The SPY method I described will definitely have times when it has 15-20% drawdowns. That said, you were willing to fade drawdowns, so I felt OK in recommending it. I still recommend more strongly you look somewhere other than the S&P. You are correct about the relative cost of ES vs. SPY. I recommended SPY because 1 contract of ES is $65K or whatever now, which would leverage you pretty heavily for a long term strategy like that. Given the drawdowns on the strategy, I didn't want to leverage you. Hence SPY.
Actually, it is. Psychological edge. Compare 2 guys, everything else being equal: the OP, who doesn't need the money and can afford to lose a little or be breakeven for months and another guy who needs to pay rent, insurance, food,etc. Which one is more likely to succeed? Which one has more pressure? To the OP, if you have so much experience, why don't YOU teach us something? Also, you should be able to recognize valuable info, so just keep reading ET and pick up the pearls of wisdom... P.S.: Your view that the only edge are frontrunning or moving the market is missguided....There are so many other ways to take advantage of the market...
The spreads on SPY are a penny. If you've got 40K to throw at your project, and you are only looking for a hundred dollars a week, then SPY is the better play. ES is like SPY on crack to a new trader. You get hit for even a few ticks on ES with its spread - which is going to happen to you a lot until you learn the ropes - and you'll just pee away your money. With all your experience in FX (which you should have mentioned in your first post before others took their time to assist you) you should be well aware that even breaking even is a large challenge, much less being net positive anything.
OK, let me clarify couple of things: 1) My FX experience is a totally different ballgame: I was in the market maker business. We pocketed the bid-ask, so be net positive wasn't the challenge it is for me now, which is why I need to learn from you guys. Others mentioned change in technology, which probably is a factor as well, although I'm not so sure. So to a large extent, I am a newbie, even with 22 years market experience under my belt. That's why I didn't mention it in the first post. 2) I'll (reluctantly) accept that there's probably other "edges" than market power and order flow. My view is probably overly influenced by my MM experience. Goes to show I definitely need to learn rather than teach: different market experience. 3) Agree wholeheartedly that not having the pressure is a plus: stressed traders do stupid stuff as they gamble for resurrection. At the same time, it's also a minus as the hunger to win may be lacking.
can you still make a market trading a retail account for yourself, what with your experience as a market maker?
What do you mean "make a market"? If your question is "Can I trade retail with (or despite?) my MM experience?", I guess the response is "time will tell". I don' know, and that's why I have minuscule ambitions.
I'm a meat and potatoes retail trader (options and equities) who knows almost nothing about futures so a lot of this is over my head What we have in common is that we're both retired and can live w/o the trading income. My nut to crunch isn't very big so if I can make $100 to $150 a day (I have other income), enjoy the chase and not tap into my nest egg, I'm a winner. I couldn't care less if this is chump change to ET's top guns or to those wannabes living in mommy's basement, spamming away. My game plan is primarily not to lose. And although it's mockable, making more trading than just sitting in money market puts me ahead in the game. For the most part, winners take care of themselves. Losers need the most attention. Obviously I incur losses but never anything stress inducing. And once in awhile, along comes an internet bubble or a global financial crisis and there's a monstrous year or two that makes up for all the other small years and increases the nest egg. While it would be nice to make what the ET millionaires make , IMHO the real goal is to reap whatever reward you can from your trading and get some satisfaction from doing better than fixed income. If you can't beat fixed income or the stress is too much or it gets too tedious, go golfing. Find your own comfort zone.
Spin, Now that's talking. Finally, another pearl of wisdom. I think you nail it here. Not losing is the first thing, I believe that's Warren Buffett who said likewise. Cheers, TJ
It's true, being able to lose your money is almost a requirement in order to succeed. Being undercapitalized and trading money that you need will almost always result in failure/blowing up. But simply being able to afford to lose in and of itself is NOT going to help you extract profits from the market. There are plenty of guys that can afford to lose in the market and they do lose until their money is gone or they actually learn how to trade profitably. The latter group is definitely in the minority.