Always."
Fully agree with your point that commercials have superior information on fundamentals, although their interest is probably more in hedging than speculating. Putting the energy market aside, do you think there is any futures market where the retail trader has a fighting chance to make good trading decisions using fundamentals?
Definitely for individual stock names. Even for stock sectors. Having said that, it would appear from history that investment banks and certain HF's are definitely privy to more "actionable intelligence" than myself or John Q Public. You'll find a fair number of members on trading boards that say they can do it for grains, meats, and softs. Hopefully some other members will share their experiences.
I posted this reply in the Energy section on December 1st about the OP making a bullish case re: Oil Rig Count Fundamentals. "I guess I see the rig count data and the economic data much differently than the OP. I see much more supply than demand, and so does the market. With such a humongous and stranded supply of crude in the U.S. and Canadian mainland, does it make sense to pick a bottom ? My guess is that commercial producers will sell into any market action above $50 just to hedge their forward production. "Rig activity levels across the Western Canadian Sedimentary Basin stood at 26 per cent this week, up slightly from last week’s rate of 24 per cent, Rig Locator records show. There were an average 195 active rigs at work out of a fleet of 762." http://www.dailyoilbulletin.com/article/2015/11/27/rig-activity-rates-remain-stagnant/"
Hi Bone, Over time you've posted a fair amount of spread charts. A good percentage of them are of a weekly time frame. What would lead you to trade a spread on a higher (weekly) time frame, as shown here, versus a daily? The obvious answer is that there's less noise and that you'll get stopped out less frequently with the other side of the coin being that your stops are larger. Do you think that in the end the $ profit is about the same? I.e. with the weekly you might have more trades with smaller profit then the weekly with fewer trades and larger profit. Also, the image of the HO fly seems to be missing. Thanks
Spreads are so cheap to capitalize in terms of margin that IMHO you really should try to swing trade them for longer periods of time. Execution costs might be an issue for retail traders using trade entry higher frequencies and if they choose spreads with very small trading ranges - highly situational. For example, you don't want to take 6 tics out of a trade, and then pay round turn costs on four contracts. Over a long career I have refined what I do and teach, but I fully recognize that other approaches can be entirely valid. I have long felt that most traders model markets using incorrect time frames, and that most traders should be using multiple time frames. From my own personal observations, too many traders have a mistaken impression that they are incorporating short, medium, and long term trend viewpoints into their trading. YMMV, just my own 2 cents.