Choosing a trading method/system

Discussion in 'Index Futures' started by imorgan, May 29, 2009.

  1. imorgan


    I am a CPA beginning the journey of trying to become a daytrader.
    My question for those that are currently trading futures with real money is, "How does someone that is a newbie go about selecting a method/strategy to begin simulated trading?"

    My best guess is to just go with the usual indicators (MACD, Bollinger, Candlesticks) to determine a probable trend formation and try to ride the trend with a stop a few ticks below my entry point in order to minimize losses.

    In reading these forums, I have found lots of methods I know nothing about and so I thought it might be useful to ask the more experienced traders where to start and what the progression might be from there.

    My end goal is to make about $500 per day, trading for 4-5 hours. I mostly have been looking at trading ES futures.

    Thanks for any guidance you can provide. All the best.
  2. 1) Being a CPA can be a blessing or curse.
    2) It's best that you read as much as you can about "everything" so that you eventually discover what works for you. You don't want to exclude anything because that may be the very thing that works well for you.
    3) After you've become familiar with "stuff", then try to formulate a method that you can paper-trade. Play around with it for awhile. Then be willing to trade "real" money with it. You'll find that you'll probably have to fine-tune things a bit.
    4) With goals, try not to have a fixed target. I believe it's better to be focused on maximizing your effort instead of constraining your time and profit. You can only get a feel for that with "real" money on the line.
    5) The eMini S&P-500 would be a good instrument to focus on because of it's liquidity, diversity and access. :cool:
  3. akdrmeb


    i highly recommend using the YM over the ES.
    especially as a new trader. several reasons..
    1. equal liquidity
    2. better moves
    3. (most important) smaller spread.
  4. i don't live trade the futures market, but i have done some backtesting on this, so i may be only slightly ahead of you

    1) bird watching in lion country, dirk du toit

    more geared towards forex, a very powerful discussion of leverage and how to use it properly. easy reading

    a must read for all traders. a MUST

    2) check my answer in the following thread:

    3) i use ninjatrader, a free tool for backtesting and simulated trading (they charge you only if you want to use the platform for live trading). very good deal.

    4) get van tharp's secret of master trading game, a user-defined equity curve simulator. trial is free

    very important! NB! to understand position sizing, and where you may end up, say, 50-70 trades from now, based on the risk profile of an individual trade

    this should also give you a feel for the capitalization level you need to make $500 per day. the bottomline is: if you're undercapitalized vs your expectations, the risk of ruin is very high

    5) 'risk of ruin' thread

    there's a very good article there, written by your fellow CPAs

    'risk of ruin' it's not meant to discourage trading, it's meant to alert you (much like a speed limit sign) to what's a dangerous way to play this game.

    6) ym vs es

    i've also heard that YM is better to start with, than ES, although I don't know for sure. btw, here's a thoughtful YM system trading thread i've stumbled across just recently:

    7) breathing exercises
    podcast #19

    Varima Garch
  5. You will likely make a lot more money if you put your time and energy into creating your own CPA firm & perhaps hiring a staff of CPAs eventually, rather than trading. Less than 1-3% of newbie traders will ever make a steady living at it.
  6. i agree. if you have a professional degree/license on your hands, it's better to build up some consulting expertise vs immediately jumping into trading.

    later on you can sell your consulting services and generate stable, reliable cash flow. trade in parallel if you want to.

    here's a quantum mechanic who sells consulting services and trades: he's sharp, but we don't need ph.d. in the nuclear particle to trade. i'm just saying he's found a way to generate stable cash flow to 'balance' trading, which is unstable.

    this is what a lot of trading systems programmers do. they do trade, but they also sell something - their programming skills. so they are not completely at the mercy of the market.

    daytrading is for retired dentists

  7. patoo



    This thread is faily typical of what goes on here. 90% bs 10% good info. There is good info here. You will just have to find it.

    Pay attention to what Nazz said. Its right on.

    Being a numbers guy myself, I would add

    The S&P is what the mood/emotion is out there. Its not hard numbers. You have to learn to read the mood as well.

    Good luck and hang in there. The 90% of traders that fail do so because they quit too soon. Those of us that became profitable learned to hold on to our money while we figured out how to trade (which may take years)
  8. Whether this is feasible depends on how much you have to play with. For example:

    If you have 10K to play with, making $500 day amounts to a whopping 1250% per year. Most pros are happy if they make 30% a year. That equates to a trading capital of about 420K.

    The question is:

    If you had 400K, would you trade for a living or retire to a developing world country where you can buy a nice house for $50K and live of the rest 350K for about 20 years? I presume you could also do some business there and make some more money.

    What do others think about this?
  9. so are you in the 'this is impossible' camp? :mad:

    shame on you :D
  10. imorgan


    Are there any methods you would skip or alternatively lean towards in choosing one to paper-trade? I’d rather not spend an enormous amount of time on say, candlestick pattern recognition if the general consensus among successful traders is that it doesn’t give you any statistical edge.

    I’ll look into the YM as well and consider which might work better in starting. I began looking into the ES simply because the only person I have met that is a “daytrader” (paper trading for past 6 months using T-3 Fibs ProTrader) is using the ES.

    Ms Varima-Garch
    Thanks for the suggestions in for further research.

    Joe Paterno
    I chose to become a CPA as a backup plan in case I never found a better business venture out there. I could make good money working many hours as a CPA but I don’t want to have a long career of late hours dealing with the number details that we accountants constantly deal with. I began my career at KPMG working 60 hour weeks and a few years of that were enough to verify my lack of love for the accounting profession. I like knowing I can always get a job, even during this current recession but accounting just doesn’t suit me long term. I am also a professional photographer so that might also clue you into my suitability to a career in accounting. I appreciate the idea though.

    Thanks for the mood tip on the S&P. I starting buying a lot of regular commons stock positions back in December simply because so many were selling out of panic driving down the whole market. I even got lucky and bought several stocks on the day the DOW was at it’s lowest simply because there was that general “the sky is falling” mentality everywhere. I have been making a killing lately on those purchases. Hopefully I can work the “mood” idea into my technical analysis.
    How much time do you think it should take someone to learn to become profitable? You imply that it may take years to finally become successful. What would you suggest specifically that would decrease that time? I have looked into various business ventures for many years and have found the quickest way to research something out is by finding someone already doing what I am trying to do and learning from them (i.e. as an apprentice). I wish there were some way to set up such a program for day trading so beginners could spend some time around those with proven track records enough to build a good foundation for efficient learning.

    If daytrading could only offer me 30% per year then I would certainly not be interested in doing it. There are other less risky ventures I could work towards paying an annual 30% return. Hopefully my research and dedication to daytrading will prove to me what kind of returns I can realistically expect given my skills and at that point I can decide if it’s better or worse than other investing opportunities.

    Thank you all for your time in responding to my posting.
    #10     May 31, 2009