Here are some posts I made to a different thread that might help a bit. Then a bit of follow up elaboration... That somewhat shows the mental path moving from options to futures. After that I started to get much better at direction. TONS of screen time and an above average memory and ability to correlate repeating occurrences. Exhausting analysis of various popular methods like candlestick patterns, Fibonacci, etc... In short, almost all of it proved to be garbage except when used under very specific conditions. Threw it all out because it wasn't useful then. Continued with tape reading and basic TA (support/resistance, channels, floors/ceilings). Then the Yen carry trade began making headlines constantly, and sparked a thought. Subsequent analysis was done on the hidden correlations between the major indices and the worlds major currencies. Inflation/Deflation effects on market values. MUCH more nonsensical noise in FX market that I had to sort through. I've already shared too much, but in a nutshell, there were a few Ah Ha moments, but I didn't just stumble across them. A decade of diligent work.
Cache thank you for sharing that. I think it is truly amazing how right you are and how uncannily similar is my experience to yours over approximately the same amount of time. I can tell though as I've mentioned before that you are several steps more developed than I am as a trader - though I dont feel very far behind. May I ask you: what is the best way to keep track of my drawdowns automatically - without having to note it reviewing the charts? Thanks.
"I've already shared too much, but in a nutshell, there were a few Ah Ha moments, but I didn't just stumble across them. A decade of diligent work." AMEN BROTHER A word about the prop futures model: There is no portfolio allocation per se; a trader is given his risk limits and position sizing limits by management and that's it. And a very good prop futures trader (a minority for sure) can return 100% per month. Honestly - not uncommon. Now, he will have some expenses and will split it with management but it is entirely doable. The trick is to use leverage (futures), convince management that your strategy is viable and consistent (they all understand spread and arbitrage) and commence to offset your margin requirements with SPAN offsets. Example: I can have on a 1,000 lot Eurodollar spread position intraday and easily use less than $100K in margin doing it. The SPAN margin for a Eurodollar spread is like $360 the last time I looked. If I can average a full tic per day after it's all said and done - it's not FU money but it's a very, very good living. And I've been doing it for 18 years now. Conservative strategy scienced out and leveraged to the hilt.
Sure, I understand what you are saying, and I agree with the concept that a good trader can make a very good living if trading prop. I'm quite familiar with the way a standard prop shop operates. But stated returns are quite different for prop guys than any other retail trader or fund manager. If I calculated my returns the way prop guys do, then the returns I mentioned above of 25-40% monthly would be adjusted to 150-240% monthly and the best month would be about 630% return. I'd be on track to make about 6,000% this year. My point is that the prop method for stating returns, greatly inflates the numbers while the underlying net dollar values are the same. I'm not saying it's wrong, just making sure that comments are compared under like conditions. My strat is NOT a "conservative strat scienced out and leveraged to the hilt". I actually don't use much leverage at all. 2X leverage is normal for me. Risk of blow up or even 20% drawdown is virtually non-existent under even the worst conditions imaginable.
Cache, I am in complete agreement with you, it's not an apples-to-apples comparison. A prop futures trader, a prop equities trader, an independent equity trader, independent futures trader, CTA, equity relative value hedge fund portfolio manager, prop options market-maker at Prime or Ronin, etc. etc.; if you look at their performance just in terms of rate-of-return and Sharpe Ratio it's not a balanced picture and surely isn't a decent criteria to judge trader performance taken on it's face value. Especially since there are so many different ways that a trader can lever a strategy. And it makes stock "RoR" claims at least for me highly suspect and to be taken with a grain of salt.
Anything is possible... Some people are professional traders others, such as myself, are professional gamblers. The difference, if there is a difference, is that one is happy with a bird in the hand and the other cannot be happy without the two in the bush.
LOL... I like that, but there is really a difference between the two. Long term expectancy. If negative, you are gambling. If positive, you are not gambling. Plain and simple.
been trading as my sole source of income since about 2004 and have never really looked at my % gain ....reason why is i trade whatever i feel comfortable with, whenever i start setting goals of i need to make $xxx or X% i either get complacent when ahead of that goal or feel the need to meet the goal if i'm behind.....also another reason why i don't keep track is i trade mainly otcbb/pinks and its really not scaleable over 100k so at the end of every qtr i withdraw back down to 100k but if i was keeping track % wise i would say 10-50% per month
Cache Landing, thank you for all the information. I am currently on the credit spread kick and doing pretty well, with a small account, but I am trying to move into futures and will take all you have posted in to consideration. Thank you for your insights.