Well said Mortimer! A .05 return on a 12 oz can of soda in NY is not as efficient as drinking the soda in Chicago and turning in the can for a .10 deposit in MI. This can ARB really works if you can buy soda in one state and return the can across the border.
Wrong! Traders think in terms of dollars and cents (income), whereas "investors" think in terms of % return on equity. Would you rather make 18% on $20,000 equity or 1 cent on 10,000,000 shares traded during the same time period?
i have to disagree with this. why would you concern yourself with the absolute value of your wins/losses? a 'trader' should be focused on nailing consistent %'s. once that is truly accomplished in a systematic way, slowly adding capital to raise the absolute value should be academic.
I love the "contact sport" animation! I'm sure that Axe is correct about a trader needing to focus on making net money every month, which we explain in our college courses (vs. the ROI for investors). But, in all fairness, the % does come into play for overall risk control and R/R ratios. I think we're all on similar (if not the same) page. If a trader of ours makes $5K per week, with $25K in their account, that looks like a fantastic ROI. But when we consider the fact that they are "using" a $Million or Two of our money in the process, then the ROI seems to pale in comparison. Either way you look at it, you must pull money out of the market, proactively (tradng), by using the $$ as a tool. And then, at some point, you can kick back and live on the ROI from investments and interest. Make sense? Don
I will add some futures discussions here (go ahead and flog me...). I went over my entire year 2003 trades to come up with my per trade average after commissions.... +1.17 pts per contract for my ES trades. One thing I found is that from July until present I have raised my daily points per trade average by about 60%. I guess I will keep track of this from now on to see any changes up or down for my average on a monthly basis.
OK, now this begs the question. Is this $1.17 per trade (net) being multiplied by 10 contracts per day? 50 contracts? 500 contracts? You're obviously doing well, but have you been able to "ramp up" to a point where some serious money is being made? One of my traders has been trading in 50 - 120 lots per trade of the E's, and did 2500 or more per day a couple of times....I wish you and he could get together....a "merging" of profit and size" of sorts. Don
I think it all depends on the trader and HOW they think. I look at the $$$ and not the % on a trade. Why? Because I have daily/weekly goals on what I want to make dollarwise. So whether I make 0.10 on 5000 SUNW (2.8%) or 0.50 on 1000 SPY (<0.5%) is irrelevant to me; it's $500 either way. The positive outcomes, whether with % or $$$ are what give a trader more confidence.
I currently trade 10 ES contract positions for entries and exits for my intraday trades. There are times during the trade day that I will be in multiple 10 ES positions at the same time (same type of trading I did on the Sept 26th ET trade challenge). Overall though, on a points per contract per trade average for the year, I am at +1.17 pts net. I usually go for 1.5 to 2.0 pts per trade, and If the price action runs deep in my direction, then I will stay in my trade with a mental trailing stop type of strategy for more profits. I have most of my trades for the year in the 1 to 2.25 pt range after looking back at the year. Chris
As I have stated before, I will be in Vegas for the Expo (flying in Wednesday night) so I will meet with you and your "Futures" traders Thursday or Friday to explain more (not everything...LOL) about what I do during the trade day. Also, I do think trading in 50 to 100 "lots" sizing is very doable while maintaining a high point per contract daily profit average. One style of my trading really works great during the days when the ES has a tight range (10 pts or less for the day). This tighter range seems to be the norm lately and one method I use works good for this. Chris
I read your second post after I responded below. Yes, I look forward to chatting with you. Perhaps you can let me know your approximate costs (PM if you like). And, please, don't concern yourself with the details of your methods, I never want to see anyone to give away "too much." ...especially when they're making a few hundred grand a year. (Be like the the 'book writers"....tell us "after" the game is over)....lol ------ That sounds like a fair enough volume to grind out some money. What are you paying for E's round trip? I'm curious, because I like to "take the temperature" of how traders are doing so that we can (as a firm) push our clearing firm for pricing that allows profits from solid traders. If you do 10 roundtrips per day of 10 contracts each, that would be 200 x 20 or 4,000 contracts per month. Is that about right? Would you mind sharing how much your complete costs are to trade at this level? I'm thinking that if we had 20 people in one location, all trading 4,000 per month, that it would add up to enough volume where we could at least cover overhead..... I appreciate the help!1 Don