stops are what keep this rusty wheel of a mrket greased... please keep using those stops.. losers use stops
"Losers use stops" is a gross generalization subject to misinterpretation. In reality, losers use a particular type of stop known as a "margin call". If you place a stop at the point price invalidates your trade, it's highly unlikely you'll be a loser.
Sounds like a pretty sweet deal. It sounds like they will expect you to follow their strategy or approach, which makes many of these comments a bit redundant. That said, I think Nodoji makes many good points in his comments. I would say the best way to learn to trade the futures is to do extensive backtesting. That forces you to define a strategy and you can see the impact of stops, profit-taking, going with the trend, etc. Many people say backtesting is useless, but that is nonsense. If you can't make money on historical data, how can you expect to do so in RT? Personally, I wouldn't trade a system, but I would use backtesting to develop tradeable setups and to develop money management rules. I know there will be plenty of disagreement, but I do not believe a non-automated trader in the ES should be taking more than three or four trades a day and plenty of days, not that many. I think ultra low margin will blow out most traders. I wouldn't want to trade more than one car for every $10k in account equity, but a newbie should use half that, maybe less. Blowing out is easier than you think. I know that the big money is made on multiday swings. I think you have to be careful about your average profit to commission ratio. It is very tempting to take a one point profit on the ES, but you are probably giving away 10% as commish. That's not a recipe for long term success.
NoDoji: "Because price would then reverse not long after that point, I had the thought that likely kills more traders than any other: "If only I didn't have that stop and had added to the position with size there..." " â 'rogue trading' i've only traded one stock once back in 1979 based on listening to the ceo explain his forthcoming meeting to sign a new client, made about 300% in a couple of weeks, so i've never traded stocks, and got into futures at a time when i was unemployed and answered an ad asking for sales people for a futures broker, tho i did once interview once with a stock broker - rejected but an interesting interview imo one could use the same methods - perhaps i should say i'd use the same methods i use to trade futures/fx to trade stocks, tho i dare say there'd be more consideration given to stock portfolio management, so i don't think trading technique needs to vary much except if one's changing from 'b-a-h' to 'scalp/intraday' trading what imo makes futures trading more reliable is there's far less fundamental risk, i mean by that futures prices aren't affected by takeovers, illness/death of key person, Lehman type scenarios, ponzis or other wrongful doings, etc, in other words completely unknown unknowable factors dramatically affecting price, so there's less to be concerned about i concentrate on the euro - eurusd/6E so it's primarily Price action and my trading method is based solely on the TA methods i've developed over the years, equally applicable to ES there are some fundamentals that 'cause' changes to futures prices, mostly news releases over the short term but during the past few years, particularly as the result of hedge funds i suspect, the amount of pure speculation has increased trading volume and impacted some futures as seen in their record price rise, ethanol based Corn price rise, Crude Oil and Gold for instance during the rally since March many stocks have doubled even trebled their price but the profit potential of doubling one's trading margin trading futures exists on a weekly basis, which is something that can't be done week in week out trading individual stocks, and is what makes futures trading so attractive to some - many rather than Stops my trades are either correct or i take an abitrary loss, but isn't there a thread about Reverse trading ? RTs ? did Jack have anything to say about RTs ? AAAintheBeltway: "I would say the best way to learn to trade the futures is to do extensive backtesting." i wouldn't disagree with backtesting as one of Several different methods to learn to trade; NT demos from Amp, Mirus etc use realtime data and one can observe and note one's bad trading behaviour rather than profitability using demos, but nothing prepares the individual for their emotional/psychological reaction to Loss like real money trading to some extent one has i believe got to go through a period/amount of desensitization that might be similar to a fear of spiders desensitization, trading isn't only about profit, money management, amount of trading margin, it's also very much about Loss
This is Great Advice. We work with traders on either side and some that play both asset classes. In that light, I can agree that traders who manage their risk, and know there limits, are consistently more successful. Happy trading and I wish you all health and wealth in the new year!
Last post of 2009 I have a few limited words about backtesting. First, i never did any because i started to trade before computers. Second, backtesting itself seems to be a flawed way to "ASSUME" you can make money in a game of chance. The exercise itself proves you are not learning how to lose money. We all know what to do in order to make money in trading. What needs to be learned is how NOT to lose money. Third, backtesting will assume you got that fill at the beginning of the big trend move. In reality, the mkt probably gapped past your assumed fill price and left you sitting alone at the train station. We all have seen reports come out in ES and BOOM, the mkt is 5 or more handles away from you before you can blink. OUCH!!!! Backtesting assumes you got out on the losers with rock solid discipline...........fat chance on that one. But will agree, backtesting can help some traders in the beginning if they were realistic about results, admitingly that is a stretch because the backtester is looking for something that yet is far, far away from their reach in real life. Curve fitting is best left alone to admiring shapley women. Happy New year and best of trading in 2010 to all. PS: leverage and anology with speed of a car is a stupid statement. There is NO leverage in a trade at all as price is from 1021.00 to 1025.00. That is either a profit or a loss.